Short-Term TSLA Price Movements - 2016

[Julian Cox]

Yes, there are plenty of good reasons for the stock to double this year. I think there is a very high chance events in Tesla will unfold as you have predicted. It's not hard to see. The harder thing to predict is what multiple the market will put on TSLA. And when.

Just curious, are you still 100% certain that the stock will hit $400 in Q3? Or are you willing to walk that back to 99% certain for Q3 and 100% certain by Q4?

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Thanks for the info on the new GAAP rules. Very useful to know.

To your question. It is probably worth pointing out that your question contains a false premise. I have never at any time been 100% certain of any particular price neither have I claimed to be. You preceding statement is accurate and I agree with this entirely: "there are plenty of good reasons for the stock to double this year. I think there is a very high chance events in Tesla will unfold as you have predicted. It's not hard to see".

As regards to the multiple, multiple of what? In my opinion the only valid multiple relates to a DCF analysis (with correct assumptions which basically never happens because the correct assumptions are too scary unless you either happen to value honesty over looking like a fool or you happen to be a billionaire running the company with a long history of doing things that people cannot bring themselves in advance to accept is the normal output of the kinds of inputs and strategies that have gone into these ventures).

As for the $380 to $400 PT in Q4. This is predicated on a number of things and it very much includes a reckoning of net market sentiment (assuming that is what you were getting at with multiples). It also includes a reckoning of Tesla's cash flow profile for the year and when that has peak good looks. It includes a factor for restoration of faith in guidance. It includes a quotient of upset for a huge block of shorts. It includes the likely behavior of Wall Street in preparation to align with Tesla for expansion funding. It includes a factor for macro economics. It certainly includes foresight of the consumer market reaction to the Model 3 (and does not contain hubris regarding stock market reaction which may very well trade flat if not sell on the news). It anticipates Model X ramp the way it actually is and its effects both in terms of business performance and market reaction by Q3. It is predicated upon Q3 reveal of very strong Q2 Model 3 reservation numbers and the preceding media reaction to frenzied consumer reservation action. It contains a "Musk" credibiity factor based on Falcon Heavy and repeated SpaceX landings. It contains a factor For the Gigafactory Launch event (probably April) and a steady ramp of good news regards Tesla Energy. Also the upset of bearish hopes that the GM Bolt and others represent plausible competition. Finally it contains the notion that getting to numbers like $380 to $400 will most probably be momentary if they occur and mark the top of a subsequent slide. I do not expect Long support at these levels in 2016. $300 - $320, possibly. The extra $60 - $100 is viewed as the top of a short squeeze on margin calls at the peak of a Wall Street stock promotion campaign leading into a fundraiser to accelerate Model 3 production capacity to 500,000 sooner than 2020 and beyond 500,000 units annually by 2020.

Risk factors: Things like Trump pitching a stock market bubble and depression like economic conditions under Obama as a campaign talking point. Nothing material that does not come under the heading of acts of God which exist for everything at all times from investing in stocks to crossing a street.

 

[AlMc]

To your question. It is probably worth pointing out that your question contains a false premise. I have never at any time been 100% certain of any particular price neither have I claimed to be. You preceding statement is accurate and I agree with this entirely: "there are plenty of good reasons for the stock to double this year. I think there is a very high chance events in Tesla will unfold as you have predicted. It's not hard to see".

As regards to the multiple, multiple of what? In my opinion the only valid multiple relates to a DCF analysis (with correct assumptions which basically never happens because the correct assumptions are too scary unless you either happen to value honesty over looking like a fool or you happen to be a billionaire running the company with a long history of doing things that people cannot bring themselves in advance to accept is the normal output of the kinds of inputs and strategies that have gone into these ventures).

