Can Tesla Survive?

This talk about calling the market is hilarious! Retail investors are nothing more than corks floating in the ocean, our positions either make money or lose it. The only control we have is the type, direction, and timing of our bet investment strategy, all else is folly.

“A probabilistic mind-set pertaining to trading consists of five fundamental truths.

1. Anything can happen.

2. You don’t need to know what is going to happen next in order to make money.

3. There is a random distribution between wins and losses for any given set of variables that define an edge.

4. An edge is nothing more than an indication of a higher probability of one thing happening over another.

5. Every moment in the market is unique.”

― Mark Douglas, Trading in the Zone: Master the Market with Confidence, Discipline, and a Winning Attitude

Or someone on the inside with prior knowledge before the release of a major announcement, such as insider trading, example: Mergers, a above or below expectations on quarter reporting, etc...

Most people are in the mix for this are people with close tie to 'high ranking' company executives or politicians.

With examples of this; such as Martha Stewart et al.

Or still at large....

...or anyone in congress. Members of congess are not restricted by insider trading laws for information that comes to them through things like congressional hearings, or even for situation they help bring about, like legislation that hurts certain businesses and helps others.

Their insider trading does all the harm that any other insider trading would do, but they are too special to be held to the very same rules as the plebeians that pay their salaries.

Politicians is almost if not unanimous... and there is no separation between parties. They can enter office with barely 2 coins to rub together and leave/retire as Multimillionaires with premium healthcare..

Term Limits are needed, but I digress

As George Orwell said in Animal Farm, “All animals are equal, but some animals are more equal than others.”, and, “The creatures outside looked from pig to man, and from man to pig, and from pig to man again; but already it was impossible to say which was which.”

Years ago, I had a large number of shares in a small cap stock. At the time I believed my trading could move the stock ... well, it did move it a little, but only for a very short time. If I can't even move a small cap stock, then what am I in terms of the entire market - miniscule! That's when I realized that I have no control over the market. Instead, I'll either follow the big guys or find a way to move quicker and jump in and out fast.

I remember worrying about using my level 2 screen to find the optimal entry and exit point, where I'd get upset if I overpaid by 1/16 (old pricing). Now I don't worry about the small stuff and concentrate more on the total profit (or keeping my loss small). Wisdom?? or just getting old!

The Market Watch report out yesterday was fairly neutral to positive still.

Me, I bought for the purpose of supporting the venture. My widdle biddy 10 share block I bought on day one. LoL I'm supportive, but not crazy.

https://electrek.co/2018/08/03/tesla-tsla-short-losses-elon-musks-next-level-burn/to

And may I say, PRICELESS! Freaking Awesome! I'll be chuckling about this all day.

Thanks

I've been working every weekend (both days) for the past few weekends, so I haven't had time to watch the market very closely.

When I read your post on Tesla shorts, I felt it was a short squeeze, but I didn't have time to check the volume and charts. Sure enough, it was a short squeeze. The weak hands got blown out, but the strong hands are now looking pretty good.

I think Elon is under too much pressure and he's now broken. The Tweet he did about the company being bought out was a hoax and now there's going to be an SEC investigation. The board is going to have to make a move. If it were you or me making the Tweet, who cares? But when the CEO does it and it moves the stock price, well ... that's a securities violation.

I wish I wasn't so busy at work, because the recent run up was a great opportunity to make a quick hit. This stock is pretty easy to play, but you have to have guts to hang in.

I believe 250 will be tested and it may fail. If it does, then there's a long way down. I don't see 380 being re-tested for a long time. Too much technical damage has been done and the shorts are in control.

Next month, I think it'll slow down and I'll spend some time analyzing the stock. Shorts and option spreads or covered options are looking good.

There are certainly a lot of forces at play, many actors tying to move the stock.

Here is a 'financial' article from yesterday claiming TSLA was in 'freefall' after JP MorgaN revised its proce target. I can't see anything on the chart that might reasonably be categorized as 'freefall'.

