Short-Term TSLA Price Movements - 2016

[TrendTrader007]

Dave, shorts often make comments like these:
1. SolarCity's management can not be trusted;
2. The intent of the merger is to save SCTY from spiral death;
3. Buying SCTY is bad for Tesla;
4. There is a decent chance the merger will not go through, SCTY would bankrupt;
5. Elon should step down;
......

Now I found you started to make these comments. It's kind of interesting. Did you somehow got yourself into a short position?

Actually what Dave T is saying makes perfect sense assuming SCTY has more toxic debt than it portrays and/or management that can not be trusted. Just because I'm long a company does not mean that I become a blind cheerleader. Healthy skepticism always is good
As an example I thought Mark Z had lost it when he paid $19B for Whatsapp. Turns out he was right and I was wrong and despite my skepticism I made 37% return on FB in a year
A similar situation faces TSLA and I've learned to trust the CEO
I have no clue about SCTY but since I hold significant stake in TSLA I'm prone to give Elon the benefit of doubt. In any case what I or any of the individual investors want or think has zero bearing on the outcome since it's the deep pocketed institutions holding millions of shares who decide the outcome of this proposed merger

 

[bh1783]

My view on Mobileye: the bottom line is Mobileye failed to see big objects on the road. In the current system, that part is done by Mobileye. Then Tesla's software will decide what to do with the objects.

Tesla didn't want to start a blaming game, they took the blame, worked hard to find a radar solution.

But Mobileye is concerned the industry will find out anyway: that the Mobileye system has fatal flaws. So Mobileye decided to blame Tesla first. Of course Mobileye is also angry that Tesla is developing their own system. Just my speculation.

I didn't invest in MBLY early on because of this reason: Tesla can not rely on a sole supplier for such an important feature. (What if MBLY is too slow, what if it is acquired by an ICE company, what if MBLY decides to triple their price?) Of course Tesla would develop their own system, and once they start, they are highly likely to have the best system in the world.

MBLY will be the next GPRO, hard to base a $10 billion company on a single accessory that can be easily replicated by someone else.

 

[Krugerrand]

I think Musk knows what he's doing and I think his timing is correct. It's risky, but when has Musk been anything OTHER than risky?

It took me a while to work it out, but if he plays his cards right, the acquistion of SolarCity is actually reasonably-priced non-dilutive financing for Tesla's Model 3 ramp. Tricky to execute but very doable.

I personally think the Model 3 ramp per se is well in hand. Service centers are another matter entirely, of course.

You just haven't had enough time to work out the service center issue, yet. But I have faith.

 

[AudubonB]

What???? No NVDIA.

Oh yes, boatloads of it. But not germane to the day's activities.

 

[anticitizen13.7]

flooding

MBLY will be the next GPRO, hard to base a $10 billion company on a single accessory that can be easily replicated by someone else.

That is the key question where it comes to Mobileye's EyeQ systems: how replicable are they? I honestly don't know.

If Tesla can develop a better system in-house in a short time, then I'd say Mobileye could be in trouble. George Hotz seems to think he can beat both the Tesla team and Mobileye with just himself and a few pals. Mobileye's "moat" is their algorithms plus a power-efficient ASIC to run those algorithms. One reason I bet on MBLY rather than NVDA was that I felt nVidia's hardware was far too power hungry. George Hotz' take has been that Mobileye's algorithms are primitive and based too much on orthodoxy.

Where TSLA is concerned, development of an in-house visual processing system would probably have a mild positive effect on share price, as it would remove one question/unknown from the future of the Autopilot system and Tesla's ability to stay ahead of the competition.

 

[Intl Professor]

One reason I bet on MBLY rather than NVDA was that I felt nVidia's hardware was far too power hungry.
snip

Is that characteristic of the recently announced "brains" for AP?

 

[RobStark]

Actually what Dave T is saying makes perfect sense assuming SCTY has more toxic debt than it portrays and/or management that can not be trusted. Just because I'm long a company does not mean that I become a blind cheerleader. Healthy skepticism always is good

Healthy skepticism is good.

Implying Solar City Chairman Elon Musk and the rest of the Solar City management team is criminally corrupt or criminally negligent is a bridge too far.

Believing that Musk and Lyndon Rive are not criminally corrupt nor criminally negligent does not make one a blind cheerleader.

 

[DaveT]

Dave, shorts often make comments like these:
1. SolarCity's management can not be trusted;
2. The intent of the merger is to save SCTY from spiral death;
3. Buying SCTY is bad for Tesla;
4. There is a decent chance the merger will not go through, SCTY would bankrupt;
5. Elon should step down;
......

