Aug 12, 2013
ckessel I think all of those are probably true. It's the nature of being small, you're often just one significant event away from either disaster or glory.�
Aug 12, 2013
jeff_adams There are those who can make money shorting Tesla, but their timing will have to be perfect. One wrong move could be disaster.
People outside these forums don't understand how powerful Tesla can become.
Think about this. Right now, the Model S is disrupting the luxury car market. Why can't they disrupt the SUV market? The truck market? Affordable passenger car market?
If their sales were comparable in those segments, how many vehicles would they sell?
They've shown the ability to build compelling vehicles in luxury and sports car markets. How dumb is it to assume they can't do the same in the other markets? That's the short argument.�
Aug 12, 2013
ElSupreme This is my problem with stocks. They have ceased to be a accurate representation of a companies value. They have become a representation of a companies perceived value. And thus companies can try to do things that raise that perception (Enron perhaps). Sure having real value helps the perception of value. But stocks only represent the perception of value.
I personally don't think that is necessarily a bad thing. But it is NOT the same as a companies value.�
Aug 12, 2013
Causalien I don't think investors differentiate between who executes. Whatever is done, is done by Elon. A hero CEO just sounds better than a mindless corporation name. Just like all Apple IPs are co-invented by Steve Jobs.�
Aug 13, 2013
Realist I think a lot of "believers" do not understand the nature of the car business.�
Aug 13, 2013
Johan Au contraire mon fr�re. A lot of nay-sayers have to stop bundling Tesla with the rest of the car business.
�
Aug 13, 2013
Realist I think facebook is still undervalued.
But how can you compare facebook with Tesla? They have more than a billion users. Tesla is a low volume niche car producer.
TSLA can easily drop to a 10billion$ market cap and there would be still no room for complaints.�
Aug 13, 2013
marvinat0rz I don't know, stock prices sort of have to be based on perceived value. If Tesla was valued on fundamentals right now, at $5/share or something, it would be the bargain of a lifetime, sell-everything-else stock if you allowed even a 5% possibility that it would be able to ramp up production and become something resembling a major automaker. At $150/share, this might or might not be the case. I'm still long, but I'm only about as bullish as I was at $30. Like you guys are saying, a company in startup mode is usually one move away from the history books or disaster.�
Aug 13, 2013
Zythryn Stocks have always been about future value, not current valuation. Even valuations take into account future earnings.
I agree TSLA is being priced based a lot on potential growth. People are seeing a lot of potential, bears are only looking at current and next quarter's numbers.
- - - Updated - - -
You are right, you can't. Tesla is so much better off.
Ask yourself:
Facebook's income per user would be?
Tesla's income per user is?
Room for Facebook to expand in its market is?
Room for Tesla to expand into its market is?
Yep, I would much rather bet on Tesla's growth than Facebook's.�
Aug 13, 2013
ElSupreme You both made my point better than my feeble attempt. Saying a companies 'valuation' based on market cap is not related to the actual value of the company. But rather its perceived value. Thus my 'not necessarily a bad thing' comment.
My issue with perceived value isn't fundamental, but the stock market is as much a popularity contest as it is anything else. This leading to many irrational behaviors, trends.�
Aug 13, 2013
smorgasbord I think most car company executives don't understand where the car business is going to be in 10 years.�
Aug 13, 2013
Discoducky So no and no then?�
Aug 25, 2013
MikeC As the only non-troll short with the courage to post here, I think you are a valuable resource to this forum. I'm curious to know if you are still holding this position? At what point would you close it out, or do you find it looks even more tempting at 161?�
Aug 26, 2013
Realist I was lucky to close my last position at 143. Still far away from getting the money back of the original trade though.