Musk has and continues make statements in social media that are difficult to see as anything other than mistakes(.....seems to be quite the fashion with the powerful in our day and age). His mistakes could certainly land him in hot water, but Tesla is big enough now that it could survive Muskless.

The charts look like TSLA will test $333. If it breaks above, it may not come down for a while. If it doesn't break through, it might retest $280ish....but without additional negative news it is difficult to see it going below that level.

Check out the volume on days bad news comes out and then look at the volume the following mornings. Those eager to buy in at a reduced price appear to overshadow those sewing the seeds of doom every time. The volume suggests there are many more interested in grabbing up shares on dips than those convinced the run up is over.

You can lose a lot of money being right about a company but wrong about its stock. Con cuidado.

I agree, I think Elon is under too much pressure, but hopefully that is easing now that they have a production running better. I saw the tweet on the taking it private as a poorly thought out but well intentioned act. unlike the mango morons tweetstorms. And lets face it, his do a lot more damage financially that Elons did. As for the company, as long as the board is behind him then its all good.

The SEC is being used by some very big short sellers who panic easily. It is very hard to prove intent, especially when they do have ongoing talks with Sovereign Wealth Fund managers about the subject that go back a year or more.

Full disclosure, I am scheduled to pick up my Model 3 on the 29th in Chicago.

We're living in a world where Twitter is the way to get your statements read and the media can't do anything about it.

It's a very different way to gather information, but it's coming from the source, which I actually like. There's nobody twisting the words or taking things out of context. Nobody can argue back either, so it allows one to speak his free mind.

As a CEO (or any other highly ranked officer), there is an obligation to be careful what is said. Since a comment can move the stock price, there are things that can be legally said and thing that cannot. Intent doesn't matter. People can say anything to get out of trouble and most likely they will.

Let us know about your Model 3. Also, how much are you paying, if you don't mind me asking?

Ah yes, but we can't pick and choose. If Elon can't pick up twitter and speak his mind then neither can the President whose tweets do far more damage to the "markets" and the world than Elon's will ever be.

No, this is yet another example of Rich people manipulating the government for their own purposes. You have to ask yourself, what kind of American would bet against one of the most innovative companies to be started in this century. Cost our country tens of thousands of American jobs both direct and indirect and our reputation as a leader on the world stage. So no, I am all for short sellers losing their shirts.

I think the difference between the two is that it seems like Elon did it to hurt the shorts, where the POTUS does it as a means to bypass the media. If Elon did it for personal gain (remember that he's a major shareholder), then he used his power for profit. If he did it out of frustration (from the media) and he can prove it, then he may get out of it, but I don't see it happening. We'll see what the court says about this (a lawsuit was filed).

The POTUS may or may not be financially benefiting from his Tweets. Remember if he is, it would be very hard to prove his intent. Also, if he wants our stock market to go up, he can say it's for the good of the country.

You're right about the forces at play. There's so many shorts out there, which leads me to believe this stock will remain in a trading range of 250 to 380, until something extremely good or bad happens. That's a good trading range to make money. Being short at the high end and long at the low end are good strategies. Keeping a tight stop just below 250 on the long end and above 380 on the long end are crucial to make sure one doesn't get crushed.

In the long run, I think TSLA may get hit hard. I do believe it'll test 250, before going through. Why? Fundamentally, there are a few issues.

1. Tesla loses money and lots of it. CF is negative. Net income is negative. It can't go on forever.

2. Tesla has loans coming due. They'll need to go back to the bond market. Money to pay off the existing loans and for operating cash.

3. Someone is going to sue Elon and Tesla for the Tweet about bringing the company private. I believe the SEC will get pulled in and it may turn out ugly.

4. Tesla has produced too many cars, so next year. the tax credits are decreasing. I think many of the people who have a car on order are expecting the nice tax credit.

5. Inventory is backing up. More and more Model 3's are sitting and even Model S's are backed up - my client was able to get one in days (someone ordered one and they didn't pick it up).

On the flipside, someone could come in and buy the company. Ford, GM or Chrysler/Fiat? Maybe???

Or the Powerwall may catch on. Doubtful, due to the cost, but you never know.

