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Tesla shares falling

Tesla shares falling

What's going on with Tesla stock? Shares trading at $162 today!

Webcrawler | October 23, 2013

A market correction after an amazing run up....

Brian H | October 23, 2013

http://www.siliconbeat.com/2013/10/23/tesla-shares-fall-elon-musk-says-g....

Now that the federal government is up and running again, it appears that NHTSA is looking at the incident more closely. Though an official investigation has not begun, the agency is gathering information to determine if agency action is warranted.
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Bank of America analyst John Lavallo II released a report Wednesday that called Tesla’s shares “vastly overvalued from a fundamental standpoint” amid the potential NHTSA investigation and concerns about Tesla’s ability to win over consumers in Europe.

Geert.Snijders | October 23, 2013

What goes up must come down and vice versa...

IMHO and without any education, but with a lot of rollercoaster experiences (=mistakes I made during decades of investing), my consideration investing in TSLA:
The last rally up to 193 was the suckers rally. Since then it broke the lower trendbar, so fully automatically profit taking will put a downward pressure on the price.
Depending on the upcoming Q3 numbers and general sentiment there will be violent upswing or a violent downswing. Anyhow, go short now or if it breaks the upward trend go long... or a stradle might do, not sure yet.

This is not advice, just my consideration, without having any position in TSLA (other than that I went veeeery long on the model S ;D)

Enjoy (driving the car), Geert

Timo | October 23, 2013

I hope there will be some major accident with car transport where some ten or so Model S burst to flames so that stock drops and I can buy more of them ;-).

I feel really stupid not to buy stock when it was something like $30.

Brian H | October 24, 2013

Geert;
Ah, a chartist!! A trend is history, and per se says nothing about the future, unless you understand the underlying factors, in which case the charts just show some of the detail. Unless there are enough chartists to create a self-fulfilling 'prophesy'.

Geert.Snijders | October 24, 2013

Brian, there you have it. We simpleton believers tend to ignore the hard and fast calculating investors that run their automated high frequency trading programs (chartists pur sang, so to speak).

The truth is that they will do 10 (or more) transactions on their dedicated server NEXT to the official market server, before the new price even leaves the building electronically... to inform us retail traders.
They will hike up (or down) on fluctuations (noise) created by us and determine the price to a large extend (by shear volume and speed), unless there are enough believers that think the trees keep growing higher than heaven...

The whole trading/pricing system is so liquid that one could say that self-fulfilling propesies are it's base mode of operation.
Always exaggerating greed and fear. In the long run trust comes afoot and leaves ahorse. That's because 1 dollar lost feels as strong as 10 dollars gained. The downward correction will be swift and mercyless.
Be prepared...

EvaP | October 24, 2013

Everything depends on the earnings.

In my short investing career I noticed that the institutions and analysts manipulate the stock prices. They bring up something negative when they want to buy and praise the stock when they want to sell...

The earnings must be known to some people by now and could have been leaked....

Problem is, there are two possibilities:

One is that the earnings were bad and institutions are selling. The other is that earnings are very good and the institutions are pushing down the prices to buy now and sell after the earnings announcements.

Warren Buffet is right when he says he ignores the noise and just relies on the facts, but a lot of money can be made with insider information and the power to manipulate the market.

I sold my stocks at 185 and bought them back in the middle 170's, so I am in red at the moment, but decided to hang on to them and see what happens. I have a feeling Elon has a surprise for us.

Aileen1025 | October 24, 2013

I spoke to a Service Rep at Merrilledge about 5 days ago and he advised me flat out to sell all my Tesla shares and re-invest in some other BS he had going that day. Surprising since I wasn't even calling about my stocks. Next day, Tesla starts dropping and continues to drop for a couple more days. Then I read a stock article how Bank of America- Merrill considers Tesla a "sell" for a bunch of bogus reasons. I was fortunate to buy my shares at $37 on a hunch and faith in this remarkable achiever named Elon Musk that I kept hearing about. It took my arguing with 3 different Reps at Merrilledge to finally make the purchase. I wanted to put my money behind the idea that the world could be a better place and that someone had finally made such a commitment to do so. I have no plans to sell my shares. I may have made my original decision based on my heart, but my brain still quite smartly tells me to "HOLD" and buy more shares when I can do so.