I wait for some volatility for further actions.�
Aug 26, 2013
Discoducky Bought some at $138 and now waiting for a low to buy more. Volatility works both ways. Since I might not be the strongest strong there are most likely others behind me.�
Aug 26, 2013
rdalcanto Realist, I'm sorry if you already answered this in the first 30 pages, but have you driven the car? Once you do, you realize that it is superior to anything else on the road, and that Tesla will change the auto industry for ever. That is why current P/E ratios mean nothing. There is zero chance of Tesla failing at this point, and zero chance it will be below 200 in a few years. The only question is - How big will it become?�
Aug 26, 2013
brianman My last buy was around 138 as well, and sold it at 151. While waiting for the next buy opening, I noticed it spike to 170+ today. I didn't have faith in that number.
(Small numbers but...)
Bought my first put today at 170-something. Sold it back at 163ish a mere 3 hours later. 36% profit in 3 hours. There's a reason why shorts get greedy with a volatile stock.�
Aug 27, 2013
marvinat0rz There is not zero chance that Tesla will be below $200 in a few years. The probability of this is considerable. I believe in Tesla's vision as much as anyone, but let's not delude ourselves to believe that this is a risk-free investment.�
Aug 27, 2013
rdalcanto Yes, I was exaggerating slightly, but I think the chance is very low.�
Oct 29, 2013
Realist I got back on the short side at 162.50 yesterday.
I believe the "blow out" earnings report coming up could be baked in.
Sentiment is turning to the downside people get aware of of the risks and massive overvaluation.
I see fair value well below 50$ and I expect the stock to go there in the long term.�
Oct 29, 2013
aznt1217 Glad to see you are willing to back up your assertions with skin in the game. Although I think you are wrong in about a weeks time, good luck and be nimble.�
Oct 29, 2013
lolachampcar Oh No..... I just bought....
I guess I am !Realist�
Oct 29, 2013
Zzzz... Hope you double down
�
Oct 29, 2013
Realist I closed the original short at 134. Still a long way to get my money back. My current position is also smaller.�
Oct 29, 2013
vin5xxx I took the opposite approach today and bought some Nov 8 calls at $175 strike price on margin. I bought mid-morning and have a nice healthy unrealized gain by the close.
Realist, if you are wrong, at what price will you close your position?�
Oct 29, 2013
rdalcanto ??? In 5-7 years, when they are selling 500,000-1,000,000 cars/year at a 25% profit margin, you really think that the stock will only be worth $50?!?!? HOW?�
Oct 29, 2013
mershaw2001 I think realist is thinking that your situation, 500,000 cars/year, is unlikely and that in 5 years they will be stuck selling 40k cars still.�
Oct 29, 2013
marvinat0rz Realist, out of curiosity: Do you have any opinion on Tesla's long-term prospects, or is your short thesis based only on Tesla being overvalued today by traditional automotive standards? I am long, but I could see a world where Tesla fell to $50/share in the short term. This would have to be based on a massively negative change in sentiment, maybe with a crash in the wider stock market. And I obviously believe it is very unlikely in the long term - Tesla will not be selling 20-40k cars/year five years from now, and any valuation has to account for this probability. If growth stocks were always valued on a "sensible" P/E, it would be a fantastic opportunity to make a lot of money.
Then again, John Petersen says that Tesla's fair value is $5/share, so maybe your short thesis is an optimistic one.�
Oct 29, 2013
mershaw2001 Actually I think that if tesla fell down towards 50 dollars, we would have to consider the fact that Elon musk might get a margin call from Goldman and have to sell out a portion of his 100 million, in which case we'd see even more downward movement.�
Oct 29, 2013
sub Anything could happen, and at some point tesla will have some sort of shorter term correction. What I don't get with people like realist, why all the negative energy? I bet your a joy to be around. I spend zero time thinking, reading, investing in any company I don't believe in. Why not go put your money behind something you believe in rather than wishing for things to go bad for others and a company? Good luck with that, I've removed everyone in my life that even remotely resembles this sort of negativity.�
Oct 29, 2013
bonnie The nice thing about being long is I have the luxury of staying focused on the long-term and ignoring the negativity of the shorts like our friend there. Sure, I hear his points ... but I evaluate companies for a living, have gotten to know a lot of the company management team, have met the talent they've hired, have walked the factory floor, witnessed the power of the culture and vision within the company, see how driven people are, own the product, experienced the customer service, watched acceptance changing, witnessed brand recognition growing exponentially, studied the financials, and believe in the future.