Of Elon may get booted and they get someone more conservative to run the company. This person turns things around and makes Tesla into a profitable auto maker. Though this may kill the stock price as it'll need to be comparable to GM, Ford and Chrysler/Fiat (in market value).

I agree with your call on a test of 333. If it breaks above, then 380 will be tested and if it breaks above, then the sky is the limit. If it fails, it'll retest 280 and I think it'll go through. I see a lot of technical damage a week ago. The next level below is 250 and there was a lot of technical damage at 250, so a re-test makes sense to me.

I'm expecting things to slow down a little at work, so I'm going to start looking at TSLA again. Looking for another quick play - in and out fast.

Take care and thanks for your analysis. I enjoy listening to your advice and it gives me the perspective of another trader.

Thank you!

Good call!

It didn't break 333 and now it's testing 280. I have a feeling you're right about it holding here, but if it doesn't, we'll see 250.

I'll tell you, we missed a great shorting opportunity at 380! If someone had the guts to short then and ride it down to 280, that would've been a huge profit - and it happened very quickly too!

What does your chart reading say about TSLA holding 280 here? And if it fails, do you see 250? Or on the upside, what do you see as upside potential. I'm thinking it would be a good play to go long if it holds 280. Maybe do a bullish call spread???

Here's the thing, it's a short trading week at the end of the summer. A lot of people are either squeezing in a week worth of summer vacation...or are assuming enough other people are that it makes the market thin.

Standing orders are likely eased away from prices likely to be reached. Other orders might be eliminated or significantly reduced. Hard to relax and get away from it if what normally requires full attention is still on the table.

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Anyway, my point is, the market has reason to be thin. Had 280 been reached and greeted with significant volume, in spite being labor day week, it would suggest a likely bottom for the time being.

If it were a normal week and 280 were approached and greeted with this less-than-impressive volume, I would expect the price to continue to search for support lower, probably 250 ish.

The chart actually looks pretty week. If it gains price on less than strong volume, I say there would be strong indication for a 250 retest....which might not hold. If it doesn't hold, it might dip precipitously....which would be a great time to grab a bullish position. If it does hold 250 on strong volume, that might be the cheapest opportunity for a good while.

That's not advice or recommendation, just my take on how the roulette ball seems to be bouncing.

Well, it did test 250 today and held. The volume this morning was huge as it fell, then buyers finally came in.

I'm sitting on the sidelines here. If it loses 250 and we get confirmation, I'm gonna go short again. The books are terrible, there's an SEC investigation, a lawsuit for price manipultion and they just lost their Chief Accounting Officer. In the recent podcast, Elon looks like he's lost it too.

A lot of bad news in a short amount of time. This time, the stock is taking a hit.

Tesla is in trouble. I suspect the stock has a long way down to go.

Elon is a very clever man, though, with a gift for PR. That marajuana was a self depricating smoke and mirrors distraction.

It provided an easy (and popularly defensible) plausible explanation of why the stock would see a large selling volume. Some would not fall for the distraction, but many would and in that light many would consider it a buying opportunuty....after all, smoking a single joint is no reason for a 7% initial plummet.

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But you know what is good reason for that initial plummet, its immenent return, and likely further downside in the not too distant future?....

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"... .On Friday the company announced that Chief Accounting Officer Dave Morton resigned after a month on the job, citing public attention and the fast pace of the post...."

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That is a very bad sign. More troublesome than looming maturities. I suspect the big players are finding ways to exit this stock or go short with as little attention drawn as possible. Musk might be assisting.

If you don't mind, I have a couple questions for you. I have my ideas about the technical (charts) and I'm wondering what you see.

1. The first time it hit 250, there was a lot of volume. To me that means a lot of technical damage occurred and the stock will have to come back and retest the low.

2. The recent drop to 250 was on lower volume and the volume has also tapered off in the last few days. The bounce has been decent (15%), though it's much weaker than the last time it hit 250. This tells me that the bounce may be done and it could break 250, though I think it'll take one or two more attempts to break through (or some really bad news). Or, the bounce can continue and if it breaks through 305, then the shorts have lost (for now).