Aileen1025 | October 24, 2013

One other thing-- obviously I am not savvy about stock like so many here. But I have noticed the failure of the media and the powers that be to embrace Tesla as an American car company. There seems to be some kind of "love" going on for Ford or GM, but Tesla continues to be treated like the red-headed stepchild. Anyone else notice this as well?

jamesd567 | October 24, 2013

On August 15, Tesla closed a fraction under $140. Today its trading around $170. Please, neophytes, do not tell me Tesla stock is falling when it clearly is not. Do some research...else you don't sound too bright.

Brian H | October 24, 2013

EvaP;
Selling at 185 and buying back at 170 doesn't sound like in the red (loss) to me. It's very black ink in the ledger!

Brian H | October 24, 2013

EvaP;
Of course, market is at 165 at the moment, so you've lost a bit on paper.

Just buy more while the gettin's good!

772 | October 25, 2013

Indeed... better you sold at 185 and bought back than to not have sold at all! You still came out ahead.

Bubba2000 | October 25, 2013

I had been dabbling in Tesla stock. However, I did buy a meaningful position between 35-40 after I test drove the car. It is one impressive car and it was obvious that the shorts were on the wrong side.
Sold 20% of my position at 107 to reduce my cost basis. Still, I would hate to loose my gains.

This is a hi risk, hi reward stock. I know that Elon has been pushing the stock down. He probably does not want a collapse in price and wants to lower expectations. However, he did buy the stock at close to $100 and sold convertibles with a strike price at $135 or so. I figure the stock would have support in this range if the earnings disappoint.

However, the expectations are quite low with guidance at 21,000 MS. Looking at the VIN averages, it looks like the current rate of production is around 600-700/week or 30,000-35,000 annualized rate. The company must be doing progress is increasing production, optimizing the supply chain. With ASP=$90k, there is a lot of room to increase gross margins to around 25%. Long term, Tesla could have gross margins close to 30% like Porsche.

I think that next year, Tesla could produce and sell 60,000 MS. In 2015, production of S+X could hit 100,000. There will be advances in battery tech, with increase range, less weight, etc. With supercharger network deployed in the US+Canada, Europe, Greater China, etc demand could indeed take off. Advances in tech are not linear. That is why I am holding and not cashed out.

772 | October 25, 2013

Bubba, those numbers are estimates... expectations are another thing entirely. With the run up in the stock's price, investors expect good-great numbers. I think the numbers will be very very good, but how the market reacts (initially) is harder to predict. Longer term, we're headed higher.

PorfirioR | October 26, 2013

When I bought TSLA stock at the beginning of the year, my wildest dream was that it would reach $150 by the end of this year. Not that I am planning on selling any time soon.

Microsoft gained around 9,000% between 1990 and 2000 (http://tinyurl.com/ke63ggp). Sounds like a lot? Take a look at Cisco (http://tinyurl.com/lsqhsgs) in the same 10 year period. In both cases, despite my co-workers urging me, I totally missed the train and I am still kicking myself. Back then, I was the one saying "overvalued", "wait until IBM, HP, or Sun take on these guys", etc.

I see some correlations between the computer industry in the early 90s and the auto industry today as far as market disruption by new entrants, new technology, and business models. Who knows where this train is going, but I would rather be on it this time.

bonaire | October 26, 2013

The problem now is mixed expectations, with some people like wedbush expecting 7000 sales in Q3 and if numbers are well short of that, some reaction may occur based on the financials and various feelings that expectations were nit met. Some guy was posting elsewhere he thought Q3 would be 10,000 sales due to the Vin numbers that Craig presented.

jk2014 | October 26, 2013

Tesla has made it past the failure point. To worry about stock price at the present moment is completely wasted brainpower and life. This is a stock that will be worth much much more in 5 years. So if you re looking for returns before then you are not investing your money wisely.

Elon said himself they will not need to raise anymore money through a secondary offering to produce gen3. Dilution is extremely limited. Knowing elon won't sell, this stock will be worth 700-1000 after first year of geniii. However, the real surprise revenue stream will come from energy storage sales, but that's a whole other thing to look forward too shaking up the short sighted...

grega | October 27, 2013

@ Aileen1025 "I have noticed the failure of the media and the powers that be to embrace Tesla as an American car company."