As for the $380 to $400 PT in Q4. This is predicated on a number of things and it very much includes a reckoning of net market sentiment (assuming that is what you were getting at with multiples). It also includes a reckoning of Tesla's cash flow profile for the year and when that has peak good looks. It includes a factor for restoration of faith in guidance. It includes a quotient of upset for a huge block of shorts. It includes the likely behavior of Wall Street in preparation to align with Tesla for expansion funding. It includes a factor for macro economics. It certainly includes foresight of the consumer market reaction to the Model 3 (and does not contain hubris regarding stock market reaction which may very well trade flat if not sell on the news). It anticipates Model X ramp the way it actually is and its effects both in terms of business performance and market reaction by Q3. It is predicated upon Q3 reveal of very strong Q2 Model 3 reservation numbers and the preceding media reaction to frenzied consumer reservation action. It contains a "Musk" credibiity factor based on Falcon Heavy and repeated SpaceX landings. It contains a factor For the Gigafactory Launch event (probably April) and a steady ramp of good news regards Tesla Energy. Also the upset of bearish hopes that the GM Bolt and others represent plausible competition. Finally it contains the notion that getting to numbers like $380 to $400 will most probably be momentary if they occur and mark the top of a subsequent slide. I do not expect Long support at these levels in 2016. $300 - $320, possibly. The extra $60 - $100 is viewed as the top of a short squeeze on margin calls at the peak of a Wall Street stock promotion campaign leading into a fundraiser to accelerate Model 3 production capacity to 500,000 sooner than 2020 and beyond 500,000 units annually by 2020.

Risk factors: Things like Trump pitching a stock market bubble and depression like economic conditions under Obama as a campaign talking point. Nothing material that does not come under the heading of acts of God which exist for everything at all times from investing in stocks to crossing a street.

I have questioned your..my words...'over the top'..predictions before as they did not have any of the qualifiers that I see in this post^^ (highlighted areas). While I still do not believe we see $300 this year (hope I am wrong), I do agree that if all the issues you reference line up correctly ( big IF ) I do see a path to some good gains in TSLA.

Thanks for putting in the 'qualifiers'

 

[sub]

So would you say that your i3 is a 10g car based purely based on the fact that in some dimensions it is smaller than a Nissan Versa and that you are an idiot for spending 30 g's to much? I don't think Julian is being attacked at all, if his posts are incorrect, he should be corrected.

First off, read my post again. I said I LEASED the i3 because I would never buy a car like it for what they are asking. Sticker on the i3 was ~52k, I also have a BMW 335d that had a sticker price of ~52-55k so I have the presumed comparable car for model 3. Let's compare the i3 to the 335d shall we? The i3 is smaller, only seats 4, has suicide doors which some idiot engineer decided to make a bigger pain by attaching the front seat belt to the door, in order to let a rear passenger out, like dropping my daughter off for school etc, the front passenger has to unbuckle and open their door so the rear door can then open. The i3 is slower (0-60 ~7.2) than the 335d (0-60 ~5.2 sec) also. The short wheel base of the i3 and lighter weight makes the car dance all over the road at highway speed, 335d destroys highway miles. I can drive the 335d anywhere I want, I can't drive the i3 past my county line unless I want to tow it home with a dead battery. I could probably add a few more things. Why did I lease it? Because I'm a greenie, period. I charge it with my solar so it is 100% clean. If my 335d is a 52k car, the i3 is a 20k car, period.

I have been disappointed with the failure of TM/EM to meet guidance recently so while we do know the things you listed will happen we don't know 'when' they will happen and how smoothly they will happen. When TM/EM start showing they can execute is when we will see 'good' financials and a short squeeze of some consequence (IMO).

I was VERY encouraged by Wheeler, the new CFO. IMO, if he can pull this off and get us to 'good' 2016 financials I would like to see him be COO. He looks like a man that can deliver the steak..:wink:

well said, completely agree.

I'm going to get shot down for saying this but I'm going to say it anyway. In your own rational self interest why don't you quit spewing fear about your own stock holding? That goes for @Amped Realtor too.

You will be in the money by May at the latest or I will eat my unwashed socks and send you the video to prove it.

Ill start by saying I really hope your correct. That being said, let's set some ground rules.
1). What type of sock are we discussing? Ankle, tube, wool?
2) are condiments allowed? I'm ok with this, a dry sock might be tough to get down.
3) if this happens it has to be a live event, we will need to have a live meetup.

@ Dreamingof3 - You don't want to be this guy!
(I don't know where this cartoon came from. I thought it was funny and saved it a while back).

hilarious and so true. I said not long ago that the market is as much about emotions as it is numbers. If you can't control the former, the latter is irrelevant.

Interesting post from Model X threads:
Any Signature Model X owners NOT receive their car yet? - Page 16

It says the VIN is supplied about 5 weeks before delivery. So lets see what VIN gets assigned by 2/25 which is 5 weeks before 3/31. I would add all VINs and multiply by 80% to get a guesstimate for end of Q deliveries. The highest Founders, Signature, and Production VINs issued so far are 63, 897, and 1101. There were 6 Model X delivered in Q3 and 208 delivered in Q4. So it looks like the total vin count is 63+897+1101=2061 and then subtracting the 2015 delieveries 2061-214=1847 and then just because it seems to sometimes work for the Model S I would multiply by 80% and make a guess at 1478 deliveries are likely as of right now. If another 200 VINs show up next week I would predict almot 1,700 Model X deliveries. So lets see if that ends up being accurate at all.