Now I found you started to make these comments. It's kind of interesting. Did you somehow got yourself into a short position?

Rather than focusing on my investment position (which I even stated earlier but somehow you missed it), why don't you focus on the arguments at hand. To be honest, I don't even follow what SCTY shorts say. My thoughts come from years of following SCTY and their recent earnings and merger filings.

So, no need to try to make me out as a short. Rather, why don't you try proving 1) that SCTY management has proven itself trustworthy, 2) SCTY's business model is solid, and 3) SCTY finances are so solid there is no risk of bankruptcy if the merger falls through. I've already stated my position and all the reasons in multiple posts with extensive writing. Now it's your turn. Balls in your court.

 

[DaveT]

Dave T is not short TSLA. He is successfully, IMO, bringing to light alternative possible realities to a group that generally does not take anything even remotely 'negative EM/TM' well. As they say in Massachusetts, DaveT is 'wicked smart' and very analytical.

Keep posting DaveT, this forum needs your input.

Thanks, Al. Good investing requires looking at things from all different angles and accessing probabilities to various risk scenarios, both upside and downside. Just trying to help folks and this board from becoming too much of an echo chamber, but maybe the effort is futile.

 

[DaveT]

You know that Elon is part of SCTY management? You argument is either that:
1. SCTY management, Elon included are dishonest scumbags?
2. SCTY management are dishonest scumbags, and Elon is gullible and foolish enough that they fooled him and Jason, and everyone else Tesla hired to do due diligence?

I think your caution is admirable, but in this instance I believe it's way over the top.

For clarification purposes, when I say SCTY "management" I mean their CEO and his team. I consider Elon, as chairman, more of an advisor that's not very active in the day-to-day of the company.

Why is my argument only boxed into those two options? Why can't it be "I don't find SCTY's management trustworthy and I think they could be understating the magnitude of SCTY's liabilities, whether it's intentional or not".

To counter this argument, it's quite simple. Folks just need to show evidence of why SCTY's management is trustworthy and clear evidence that SCTY's finances are thoroughly transparent.

Why are you concerned with competition? For the foreseeable future compelling, long range EV's don't need to be concerned with competition. ICE car makers and makers of uncompelling EV's are the ones who should be concerned. The LEAF is an example of an uncompelling EV.

I agree with many of your positive, anti fan boy GM Bolt posts, but I think that GM is the company that should be concerned. Do you think that the Bolt is competitive with the M3? Beyond that do you see any signs that GM has any clue that they are not competitive, or how to tackle the problem? GM's problem isn't that they can't build a decent EV for ~$35k. Their problem is they lack the vision and ability to build a great $35k car that happens to be an EV. This probably dies not matter, because the market for decent EV's is huge enough, but I believe that a TSLA investor absolutely has nothing to worry about in terms of competition.

I made a mistake on GM's pack cost, it's about $210kWh, not $245kWh. But LG Chem has definitely not proven that they can build cells or packs at a price that is competitive with GF prices. Scale isn't the only reason, or even the main reason for the GF related price reductions (I intend to explain this more completely when I have more time).

I don't understand why I'm the only one on this board (or at least it seems from the post), that is impressed by LG Chem's cell costs ($145/kWh). The pack costs ($210/kWh) are completely speculation based on one ex-GM engineers thoughts. So pack costs could even be cheaper than that, or it could be more expensive. But what we do know is cell costs is $145/kWh, which is much lower than most expected. And it's quite close to what Tesla's costs are right now. Sure, GF will lower costs significantly, but then again all the major battery players have aggressive plans for their own large battery factories. I think it'd be well-served for folks to do their due diligence on BYD and their battery capacity and future plans, as well as LG Chem and Samsung SDI. They will also benefit from economies of scale as EV demand grows.

And how many times do I need to state that I don't think the Bolt is competition for Model 3? I think I must have stated that already five times(?) or more already.

It's not about the Bolt... actually I won't repeat myself. Just read my past posts.

I've love to hear your reasoning on why you think economies of scale won't be the main reason for GF cell cost reduction. Because that seems to go against what Tesla has been saying.

 

[MikeC]

Dave, I think most of us who have been following you for a while know that you put a lot of thought into this stuff and are just telling it like you see it. I appreciate you sharing your view, even while hoping you're wrong.