It's above $32? ... The rest is just noise.�
Oct 29, 2013
MikeL Ha! As I recall, I paid $32.51 for my first batch. Some friends and family have said "you have GOT to sell, or at least keep your finger hovering over the button for when it tanks" ok, I'm paraphrasing. 2 things they don't seem to know: I'm in long with only spare cash I could afford to lose, and: a drop in price means 'buy more' not 'sell'. I'm a believer. ML�
Oct 30, 2013
sub I'm with you for the most part, I'm well into the green but not as far as you. The shorts/bears don't affect me personally, just trying to illustrate their negativity. I can see playing short term downward movement of a stock as a pure financial play, but these shorts are obsessed with tesla failing. They have to be really miserable people to be around, they don't realize the negativity hurts them the most. Poor things, I guess they can put a price on happiness and apparently it's a lot lower than $164.�
Oct 30, 2013
marvinat0rz I dunno, there should be room for opposing views on this forum. Seems like whenever someone who's short or even a bit negative shows up here, he gets pounced by 200 contributors, accused of trolling, accused of being stupid etc. I think opposing views are valuable feedback which should be appreciated. Which is why I encourage you to post, Realist.�
Oct 30, 2013
sub Just to be clear, I'm not against realist posting or being on TMC, trying to understand his and other shorts psychology.�
Oct 30, 2013
lolachampcar I'm already up from jumping in yesterday.
To be clear. My long position remains untouched. I just can not resist a little "day trading" when the stock gets hit just before what I believe will be a very good Q3. It just does not make sense so why not make a little coffee money.�
Oct 30, 2013
Realist It's all about Valuation.
Tesla is a 20 billion$ company. So far they have not generated a single $ on cash flow despite the surprising success of their flagship car Model S.
People try to justify the market cap through various arguments (technological leadership, brand value, Musk being a genius etc....)
All this "believing" and the sheer greed through the share's surge has created this massive bubble.
I don't have a crystal Ball, so indeed Tesla could go to 300 and higher. Still I see very viable chance for Tesla actually ending up as another Fisker. The people who really believe that Tesla can shake up the whole industry have obviously no insight into the forces and knowledge of this sector. The Model S is in fact already an outdated car and the only reason why companies like Toyota and BMW don't create a direct competitor is the profit margin.
I know that americans always see themselve as the leader in tech. But that is not how we think. I see no way for Tesla being sucessfull in Europe without subsidies. Musk wants to sell 10.000 cars a Year in germany. He will be lucky if he sells 1000. Japan might be worse still.�
Oct 30, 2013
Zythryn Realist, is the "viable chance", as you put it, based on some sort of analysis, or on your opinion? What is that based on?
Tesla has already cleared many hurdles Fisker failed to clear.
They have a vastly superior supply chain than Fisker did, and are less reliant on it than Fisker was.
I do value opposing views, I just would like to know if yours is based on anything?�
Oct 30, 2013
Mario Kadastik Hmm, maybe you can enlighten us in which parts it is so seriously outdated? And considering the luxury or performance class of cars the Model S is not higher priced, in many cases it's far cheaper than the competing cars so seeing 1000 sales is being extremely pessimistic indeed. The 10k per year goal is at the end of 2014 when they have created the infrastructure to take range anxiety out of the question even for autobahn speed driving. That's one of the reasons Elon put focus on Germany and is investing hard in 2014 to german infrastructure. Creating 54 superchargers costs ca 8M, which is offset by sale of 4000 cars (the 2000 usd supercharger activation at sale) so it's a good investment.�
Oct 30, 2013
Krugerrand This is why you will be wrong in the end. You've made a gravely incorrect assumption (several actually). You can't possibly know the background of the people, or even the majority of the people, who 'really believe that Tesla can shake up the whole industry'. There's a whole group of people, right this very second, working at a little company called Tesla who believe. We know many of those Tesla employees believe because people talk to them every day and report how enthusiastic they are about what's going on at Tesla. We know many of those Tesla employees have insight into the forces and knowledge of this sector because they've come from other automotive manufacturers, some from very high levels. There are many people on this forum who believe and have insight into the forces and knowledge of this sector. Many of the original investors in Tesla and current investors, have insight into the forces and knowledge of this sector.