The issue with this is the ramp is not expected to be linear. However, I think this can be used to set a bottom number. I'm too lazy to do the work so I'll go with your 1478 as a worse case for now.

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For some reason I can't edit prior post. I forgot to add in my i3 v 335d comparison, change i3 to Bolt and 335d to Model 3 and ask yourself if you're willing to pay anywhere near the same price for those cars? Yeah, the bolt will be able to go 50 miles farther from home than the i3 before turning around...yipee. The bolt is a model 3 killer, laughable, but the shorties are hanging onto that fallacy pretty hard.

 

[lango]

I think there is too much skepticism towards Tesla and TSLA to reach over $300 this year. It takes research to come up with the result of TSLA being undervalued, and the less research that is done the more overvalued it appears to be. The overvaluation case is based on normal financial metrics and also by comparing it to the auto sector and not recognizing how management is better than the competition, the difficulties for competition to handle the transition and Tesla's head start.

The bear/overvaluation case is still intact for the bears and there is a large number of market participants that are neither bear or bull. The only thing that has changed for them the last month or so is that Model X does seem to be rampable. The next thing would be that there is indeed a lot of demand for Model 3. But there is still plently of points left that Tesla need to prove the negatives wrong about.

I also don't expect the market to finish green for the year by a large margin so that would add to Tesla not reaching $300, too.

 

[McMuggets]

I haven't retracted it either. Nothing has changed since I pointed out the reasons for it. All that has happened since is that some of the legs of that thesis have been verified. The dramatic post Model X development cost dip in TSLA is cancelled out by the short interest (borrowed shares that need to be paid for). That short interest is a fair proxy for $5 billion of market cap in reserve if it could all be bought back at $165, and it can't be. It's a market cap reserve of at least $10 billion before that debt is settled in competition with itself plus some more $billions of market cap generated in competition with Long purchasing following a significant upside catalyst of which there is an unending bounty laid out this year that only a state of denial can be blind to. Never underestimate the power of denial. Purists will argue that this is not a strict definition of how market cap works but with TSLA this is as close an approximation required to make sense of it.

I follow your line of thought here. I think you're right actually... because of the huge short interest, there is no way they can buy back all those shares to cover... barring some sort of cataclysmic event for Tesla to bring it into bankruptcy, the unending 2016 developments (Model X ramp, Model 3, Gigafactory, market share penetration) will squeeze these borrowed shares so hard. Literally, TSLA could be ready to pop a lot higher in a tsunami of hurt. Buying interest from new players has got to be piqued too.... where will the shorts get their shares to cover?

 

[Julian Cox]

I have questioned your..my words...'over the top'..predictions before as they did not have any of the qualifiers that I see in this post^^ (highlighted areas). While I still do not believe we see $300 this year (hope I am wrong), I do agree that if all the issues you reference line up correctly ( big IF ) I do see a path to some good gains in TSLA.

Thanks for putting in the 'qualifiers'

Welcome. I could be entirely wrong but I think that would defy reason including reasoned analysis of forward looking market sentiment.

 

[larmor]

I think market is looking for profitability. TM stated this as a goal for this year. I believe they will do this b/w energy sales and delivery of MX.

 

[MitchJi]

BMW is very serious about BEV cars. Relative of mine that works for corporate owned dealer (yup, there is such thing in Canada), mentioned that they have corporate training sessions or alike with 'electrify or die' message.

BMW is serious about PHEV cars. In other words they are spending their money, based on the mistaken belief that batteries for cars will continue to be too expensive for practical BEV's for quite a while.

Secondly, Tesla Energy. I am reasonably convinced that Tesla Energy (at least the timing of it here in 2016) is the product of excess pre-silicon anode 18650 cell inventory. It does not matter that this year this is a relatively low margin exercise. It does not matter that the market in 2016 is limited to special economic cases for PowerWall in South Africa and Australia and maybe Germany and to pilot projects and partially incentive funded exercises for Power Pack.

Good luck.

Julian.