 

[DaveT]

Actually what Dave T is saying makes perfect sense assuming SCTY has more toxic debt than it portrays and/or management that can not be trusted. Just because I'm long a company does not mean that I become a blind cheerleader. Healthy skepticism always is good
As an example I thought Mark Z had lost it when he paid $19B for Whatsapp. Turns out he was right and I was wrong and despite my skepticism I made 37% return on FB in a year
A similar situation faces TSLA and I've learned to trust the CEO
I have no clue about SCTY but since I hold significant stake in TSLA I'm prone to give Elon the benefit of doubt. In any case what I or any of the individual investors want or think has zero bearing on the outcome since it's the deep pocketed institutions holding millions of shares who decide the outcome of this proposed merger

Yep, I share this perspective.

 

[DaveT]

Okay, I will really need to devote more time over the weekend to come up with various probabilistic scenarios but here is my quick take:
I expect TSLA to start going up big time right from here. Don't ask me why, it's just my trader's intuition (although I'm sure I can come up with several technical reasons if I try)
The move up has already started and it will pick up steam starting next quarter and thereafter I expect TSLA to begin a meteoric ascent into the stratosphere for at least the next 4 quarters that is well into Q3 2017
Assuming all this plays out as I suspect, this is the time to establish long term position in TSLA before the end of September 2016 in order to realize long term capital gains in taxable accounts
I'm seriously considering selling my highly profitable FB call options that I already have long term capital gains in, which I have held since July 2015 and putting the proceeds in TSLA stock ( not J 2018 calls even though I have tons of those already) why? Because I do not like putting a time limit on my TSLA position. J 2018 is cutting it too close and in any case if TSLA takes off as I suspect it will then my huge position in common will be quite satisfactory
We'll see
There is many a slip
Between the cup and the lip

What's interesting is I hold your scenario as having very good odds. That's one of the reasons I'm super-aggressive long. I think there's a good chance that TSLA does pop to $400-500 within the next 1-2 years. And it's entirely possible that the rise could start now.

There's always multiple possible scenarios at play, with various odds and probabilities. That's why I can hold super bullish scenarios as well as very bearish scenarios at the same time. It's just I attribute different odds to different scenarios. I'm long a stock if the super bullish scenarios probabilities far outweighs the very bearish scenarios. But I also get concerned when the very bearish scenarios start to pick up some steam... as it makes me rethink my very bullish scenarios and have to re-evaluate my position.

 

[Fallenone]

For clarification purposes, when I say SCTY "management" I mean their CEO and his team. I consider Elon, as chairman, more of an advisor that's not very active in the day-to-day of the company.

Why is my argument only boxed into those two options? Why can't it be "I don't find SCTY's management trustworthy and I think they could be understating the magnitude of SCTY's liabilities, whether it's intentional or not".

To counter this argument, it's quite simple. Folks just need to show evidence of why SCTY's management is trustworthy and clear evidence that SCTY's finances are thoroughly transparent.



I don't understand why I'm the only one on this board (or at least it seems from the post), that is impressed by LG Chem's cell costs ($145/kWh). The pack costs ($210/kWh) are completely speculation based on one ex-GM engineers thoughts. So pack costs could even be cheaper than that, or it could be more expensive. But what we do know is cell costs is $145/kWh, which is much lower than most expected. And it's quite close to what Tesla's costs are right now. Sure, GF will lower costs significantly, but then again all the major battery players have aggressive plans for their own large battery factories. I think it'd be well-served for folks to do their due diligence on BYD and their battery capacity and future plans, as well as LG Chem and Samsung SDI. They will also benefit from economies of scale as EV demand grows.

And how many times do I need to state that I don't think the Bolt is competition for Model 3? I think I must have stated that already five times(?) or more already.

It's not about the Bolt... actually I won't repeat myself. Just read my past posts.

I've love to hear your reasoning on why you think economies of scale won't be the main reason for GF cell cost reduction. Because that seems to go against what Tesla has been saying.

On the LG Chem, I think $145/kWh was the bundle price given GM sourced a number of other components to LG, like infotainment and other electronics, etc. It's not a price people can just ask and get. LG was pretty upset after GM leaked this price in one of their presentation slides for this reason. But yes I agree, they're doing pretty well.