3. The last bounce off 250 (April) had a lot of buying (volume) and it set up the possibility to retest 380 and possibly break through. We did see it get there, but couldn't break through. Volume was large on a failed breakout, followed by a 35% drop. I don't see the stock hitting 380 in a while. Again, too much technical damage and not enough buying after the test at 250.

Now to fundamentals. I agree that Morton leaving is a sign of something really bad going on internally. I get that it could be a clash of personalities, however at that level, you double, triple and quadruple check before hiring someone into your C-Suite. I think he was the right guy, but he saw something he didn't want to risk going to jail for (or dirtying his name).

New news from the front lines: If you want a Model 3, you can place and order and get the car in weeks. I just got off the phone with one of my clients and she spoke to the Tesla guy on Friday and they told her she could have a car by the end of the month. Though she'd have to take one of the ones on the lot, not a special order. The base Model 3 is now $49K + options. And they've cut the color options down, so there's even less choices. She told me she really likes sitting in the car and the high tech feel. The glass roof she likes and she said it doesn't get hot inside (like you'd expect with a glass roof). She likes the big tablet on the dash too. She also likes how it drives (she mentioned the self parking feature), but she's coming out of a hybrid, so even a Hyundai Elantra Sport drives better. Her concerns are:

1. She thinks Elon is stretched too thin and he's not doing a good job managing his company nor his life.

2. She is worried that the software upgrades will stop if the company goes under.

3. She was originally (months ago when she first took a look) told that she gets a supercharger when she buys the car. Now it's an extra cost.

4. She is concerned about repairs and getting parts if they go out of business.

5. She is concerned that she was told there are some 400,000 people who are still waiting for their car, but she can get one in two weeks. She feels that the company is lying to everyone about the backlog of orders. Why does she go to the front of the line, while others have been waiting years?

6. Last, she feels that the salesman was rushing her to get the car. She didn't like the feeling of being pressured. She also said that if there's something someone really wants and it's in short supply, they have to fight go get one - the salesmen don't push them. She gave me an example of the iPhone releases. How people line up around the block to get one.

i doubt it gets through 305. I'd be very surprised if it does get above 305 with meaningful volume.

Support when approaching 250 was not robust. Definitely nothing to depend on. I think there is probably a better chance a retest of 250 soon fails than holds.

Below 250,... not much support likely till 180ish.

That said, technicals take a back seat to news as disturbing as the recently hired chief accounting officer abruptly abandoning ship.....especially when the founder pulls a bad boy publicity distraction when the resignation is announced. The abrupt resignation of the new hire head of accounting is a horrible sign. Musks actions give the appearance of egregious impropriety...if he were innocent he should still be sufficiently aware of how it would appear and avoid such action....but instead it appears distraction and misdirection are standard operating proceedure.

I wouldn't be long on TSLA. If TSLA were offered to me right now at 200 a share with the stipulation I couldn't sell for 60 days, I wouldn't bite.

It didn't break 305 - just missed it and has come down to 285.

I believe the longs are pretty solid. The weak ones were shaken out at 250 and the ones left are in it for the long haul. That being said, if it loses 250 with some volume, then the "smart" money will probably bail, leaving the dreamers behind. 180 is a long way down, but think of the drop from 380 to 250. That was the one to play! I missed it, but I'm ready if it loses 250.

I also think the SEC is going to crucify Musk. And Musk being Musk, he won't back down ... unless he starts listening to his advisors (legal team). Even Zuckerburg gave in.

I just heard that the VP of Worldwide Finance, Justin McAnear is leaving Oct 7th. Not as big as a C-Suite guy, but another executive level loss.

Who wants Tesla Short shorts?

Saudi Arabia?! Go Figure.

A couple new observations about the company.

1. I saw a Tesla Model S chassis at the Peterson Museum and I wasn't impressed. The castings were rough and porous. The design is made for efficient use of battery storage, but chassis dynamics are wrong. The suspension is generations behind Porsche, BMW, Mercedes and Audi. The battery pack is impressive. The electronics and circuit board are well made and the packaging is impressive. So, I have to agree with the report from Munro, though his complaints were on the fit and finish + The poorly thought out design aspects.