This is also why you will be wrong in the end. Your unwillingness to acknowledge the success that Tesla is already seeing in Europe. Your inability to comprehend the ingenuity of Model S, the Supercharger Network, and Tesla's business model. But mostly your lack of understanding of the man at the helm.�
Oct 30, 2013
qwk I don't see how anyone that drives the car can say that it's outdated. Lol. Going from a Model S to ANY other car feels like you just jumped into an old wore out Model A. I really cannot se how the existing auto industy can adapt. They are doomed.�
Oct 30, 2013
rdalcanto This comment leads me to believe you have not spent real time driving the car. The P85+ blows the doors off the 2012 Porsche 991 911S that I sold this summer. If any cars are outdated, it is the ICE products from Porsche, BMW, Audi, etc., not Tesla.�
Oct 30, 2013
JRP3 Realist's last post points out exactly why he gets "jumped on". He's created an unrealistic scenario and based his investing strategy on it.�
Oct 30, 2013
30seconds among more complicated analysis around sales growth, costs, margins, discount rates, etc that I like to do around major positions I hold I also like the simple ones.
I agree with Realist that it is all about valuation. So at a $20B valuation for a company with high growth prospects I start with P/E guesstimates. I don't think the existing automakers are a good benchmark any more so than newspapers were for internet companies 5-10 years ago. Any of the publishing companies could have built substantial internet portals, search engines, apps, etc., but the fact is that they were too tied to existing business models and internal structures (talent / lack of talent included) to do so. this is a common story with companies that provide substantial technology disruption and you either believe it or not.
So at a P/E of 20 and a valuation of $20B what would it take/ when could TSLA reach this? If Elon says 25% margins for the Model S and X and average selling price of $100k (this is the EASY math version) then TSLA would need $4B in revenues or 40,000 vehicles sold. Seems to me that they will hit this run rate by the end of next year at 800 vehicles / week. that would put them at a revenue multiple of 5 and earnings multiple of 20, neither of which are particularly unreasonable for a high growth company that is a major disruptor.
Of course this is an oversimplified analysis, but they too have utility.�
Oct 30, 2013
marvinat0rz This analysis is off by at least a factor of two since you need to use net margin and not gross margin. So you probably need at least slightly better accuracy for a serious bull case.�
Oct 30, 2013
Realist The crucial key to my thesis are the warranty claims.
The initial gross margin is not going to help you when warranty claims explode. And this is what I see from several sources incl. this forum.
The Model S has a 50.000 mile warranty. Imagine one serious battery problem and it destroys the profit margin for 3 or more cars.
Getting the quality right is everything to get sustainable profit in this industry. Tesla is a very long way from that. I believe Musk is clearly underestimating this factor.
If this warranty claims will show up in the numbers, basically showing Tesla's inability to create any positive cash flow, it should be a shock to the bulls.�
Oct 30, 2013
qwk So other manufacturers cars don't have warranties or problems? You are really grasping here, and your track record is sad.�
Oct 30, 2013
aznt1217 I agree on the point of pure fundamental valuation, but this has always been the lifelong debate in the world of finance, and I understand the concepts of cash burn/generation. I hate to say it but your thesis is all over the place. You say it hinges on warranty, then you change to say that they cannot sustain sales, then you talk about margins and how they are seemingly razor thin.
Can you please provide an example of a warranty claim and its financial impacts, I haven't found anything? In fact it's inherently less of an expense for Tesla. Problems are easily identifiable and with the way the car is made everything is modular with less parts. If there's a serious failure in the motor... switch the entire assembly out. If there's a problem with the battery... swap it out. I don't see the issue.