On the BYD, I'm not sure why you think of them this highly. Yes they are building a GF of their own. But the technology they are using is LFP based. Pretty much the worst form of Li battery technology out there. As a result, specific energy, consistency, longevity, and even price, are not competitive. For their BEV e6, it has less than 200 miles for 75 kWh; the power output is limited because of both heating and consistency issues; BYD owners report they lose 20% of the battery capacity in about a year; pack cost is about $300/kWh

 

[DaveT]

That just reads as expressing doubt for the sake of doubt. You have:
1) assumed that there's a recession next year (reasonable risk scenario)
2) assumed that the model 3 gets delayed (also reasonable risk scenario, but only an issue when a subset of the above)
3) assumed that the model S/X sales aren't enough to pay for operations (same exceptions as #2)
4) assumed that SCTY management isn't trustworthy (reasonable risk scenario, but very difficult to justify)
5) assumed that SCTY debt is worse than they've admitted (is a subset of #4, because trustworthy management isn't going to give you bad debt numbers, but UNtrustworthy management CAN still give you honest debt numbers)

The scenario you're worried about requires several [mostly independent] risk factors to occur _in combination_ before its a viable scenario. I just can't agree to the amount of weight you've given SCTY's debt.

Every future scenario, even the bullish ones, have their own assumptions. So assumptions aren't bad as long as one realizes that that's what they are. Assumptions have risks because we don't have all the info, and we never do about the future.

Regarding the assumptions you laid out, I'd say #3 really isn't much of an assumption since I don't think there's any way Model S/X sales are going to pay for Tesla operations when they're investing heavily into Model 3, unless S/X sales go crazy through the roof and like double. Even Elon admits, Tesla doesn't expect to be cash flow positive again (not including this quarter) until after the Model 3 is in full production.

And your #4 and #5 can be grouped together as just #5.

So, we've got three main assumptions going here:
1. there's a chance of a recession next year
2. there's a chance the Model 3 gets delayed
3. there's a chance SCTY debt is worse than their management has let on.

Now if you look at those assumptions, I don't think any of them are really out of line. They actually sound fairly sound (at least to me).

The real issue is what are the "chances", meaning what are the probabilities. What many people here seem to do is immediately discount anyone who brings up certain risks. But the three risks above are important risks to evaluate because I think they are legitimate risks that every investor in TSLA should not only be aware of but weigh themselves. For some, they might see the risks of all three as negligible. But for others, the risks might be more substantial. But I think it's probably not wise to claim that there are no risks with any of those 3 risk factors. (For example, who would like to argue 1) there's no chance of a recession next year, 2) there's no chance the Model 3 gets delayed, and 3) there's no chance SCTY debt is worse than their management has let on?)

I think with #1 and recession, that we could debate all day and we probably wouldn't get very far. Nobody really knows what the odds are. So each person needs to make up their own mind.

With #2, again nobody knows if the Model 3 will be delayed. But I don't think I'm out of line when I say that I don't think production will start before August 2017, and I don't think Tesla will produce 100-200k Model 3s in 2017 as Elon says they hope to. I think it will be far less than 100k, as ramping a new vehicle likely will have more challenges than expected.

For #3, it's up to each person to make their judgment call on the trustworthiness of SCTY management and the quality of their debt/liabilities. Besides Neroden (and maybe a couple others), I haven't heard many people try to defend SCTY's debt/liability as non-toxic, and even with Neroden, I don't think he's really proven to me that their debt/liability is a non-issue to Tesla. I think it does affect Tesla, the question is how much. And that's difficult to know, especially when SCTY's finances are as muddled as they are.

 

[SBenson]

Healthy skepticism is good.

Implying Solar City Chairman Elon Musk and the rest of the Solar City management team is criminally corrupt or criminally negligent is a bridge too far.

Believing that Musk and Lyndon Rive are not criminally corrupt nor criminally negligent does not make one a blind cheerleader.

Musk has repeatedly said in many interviews over the course of many years that he has a very passive role in SCTY. He spends only a few hours a quarter "just showing up for the board meetings just to receive the good news" (good progress). Those are Musks very own words, not mine. See ANY feature length interview on YouTube.

I believe Lyndon Rive did a very good job of presenting everything in the best light through bullshit presentations and number gimmickry. Musk is way too busy to weed through this garbage and figure the truth.

I have repeatedly stated that SCTY management is deceptive over many quarters in SCTY thread. Nowhere did I think or imply that Musk is part of it. The buck stops with Lyndon Rive.

I believe @DaveT is saying the same thing now... To my credit, much later

 

[DaveT]

What about Tesla energy? TSLA isn't ONLY about the model 3. The Secret Master Plan #2 needs solar panel integration with its batteries as well.

Sure, I'd love Tesla to do it all. But I also know sometimes it's wise to build things one block at a time. I'd love for Tesla to nail the Model 3. Let it get to full production by mid 2018. And then, let's start talking about dominating solar energy/storage.