2. Tesla just hit the mark, where the tax credits drop. It won't happen until 2019, so the buyers may not purchase their ordered cars. I also just had a client who just purchased a Model S and get this, they purchased it without an order. He completed the transaction in three days and he told me that there were a lot of unsold cars. If there's a lot of unsold ordered cars, then it'll be worse when the tax credit gets cut.

This week, Elon Musk came out with some news about the company no longer supporting their referral program - gives discounts to people who own a Tesla and refer people, who ultimately buy a car. My take is that this is bad news, but not terrible. Sounds like a cost cutting maneuver to me and only when companies have cash problems do they cut programs like this.

Today, TSLA is down hard. 13% in one day - a great day to short it. Unfortunately for me, I'm not short, nor am I long. What was the problem. Laying off employees to bring costs down - yes, that's a problem. It also tells me that their sales are not high enough = not enough demand for their products. Why the drop in demand? They've sold a lot of Model 3's last year, so a lot of the pent up demand is gone. The bigger problem is moving forward. The government gave $7500 tax credits to buyers of Tesla cars, but the credit were reduced after sales reached a pre-determined number, so tax credits are now 1/2 of what they were on December 31st. To counter this, Tesla reduced the price of their Model 3 by $2,000, hoping that the $1,750 difference wouldn't hurt sales. Based on today's news, one can guess that sales are down.

Let's look at this from a logical standpoint. The cheapest Tesla Model 3 is $44K. Put 10% down (say $5000) and with tier 1 credit, a 60 month loan at 2.99% interest gives you a payment of $787/mo (Los Angeles sales tax and DMV fees). Compare this to the #1 selling car, the Toyota Camry. Choose a base model LE with a sticker just over $25K. Put the same $5000 down and your payment is $399/mo. Will someone pay nearly double for a Tesla Model 3? Yes, there are many people who will, but the average Joe doesn't have an extra $33/mo or $4,656 in annual payments ($23,280 for the life of the loan, but people are payment shoppers, so $388/mo is a better measure). Toyota sold 6,600 Camry's per week in 2018. Tesla wants to sell 5,000 Model 3's per week. Are there that many people who can afford a $787/mo car payment? And of the people who can, who wants to spend that much on a car?

I don't hate Tesla. I think that Elon Musk has done something remarkable in creating a car company from scratch. I, however am a businessman and also an investor. As a businessman, I don't see Tesla having a business model that's sustainable. I believe sales will struggle from here and the 5,000 Model 3/week goal isn't doable. Sure, Tesla proved that they can do it production wise. There just aren't enough buyers. As an investor, I see this as an opportunity to make money. I'm not a fan of shorting stocks, however when there's an opportunity screaming at me, I have to take it. My business takes precedence over my investing - I pay the bills with my business and hopefully get additional funds that I can use for investing. I get too busy with my business and I miss opportunities like today, but mark my words, this isn't over for TSLA. There will be other great shorting opportunities and unless someone buys them out, I think the stock is headed below $50 - maybe to the teens. Do your due diligence and don't follow me (or anyone else) blindly. I'm just giving you my analysis and showing you a way to make money.

I didn’t catch it all today, but I hear they announce large layoffs also.

The big news was that Elon said that things were going to be tough looking forward. The stock dropped to $302. Not a bad place to short it, but I'd feel better shorting it in the $350+ range. A client of ours shorted it at $365 - he told me to do the same and I was too busy to put in the trade. He told me he covered most of his short the other day and he held a little, because he feels it could get back down to test $250.

If you have a minute, take a look at PCG. I heard about the lawsuits and potential BK a couple weeks ago. It was two Mondays ago, the stock gapped down and I had a short order in at 20 in the morning, but I didn't get a sale. Last Monday, the thing collapsed. I'm looking at a short here, but I'd like to see it closer to 9. It bounced on Friday, and I'm hoping for a follow through above 8 1/2. If it's above 8 1/2, I'll jump in.