AFAIK the 10 kWh Powerwall cells are the same cells as those in the S/X
Most cells for Tesla Energy including all PowerPack are MNC [NMC typo corrected by Mitch], not the NCA types used in Model S/X. So I doubt that much excess pre-silicon anode 18650 cell inventory will be used for Tesla Energy.

Very nice catch Matt! But not completely correct:
Tesla Motors (TSLA) CEO Elon Musk on Q1 2014 Results - Earnings Call Transcript | Seeking Alpha

Elon Musk (Chairman and CEO):
There are two applications which are quite different. One is backup power, or peak-up -- the equivalent, on a utility scale of like a peaker plant, which is a high-energy application. And there is the daily cycler application. There are different chemistries, depending upon what you have.

The backup power chemistry is quite similar to the car, which is a nickel cobalt aluminum [NCA] or a cathode. The daily cycling control constituent is nickel manganese cobalt [NMC]. It's quite a lot of manganese in there.

One is meant for, call it maybe 60 or 70 cycles per year. And the other one is meant for daily cycling -- daily deep cycling, so it's 365 cycles a year. The daily cycler one, we expected to be able to daily cycle for something on the order of 15 years. Obviously warranty period would be a little bit less than that. We expected to be something that's in the 5000-cycle range capability. Whereas the high-energy pack is more like around the maybe, depending on how it's used, anywhere from 1000 to 1500 cycles. They have comparable calendar lives.

Quite similar to, not identical to. And the NMC Cells used for daily cycling are not even close. So there are ZERO excess pre-silicon anode 18650 cells made for the MS-MX that match the specs for the TE Cells. And I believe that 2016 TE Margins will be in the 20-25% range.

 

[ScepticMatt]

Source? I haven't heard this, and I'm guessing M3 will be more like 230 miles EPA for the 55kwh base model and 300miles for the 75kwh higher model.

Thinking about it more I'm not so sure anymore. I just saw third party mention 5000 cycle life and the powerpack inside showing 15 module banks.

 

[lango]

BMW is serious about PHEV cars. In other words they are spending their money, based on the mistaken belief that batteries for cars will continue to be too expensive for practical BEV's for quite a while.

There will be a lot of investment in PHEV and the tech will be short-lived for mass market cars, at most 10 years. So the big auto that skips PHEV and go directly to BEV I think will do the right decision, but looks like no one is going to do that.

Now for performance cars PHEV will be used longer as BEV is not working well for that yet. Model S is not really workable on a track.

 

[Irishjugg]

Dont confuse gross margin with net income. Tesla will likely not sustained positive ne income on a GAAP basis until full production of the M3 and the market is willing to accept that. I do agree that they won't be valued at less than 2x LTM revenue for at least 5 years.

I know that, but that's my fault for not saying I'm being super simplistic and ignoring SG&A, Capex, etc. Appreciate YOY pointing it out for the thread though.
Been one hell of a busy day.

 

[Spidy]

There will be a lot of investment in PHEV and the tech will be short-lived for mass market cars, at most 10 years. So the big auto that skip PHEV and go directly to BEV I think will do the right decision, but looks like no one is going to do that.
Now for performance cars PHEV I think will be used for longer as BEV is not working well for that yet. Model S is not really workable on a track.

They don't have 10 years to comply with fleet emission regulations. They probably expect PHEV cars to be a much easier sell.

Also I'm not sure why people think there is so much special PHEV tech. Battery-Inverter-Driveunit a lot of that stuff is very similar to EVs.

 

[lango]

They don't have 10 years to comply with fleet emission regulations. They probably expect PHEV cars to be a much easier sell.

Also I'm not sure why people think there is so much special PHEV tech. Battery-Inverter-Driveunit a lot of that stuff is very similar to EVs.

You are absolutely correct. The PHEV push for the next generation of platforms is because of regulations to a large degree.

 

[maoing]

IMO, 2000 model X needed to meet Q1 16000 delivery guidance. Q4 model S production rate is 14000 which I believe it's hard to be improved much in Q1. In order to have surprise Q1 delivery #, we need 3000 model X delivery.