I give you credit for having conviction in your case of shorting, but it's on the delusional side of things because it it's baseless. At least the bulls have a case for a direction. I don't see yours. Yes, you can say that people are crazy to keep going back to the question of "have you driven the car?" but this matters. If you haven't, then how can you say it's outdated? Can you please let us know why you think the vehicle is outdated?
Your comparison's to Fisker are dead wrong as well. If you had any sense of business and understanding management metrics/performance/basics you'd know why you were wrong and how it's flat out ignorant to even draw this comparison. You also say that quality is underestimated at Tesla, well this is flat out wrong. Conference call after conference call, this point is stressed in manufacturing Q+A. Gilbert and Elon aren't scrubs they have a track record for quality. There's a reason why he was sleeping on the manufacturing floor during ramp up and why his office is there. The focus is there and I highly suggest you focus on what the real reasons you short so you don't lose your shirt in the long term.�
Oct 30, 2013
Johan Warranty claim worries is a valid concern. So is a fire that destroys the NUMMI (Tesla have only one plant and are vulnerable in that respect). So is a big earthquake that shuts down Panasonic battery factory (until they have secured other suppliers). Etc. etc. But are you really building your short case on this?�
Oct 30, 2013
blakegallagher assuming an 80k asp and a 25 percent GM that statement says that replacing one battery under warranty would cost Tesla 60k or more. That is higher even then their retail price on these batteries. While I am glad you are posting here and warranty claims could become an issue .... you are clearly exaggerating when you say one bad battery would eat the profit of 3 or more cars.�
Oct 30, 2013
Realist The financial impact of warranty claims do become an issue when rising beyond the calculated provisions.
The Model S has serious major issues. Just browse through this forum, the car is not on a competitive level regarding quality. And you cannot sort it out from one Day to the next. It takes years to get it right. Most failures in the car industry happened because of quality issues.
The over optimistic view on demand and technology, the competition and the overall weak financial condition are other points, still the warranty claims are the major factor the market seems to overlook for the moment.
The valuation is far beyond any reasonable approach. But since were are in a bubble it could become 300 before turning to 50 and lower. In the long term I see very little chance for Tesla to survive.�
Oct 30, 2013
sub Speaking of out dated, the car we are needing to replace is a 2001 BMW 3 series wagon. I've spent thousands over the last few months keeping it on the road, it burns a quart of oil every couple of weeks. It has 150k miles. We have test driven new BMW wagons and I refuse to buy one, they are only slightly improved in the last 13 years and I can't justify spending 5k, why would I spend 40-50k?!
we just did our 2nd test drive, it's been hard getting my wife on board. Plan was to test drive model S then head to ice dealers and probably buy something because my wife insisted she couldn't do the tesla. After our tesla test drive, we didn't bother going to look at ice vehicles, pointless. We will be buying our tesla shortly.
why the long story? This is what the shorts are missing, hard to break this sentiment down with a calculator, can't stop the momentum now.�
Oct 30, 2013
Johan This claim has no root in reality. Clearly you must have some better source for this claim than this forum. There is going to be a hughe bias towards error and problem reporting on a forum like this. Please tell me you have not based a large part of your short thesis on such weak assumptions.