I agree Tesla should showcase that in the US, just as Apple does their "assembled in the USA".

But there are 2 components. "Made in our country" and/or "Made in a country that is renown for brilliant cars". The USA doesn't have a worldwide reputation for brilliant prestige cars - that belongs to Japan and Germany. Any sales gained in the US will be offset by sales lost in Europe and Asia.

So yes if the share holders of TSLA are mainly US based, perhaps pushing the US manufacturing would boost share price. But if it's international then no.

(Of course the reality is the quality of a new car company will depend on standards set by the company. The designers, production line workers, automated production line and so forth. It's just that companies set their standards based on similar standards ... which in the past were other nearby companies. I think that's changed.)

Bubba2000 | October 27, 2013

The wild card with Tesla is disruptive technology:
1. Battery tech - Current trend is improvement of battery energy density by 7% and corresponding decrease in $/KW-hr. However, with so much research being done with electrodes, chemistry, nanotechnology, etc we could see sudden improvements in battery tech. It has happened in multiple fields including hard drives, and even in batteries when we went from NiMH to Li-ion. I think it is matter of time.

Meanwhile, in 3-5 years we could see a 500 mile battery in Model S or X... that would have a huge impact on the demand. Why would I want buy a S550, BMW5, 7xx, or Audi 7, 8? Especially with

2. Tesla has access to the best metallurgists and material science experts from SpaceX. With Model S weighing 4,647 lbs, of which the battery pack weighs 8000 batteries x 45 gms x 2.2 = 792 lbs. So the car weight minus the batteries is 3,855 lbs. That is a lot of weight for car that uses Al and Boron steel reinforcement. I suspect that Tesla went overboard in structural safety. Without compromising safety, I would think that Tesla could optimize structural design, use higher strength alloys of steel with Nickel, Vanadium, Chromium mix. Titanium alloys would be a tempting choice, but besides the cost, it is hard to weld, cast, extrude or stamp. They could knock off 500-1,000 lbs of weight.

3. Improved electronics - Silicon controlled inverter efficiency has been improving over the years and will continue to do so. Power transmission efficiency could be improved as well. The induction motor that of the Model S got to be the best there is... 416 HP from such a small package... not sure it could be improved by much.

4. Friction and Aerodynamics - I am impressed how little friction the whole car has. Put it in neutral and it rolls easily... it will be improved with time. The aerodynamics could be great too. However, under the car, they could reduce turbulence in the wheel wells with additional panels.

5. Supercharger performance - The European superchargers will have a capacity of 135 KW versus 120 KW in the US for now. Higher capacity batteries will certainly enable even faster charging. Cut 1/2 charge to 15 min and it is almost as good as a gasoline filling station.

Add it all up and BEV from Tesla could disrupt the ICE industry starting with hi end cars. I saw that happen with the PC. Too almost 15-20 years, but MSFT, Intel turned out the be great investments, except that I missed most of it... duh! Another misses were AMZN, NFLX..., etc. Mostly but selling too early to not recognizing the disruptive potential. Oh, many of them had ugly balance sheets and income statements at one point.

I think Elon is sandbagging Tesla earnings and valuation. If he thinks Tesla is overvalued, why not raise $2B with a secondary? Only 10% dilution. It would bullet proof Tesla for a long time. Could spend $100M on 500 SCs in the US+parts of Canada plus 5000 HPWC in the cities in partnerships with hotels, restaurants, etc for pay per use service. Do the same in Europe. Increase production of Model S, X with automation and economies of scale could allow price cuts or addition of features at the current price. Have funds to build 500,000 Gen III. Anyway, the shorts have about $2B in shares that they need to buy.

Bubba2000 | October 27, 2013

Correction: Shorts have MORE than $2B short in the market.

EvaP | October 27, 2013

I think Elon does the right thing when he caters to the Germans. They are used to the best of the best. Germans don't want slow cars, so he is smart if he soups it up a little for them.
We in North America don't want to drive that fast. I used to live in Europe. I hate that speed everywhere when I go home. You have to be used to that if you don't want to die.
Just because he is catering to them, doesn't mean he can't cater to the American, Russian or Chinese market at the same time. He gives everybody what they need. Very smart.