Interesting post from Model X threads:
Any Signature Model X owners NOT receive their car yet? - Page 16

It says the VIN is supplied about 5 weeks before delivery. So lets see what VIN gets assigned by 2/25 which is 5 weeks before 3/31. I would add all VINs and multiply by 80% to get a guesstimate for end of Q deliveries. The highest Founders, Signature, and Production VINs issued so far are 63, 897, and 1101. There were 6 Model X delivered in Q3 and 208 delivered in Q4. So it looks like the total vin count is 63+897+1101=2061 and then subtracting the 2015 delieveries 2061-214=1847 and then just because it seems to sometimes work for the Model S I would multiply by 80% and make a guess at 1478 deliveries are likely as of right now. If another 200 VINs show up next week I would predict almot 1,700 Model X deliveries. So lets see if that ends up being accurate at all.

 

[chickensevil]

Guys, this really isn't that complicated.

The GM Bolt is a $17.5K GM Sonic with an unremarkable-performance $20,000 LG electric drivetrain and unremarkable LG infotainment system.

Just to provide visual reference to this statement (which should help show what he is talking about):

Bonus points if you can tell at a glance which interior is to the Bolt and which is to the Sonic!

I will note that the seats look *slightly* nicer in the Bolt photos vs the Sonic (go look them up if you like), but they both still appear to be textile seating.

IMO it seems reasonable to expect at least one Model 3 reservation for every Model S currently on the road. Tesla's primary advertising is word of mouth from happy customers, and it's a freakin refundable $1K deposit. 100K+ in short order following the reveal I'd say. The Model S blew away cars in its class (especially the high performance version), and I expect the same to be the case with the Model 3.

To clarify, I wasn't saying that they couldn't get (as you are suggesting ~150k reservations) 500k or more reservations, just simply that it would take a large number for it to be visibly obvious on the ER cash lines for deposits that it was largely impacted by the M3 and then it would be difficult to derive a number from that even still due to being mixed with other deposits. I also actually think the numbers will be very good, good enough that they will happily blurt it out on the ER at the latest how good those numbers are and then there will be no need for guesswork

That math doesn't check out. a 300 mile pack needs to be >50% larger than a 200 mile pack to account for 50% longer range and a larger vehicle mass.
I doubt that Tesla can hit 200 mi "usable range minimum" with a 50 kWh pack, but even if they did they would need more than 75 kWh to hit 300 mi range.

Ahem... the Roadster was only a 53kWh pack and it goes well over 250 miles of range. Yes that thing only weights in at like 2,500lbs, but the M3 will *NOT* weight the 4,500-5,000lbs that the MS does. I would guess it will come in at 3,000-3,500, which should be good enough to make a 50kWh pack (especially with really good drag coefficients, which the roadster didn't particularly have, mind you... that worked against the roadster more at 55MPH than hauling around its weight). go 200 miles or more of range. I would also not be surprised to see the top range model come in at 70-75kWh to get up to the same ~280 miles that you can get in the Model S. Of all the things they will be happy to leave in the model S, range (the biggest negative on an EV you can have) is not going to be one of them. They are going to come out swinging for the fences on range with the M3 as people are constantly hounding Tesla on the current 280 miles of range you can get today as "not enough".

 

[Fallenone]

The spike at close was for block trades based on options. Today is the monthly option expiration date.

Captain, I'm caught in an upward tractor beam and I can't shake it!

View attachment 111900

Edit: Looks like the Klingons (shorts) don't want TSLA to close above its starting point today. The market-makers vs. shorts tug-of-war is on

View attachment 111901

Well, the shorts won the tug-of-war by a smidgen, but all-in-all it was a good week. TSLA closed down $0.19 for the day but shortly afterwards was trading above 167 in after-hours. Don't believe in SP manipulation? Check out the volume and you will see a spike right at 4:00pm, likely intended for 3:59pm.

 

[BornToFly]

Wow! That Bolt interior could not look any cheaper. The plastic and general design are terrible. Hard to believe that interior is for a car costing more than $15,000. What a turd.

 

[ggies07]

Wow! That Bolt interior could not look any cheaper. The plastic and general design are terrible. Hard to believe that interior is for a car costing more than $15,000. What a turd.

Not only that, but the interface of the screen looks like a toddler toy compare to Tesla's. Should be so much nicer for $37,500.

 

[woof]

Ahem... the Roadster was only a 45kWh pack and it goes well over 250 miles of range.

I think you meant to write the Roadster has a 53kWh battery pack.

 

[chickensevil]

I think you meant to write the Roadster has a 53kWh battery pack.

Oops... not sure why I was thinking 45... where did that come from? I have corrected the post. I think my point still has merit though given their stated goal of "at least 200 miles" and the roadster went considerably farther than 200.