One hard fact, that we do have, is that even though warranty work/claims has never been a singled out cost post in the quarterly reports, it would have been very hard to hide these costs were they in fact substantial. There is no sign of these costs having been of significance in any of the last quarterly reports. Now I know you will say that the cars have only been on the road for a short time and that in time they will start to fail/break down/require a lot of warranty work etc. etc. etc. But again I ask what are you basing this assumption on???�
Oct 30, 2013
qwk Tesla refurbishes pretty much every part. Battery problems are dirt cheap to warranty, as you only have to replace what is bad.�
Oct 30, 2013
aznt1217 Congratulations you understand basic budgeting of cash inflow and outflow, but you missed my point. Where did you get the numbers for 1 warranty claim takes out profit margins of 3 cars. Which serious major issues are you referring to? Creaking windshields? Moonroof wind noise? Even Honda's and Acuras have this problem. This is industry wide and you are looking at a very limited sample size. For every 1 car there's an issue with there are 10 or more (just giving an example) that are more than fine. There's confirmation bias on the negative side as well, people are more inclined to write negative reviews than positive ones. Give me some serious major issues. Don't even talk about German cars and quality because quite frankly most of them don't hold up well under normal usage after a certain point. This isn't even up for debate, it's damn near fact based on empirical evidence. It's called planned obsolescence. Why do you think most luxury cars are leased? Why do you think they started maintenance free service plans till 3 years/30,000 miles. More importantly, I still haven't seen any data or facts to back up your point. You talk about financial stability like it's Tesla a la 2008. It's simply not. You clearly have no handle on the way a company works.
And no, most failures in the car industry do not happen because of quality issues directly. Do a full analysis up the chain from product to boardroom and you will see where the issues lie. Quality is only as good as it's management. Henrik Fisker didn't give a damn about engineering which led to his quality issue... too much heat leading to burning cars. DMC was promising, but they had quality issues because John Delorean was a drunk and didn't care. GM had an issue because executives were too busy playing boardroom games while competitors surpassed them.
It's good that you are posting this because it's quite a good representation of common market sentiment. Human beings are sheep. Believe what you want to believe, but most of the Tesla bulls are contrarians and its these people that make it successfully. Had you made this argument before the Model S was launched it would be more feasible. You say that Tesla has very little chance to survive, but I am more inclined to believe the minds that are greater than yours and mine such as Elon Musk, JB Straubel, Akio Toyoda, and others. I suggest you disconnect your heart from your head and take a breather and think about the baseless arguments you are putting out.
- - - Updated - - -
I never said they weren't a valid concern, but I want to see his analysis on the financial impact. I haven't seen squat. If he's making assertions, he needs to be able to back them up on stuff other than emotions and hopes and dreams of Tesla's demise. Truthfully I could care less on what he bases his short case on because I enjoy free lunches, but if he's trying to sway others into believing stupidity there's a serious problem with that.�
Oct 30, 2013
Johan ... So then you and I are in agreement thenWhat I meant was that if there were real data pointing towards poor quality then warranty costs would be a valid concern. But to just throw it out there as a valid concern, without any data supporting it, would mean that any likely and unlikely catastrophe that could hit Tesla is a valid reason to short the stock (which it is of course not).
�
Oct 30, 2013
NigelM Quote of the day IMO. There's plenty of folks on TMC who've played with puts and call and at various times many of them have effectively bet that the price is going down; just so happens there's a few folks that think it's going down much more than others....it's just a question of degree.�
Oct 30, 2013
anticitizen13.7 A startup company like Tesla, which is a manufacturer, has to re-invest money in physical plant expansion and R&D for future products. I don't believe that standard models of present valuation apply, because the company is still working towards its goal of building cars in the Hundreds of Thousands (300k+/year) rather than in the Tens of Thousands (20k+/year). Nobody, whether Bull or Bear, is going to have any good indication in the near term of what the company will be actually worth 5-10 years down the line. Is investing in Tesla something akin to speculation? Probably, but all new ventures come with uncertainty and risk.
The stock could ultimately go to $1,000+/share, or be worth $0/share. Nobody knows.
I want to address the bolded comment, because it's a common criticism leveled against the Model S. I believe people claim that Model S is "oudated" because it currently lacks several features found in similarly priced cars.
In its very comprehensive review, Ars Technica says as much: http://arstechnica.com/features/2013/10/review-tesla-model-s/3/
However, it is much easier for Tesla to add the features it doesn't have to its cars, than for BMW and Audi to add Tesla-like technology to its existing platforms. Stuff like Adaptive Cruise Control and IR cameras are relatively inexpensive electronics. It should not be difficult to integrate these systems into the Model S. In contrast, for BMW or Audi to replicate the Tesla driving experience, they would have to engineer whole new mechanical platforms around an electric powertrain, develop a large battery system, create a Supercharger-class DC charging system, deploy a network of Superchargers, and sell these high performance electric cars alongside their ICE counterparts.