 

[Zhelko Dimic]

Actually what Dave T is saying makes perfect sense assuming SCTY has more toxic debt than it portrays and/or management that can not be trusted. Just because I'm long a company does not mean that I become a blind cheerleader. Healthy skepticism always is good
As an example I thought Mark Z had lost it when he paid $19B for Whatsapp. Turns out he was right and I was wrong and despite my skepticism I made 37% return on FB in a year
A similar situation faces TSLA and I've learned to trust the CEO
I have no clue about SCTY but since I hold significant stake in TSLA I'm prone to give Elon the benefit of doubt. In any case what I or any of the individual investors want or think has zero bearing on the outcome since it's the deep pocketed institutions holding millions of shares who decide the outcome of this proposed merger

Oh man, I can't stay quiet over this one.

You see, you didn't trust Zack, but I was in FB stock when that happened, and I was certain at the time, it was brilliant move.
I was as certain, as I was certain SCTY merger was crappy move when it was announced.

Zuck had house in order, executing like a machine, highly profitable, and was looking to expand into new opportunities. He had bandwidth to handle new challenges, and massively successful leadership of whatsapp to leave in place to lead. Whatsapp managed to get to 400M users, with 42 engineers. Zuck could offer them engineers, powerful and cheap data centers, software tools they never would have had time building on their own. He could let them do what they do best, and enable them to do it better. That's synergy.
And what about SCTY? Elon wants to take them in, so he can have one more thing on his plate? At the time when Tesla failed to execute on number of quarters, and whole company is bet on Model 3? And SCTY has whole slew of issues that only now come to light with the S4. It seems to me Elon is saving Elon's shareholders(institutions invested in both TSLA and SVTY) at the expense of Tesla shareholders. And these two groups of people are NOT the same.
When Tesla gets into kind of situation like FB had, with clean house, and is more than 12 months until next capital raise, I would be delighted if it were to look into new markets and opportunities...

Unrelated, someone help me understand, what was SCTY's contribution with closing deal for 20MW/80MWh system?
And is 80MWh equal to capacity of 12,500 power walls? How many sales persons does it take to sell 12,500 power walls?

@DaveT - thanks for the input, I was starting to think that balance cannot be restored to this forum, and that it would become less useful place to visit.

Now, let the 'Dislikes' fly!!! I'm not coming back to answer, unless very, very seriously provoked

 

[DaveT]

Musk has repeatedly said in many interviews over the course of many years that he has a very passive role in SCTY. He spends only a few hours a quarter just showing up for the board meetings "just to receive the good news" (good progress). Those are Musks very own words, not mine. See ANY feature length interview on YouTube.

I believe Lyndon Rive did a very good job of presenting everything in the best light through bullshit presentations and number gimmickry. Musk is way too busy to weed through this garbage and figure the truth.

I have repeatedly stated that SCTY management is deceptive over many quarters in SCTY thread. Nowhere did I think or imply that Musk is part of it. The buck stops with Lyndon Rive.

I believe @DaveT is saying the same thing now... To my credit, much later

I picked up that SCTY management was not very capable a couple years ago, but I reasoned that Elon was the ultimate mastermind and that he could fix SCTY. I just didn't expect him to try to fix SCTY at the expense of TSLA.

If the SCTY merger does go through, I really hope Lyndon is let go of. If Lyndon becomes SVP, Tesla Energy... then that would be beyond terrible for TSLA, IMO. I would have to consider liquidating a lot of my position at that point.

 

[vgrinshpun]

I don't understand why I'm the only one on this board (or at least it seems from the post), that is impressed by LG Chem's cell costs ($145/kWh). The pack costs ($210/kWh) are completely speculation based on one ex-GM engineers thoughts. So pack costs could even be cheaper than that, or it could be more expensive. But what we do know is cell costs is $145/kWh, which is much lower than most expected. And it's quite close to what Tesla's costs are right now. Sure, GF will lower costs significantly, but then again all the major battery players have aggressive plans for their own large battery factories. I think it'd be well-served for folks to do their due diligence on BYD and their battery capacity and future plans, as well as LG Chem and Samsung SDI. They will also benefit from economies of scale as EV demand grows.

Because it is $100 cheaper than what others are paying. I believe this is a aggressive bundle price - they most likely will not be able to sell their cells at this price without loosing money:

Despite all the warm fuzzies, LG Chem is reportedly disappointed in its friend for revealing battery cell costs to the press. A few weeks ago, GM announced that the Bolt’s battery cost would be an “industry-leading” $145/kWh.

According to Autoline Daily’s John McElroy, that’s $100 cheaper than what others are paying. As South Korea’s E-Today reported, “LG Chem is ticked off, it cannot understand why General Motors would disclose the price of the batteries, because now all of LG Chem’s other customers are going to be asking for the price.”