Yes, the electric car age is around the corner. Every time there is a shift in consumer behavior (Netflix: people don't rent movies but watch it online, Amazon: writers don't need agents and publishers but publish their own books), there is a tremendous profit to be made. Microsoft made its money with such simple thing as Windows. Bill Gates realized that users need something that makes it simple to enter data in the computer and voila! IBM rejected his idea not realizing that there were billions of potential customers.

If there is something that will revolutionize something that basically everybody is using, there is always a lot of money to be made. Of course, something could happen. Some other company could make a car the appeals to the people more.

If I were Elon, I would have started Gen III right after the Model S. As it is now, the competition has plenty of time to catch up. All they have to do is to buy a Tesla, take it apart, study it, copy it (except the patent part) and they can steal huge part of the market.
Had they started with mass production of a less expensive car right away, they could have been unbeatable.

BTW, I think the future of cars will be completely different. People won't buy new cars, just stronger batteries or better computers and insert them into the old cars.

Gas-driven cars have a short life span. Once the motor falls apart, you need to replace the whole car. With an electric car, if you are careful, you can drive the same car for many decades without having to buy a new one. Just change the battery and the computer parts.

Brian H | October 28, 2013

EvaP;
Your timeline is jumbled. The MSFT/IBM split came way before Windows, at the DOS stage. And Windows was a knockoff of Apple's graphic interface.

Bubba2000 | October 28, 2013

I have wondered why Tesla did not just focus its limited resources in the US market and leave the rest of the world alone for now. Install the 500 superchargers here in the US, plus HPWC in most cities via hotel chains, restaurants, etc. Sales/Service centers in every State. We got the same language, auto specs, etc. Yes, NADA is a pain in a few states, but Tesla got around that.

There is the question of the number of customers in the US. However, with increased density of superchargers, service, etc the value of the car increases and that drive demand.

Tesla does need to drive their costs down so they can price the car lower and still have 25% gross margins.

PorfirioR | October 28, 2013

Brian H,

Perhaps Evap's sentences were not in chronological order, but the statements were correct. I don't believe that either sentence was trying to say that IBM rejected Windows. Although one could make an argument that IBM's failure with OS/2 after attempting to partner with Microsoft was another rejection of Microsoft Windows technology, but I digress.

Also, both Microsoft and Apple "adopted" the GUI concept from Xerox Palo Alto Research Center, who seemed to be in the business of giving things away.

Anyway, the point of EvaP's post was that the establishment often rejects innovators because to innovate is to disrupt the status quo and it also means taking risks.

tarsiacassina | October 28, 2013

Hey, guys ... wondering why the market is down again today - there has been another fire - this time in Mexico arising out of a horrific accident where the person was speeding, lost control and plowed through two brick walls and into a tree ... but the guy walked away almost unscathed ... the car was a mess! Now he wants a new Model S as soon as possible! It all happened on the 18th, but is only now hitting the wires. Here is a link for a video and the story - http://jalopnik.com/another-tesla-model-s-caught-fire-after-a-crash-in-m...

Bubba2000 | October 28, 2013

Tars,
The forward PE is hi and the company valuation is based on expectations. Negative articles in the Fool, Seeking Alpha every day, and just about every analyst. Even Elon is talking the stock down. After such a big run up, the stock got to have some pullback. A lot of folks made a ton of money and it is tempting to sell. Weak hands too want to sell.

Brian H | October 28, 2013

I notice the volume is rather low. Buying opp.

PorfirioR | October 29, 2013

Yes. Especially with the earnings announcement coming up on 11/5.

Geert.Snijders | November 6, 2013

Sorry for all with long positions, but I hate to be right...

After all, I decided not to take any position in TSLA other than being a valued customer!

olanmills | November 6, 2013

Right about what? If you bought TSLA in earlier this year you're still doing fine or probably much better than fine, actually.

If you bought TSLA only within the last couple months, and your plan was to make a profit and sell with in a couple months, well that's always a risky move.

Why would you be sorry about the long positions at all? None of the fundamentals have changed. The sales, revenue, and costs were basically in line with expectations. Tesla is still on it's path to long term success.

I think this correction is basically some profit taking and reality setting in.

Geert.Snijders | November 6, 2013

Hi Olan,
If only I had known about Tesla earlier...
First contact with Tesla for me has been around april/may this year and that was to test drive the MS and eventually put my money into TSLA revenue, not its stock price... Like most of us I can spend my money only once.