For Tesla to catch up on the gadgets will not be difficult. For BMW and Audi to catch up on the paradigm shift to electric cars is a much more difficult path. By the time BMW has something that can compete with a Model S in several years (if they choose to build a 5-series sized electric), it will be too late. Tesla's Supercharger network grows by the week. Tesla will have made serious inroads into China, where big American cars are seen as a prestige purchase.�
Oct 30, 2013
Realist Based on Tesla's last SEC Filing warranty accrual rate is below 3% of revenue. That is among the lowest rate of the industry equal to japanese and much lower than my german friends.
I find it hard to believe that such a young company with a basically new and unproven technology can achieve anything close to that, especially considering the fact that they have a 8 year warranty on the battery.
You can make your own calculation if real warranty expenses are 10% of revenue. The effect on the profit margin is severe. Interesting to note during Roadster production accrual rate was 6%. And that car was plain simple in comparison to the Model S.�
Oct 30, 2013
anticitizen13.7 http://www.consumerreports.org/cro/news/2013/10/tesla-model-s-recommended-reliablity/index.htm
(1) Tesla had lots of data from the Roadster to use when designing the Model S battery pack. Its not like the concept is completely novel.
(2) Electric powertrains are inherently simpler than internal combustion engines. Look at the Tesla Model S motor + single gear. Then look at a Honda J35Y1 V6 engine + 6-speed automatic. Which one has more parts that can fail?
Also, even in the event of a battery or motor problem, repairs are much easier on a Tesla Model S than they are on a conventional petrol automobile. Dropping out the battery is a trivial task for the service center. The powertrain is easily accessed as well. To pull an engine out of something like a Honda is much more complicated and requires a lot of $ cost in labor.
I'd like to hear anyone dispute the points I've made. I was (and still am, to some extent) a big Honda supporter, and I think Honda engines are great engineering, but any way I look at this, Tesla's way of making an automobile is the future.�
Oct 30, 2013
pfq1982 I wonder about the warranty as well. Looks low to me too. SEC filings have shown Tesla doesn't always get their books right, so I think you are fair to question this.
Having said that, what really goes into the warranty accrual? If there is a bad inverter (hum), is that expense on Tesla for bad assembly or on the part manufacturer for a defective part? I don't know.
BTW, from the SEC filings, this does show that Tesla warranty accrual isn't apples to apples vs. other manufacturers, since they have the additional layer of dealer profit to work through. On the other hand, some of that expense might show up as SG&A at the service center instead of a labor component of warranty COGS expense:
"Further, we believe that by owning our sales network we will avoid the conflict of interest in the traditional dealership structure inherent to most incumbent automobile manufacturers where the sale of warranty parts and repairs by a dealer are a key source of revenue and profit for the dealer but often are an expense for the vehicle manufacturer. "
- - - Updated - - -
Unless their cars are discovered to cause cancer, Tesla is well past the "are they going to survive" part. They did that when they won Consumer Reports and grabbed big mindshare and exploited a niche market (the long-range EV sedan) that the big guys still refuse to compete in.
Think about it, they created a luxury brand. The only one that has really done that in ages is Lexus. And Lexus sells like crap in Germany - I bet Tesla surpasses them in short order.�
Oct 30, 2013
mkjayakumar Tesla doesn't cause cancer ?
I thought JP said it did.�
Oct 30, 2013
brianman Point of clarification - Are you saying they:
(1) Are lying in the SEC report?
(2) Have bad data when doing their math.
(3) Fail math.
(4) Something else.
If (4), please elaborate.