To answer your question: I was referring to an earlier post I made in this thread.

I agree that Tesla executes their plan very well, but that has little to do with the price of its shares. Since it is so hyped.

In the long run Tesla is not a Palo Alto software driven company, but an logistically driven one. That fact alone makes its growth more 'sluggish'. Physical components will have to be procured and shipped from around the world, assembled and distributed across the world as cars. Not over the internet (like software), but using old school freight vessels etc.

A true long term believer has a position now and does not look at its value for another 10-20 year.

Brian H | November 6, 2013

At the start of last May, TSLA was $60. Pity the poor longs!

Captain_Zap | November 6, 2013

A few weeks earlier than that it was half that price.

I think there is lots of room for mega-growth and at a relatively fast pace. I'm holding for much longer.

joenanp | November 7, 2013

I love it. I just became an enthusiast and am selling other stock to buy TSLA. It takes time and I was cringing watching the jump just prior to Tuesday's report. Now I am loving it; by the time the money is available, the price will be good for me to buy. When we look out 10-20 years, TSLA will be one of the one's we all wish we'd have bought today.

DonS | November 7, 2013

If you believe in the company, buy and hold for years. Otherwise don't buy.

Everyone betting on the day to day gyrations just makes the stock brokers rich while giving themselves ulcers.

jpcarigma | November 7, 2013

What goes up must come down. Your right DonS I believe in the company it hasn't even scratched the surface as far as its potential. I will be a holding shares for the long haul. If it goes down further I might grab a few more shares.

jajabor | November 7, 2013

I believe in the company and thus holding my shares. However, I think Mr. Musk is wrong to focus on too many things right now. He is working on driverless cars, he is working on European+Asian models, he is just working on too many things. Does he really need to do that? No, he needs to focus on the US market first, and Model S first, then Model X. And once you have captured US, rest of the world will follow. Instead, right now everything is half cooked...and the company is loosing money. You and I won't be selling our stocks because we believe in the company but most BIG inventors will. All they care about is if the company will make them money, nothing else. Unfortunately these investors hold a very large chunk of stocks.

jk2014 | November 7, 2013

The road to a transformed energy system in America (and the world) will be paved with times like these. I'd rather be apart of this then sending my fellow Americans to die on foreign soil, creating foreign extremists, destabilizing our economy, or promulgate one of the most catastrophic experiments with the only air, seas, and lands we've got. Hands down.

TeslaRocks | November 7, 2013

So what now, Brian H? Sell, sell, sell?

TeslaRocks | November 7, 2013

; >

jajabor | November 7, 2013

@jk2014, totally agree with you. @TeslaRocks, I think it's time to buy more. At the same time I think Tesla needs to focus back on USA market and take care of unfinished business here in the USA first.

jk2014 | November 7, 2013

Amwkhan -- This type of surging demand all around the world will happen with GenIII only 10x bigger. As we see now, demand is strong, but production is limited to expand to meet it. I think Elon is peppering Europe and soon China market to wet the whistle and willing to curtain US production a bit while line production continues to expand and become more efficient. Elon has it right by trying to prepare for this type of situation with GenIII. I think the next 3 years is going to be about ramping it's first production run to at least 50K-100K. The battery supply capacity, in my mind, is a direct function of Tesla's ability to meet this future production number .

jk2014 | November 7, 2013

Crazy hair brained idea that's out there in la la land so berate me thoroughly if offended-- how many shares are free float if everyone dumps them on the market for sale, except Elon and company? Now if share price goes low enough, how much would it cost to by up a majority? Could someone gain more share of the company than Elon et al? Could they take over the board? Could Tesla be taken over by the likes of heavy pocket investors if the conditions are right?

TSLAholic | November 7, 2013

You figured out my master plan. Darn it!

jk2014 | November 7, 2013

TSLAholic-- It's you that is doing this! Such a scoundrel!

Brian H | November 7, 2013

The day's volume track is informative. There was a massive sell order on opening, then it hit "support" after about 1½ hrs., and very few sellers for the rest of the day.

jk2014 | November 7, 2013

The short "circuit breaker" on tesla this morning. Borrowing shares is authorized to resume tomorrow. Shorts might be back in force then...