Thanks.�
Oct 31, 2013
NigelM He's simply saying that he feels their forecast of 3% is risky given what he perceives to be unproven technology.�
Oct 31, 2013
bhuwan The way the stock has been behaving lately, realist *MIGHT* actually be right to have short'd the stock !�
Oct 31, 2013
Realist I believe Tesla is trying to show the best EPS report they can. They are not lying or doing anything illegal. They are just stretching their accounting method up to a very aggressive point. It�s just a non-conservative Report.
Still, there is reason to believe that the warranty accruals are too low. The consumer reports are not a reliable resources because the Model S is a very young car. Yes an electric car has less parts than any ICE but this is not protecting you from any flaws. A modern ICE engine will need new fluid after 20.000 miles and that�s it. Warranty claims have come down dramatically in that proven technology. It�s the minor points that cause the problems, software, hardware, doors, windows, sunroofs, tires, brakes, Suspension.
German car manufacturers have rates above 5% of revenue. Reason for this is the higher complexity of the cars. A full loaded Panamera has more technology under the hood than a Chevy spark or a Ford Pickup. Therefore German car companies warranty accrual rates have always been higher. Tesla want�s to undercut these rates right from the start with faster and less complex production times. Still the Model S is not a simple car. It�s a very different animal to the Roadster which was essentially a Lotus Elise.
A warranty rate of 7% would be a great achievement for Tesla. This is 4,5% higher than the actual accrual rate. Assuming 3b revenue in 2014 4,5% additional warranty expenses gives you 135 mil. $ extra cost each year. 10% warranty rate gives you more than 200 mil $ extra cost, essentially wiping out any credit feasibility within one year.
I don�t say they will hit a wall soon but these numbers show you that there is indeed still serious risk to the business since the company virtually has no capital reserves at all.
For comparison. The Fiat Group with a market value 50% of Tesla reported 1 billion net profit yesterday and 20 billion cash $ on hand. There is debt of course but market cap is below book value. Tesla is worth app. 15x book value.
Pretty insane number.�
Oct 31, 2013
NigelM There is a certain logic to the argument that a more complex car has higher warranty costs, however I also think that the Model S is overall much simpler than an ICE and there is some Roadster history to validate the technology. IMO, the big factor that you're missing is that the dealers make a huge chunk of their income from warranty costs and this means two things:
- Dealers have a vested interest in finding warranty-covered problems
- The auto-manufacturers warranty costs include the dealer profit margins
Tesla's stated modus operandi is not to profit on service and so their fully owned Service Centers will effectively be much lower cost to the company than traditional warranty costs going via a dealership.�
Oct 31, 2013
Mario Kadastik I can understand your worry for the warranty, but I doubt this will be reason enough for a $50 price target. With regard to Fiat group I'd have to guess the reason the price is below book value is that in the future the market expects the company to not only not grow, but actually shrink in size. You cannot compare a fast growing young company to that of a long term company with many legacy expenditures attached to it. Yes the efficiency in process might be higher in an old manufacturer, but so are long term liabilities.
The share price of Tesla might have appreciated faster than people expected and it does value in good execution on the management part over the 5-7 years, but with good execution the value is actually still low with plenty of room to grow. I agree that there are risks that might hit them square in the face, but they've so far proven they can overcome those well in advance (like the battery supply risk that got resolved for the next few years at least with the recent press release). I seriously doubt they have demand issues for years to come still as the general market is huge and capturing just a few percent of it leaves a huge upwards trend. If the car were so-so I'd be worried, but the car is so good that it really sells itself. Demand is always a function of delivery time, I for example was waiting for the Model S for many years too, but didn't even contemplate buying one until they started rolling on the streets and I could see realistic timelines while many people did reserve (the early adopters). Now we are getting to the phase where curious people with loads of free cash or ability to raise the cash are starting to pick up the car after seeing it in action and this will roll out in an exponential exposure as more cars appear on streets. Add to it global expansion and demand as such will not be an issue up to 100-200k MS/MX per year. So for now and the next 3-5 years I'd say Tesla will always be supply limited, which is an excellent position to be in. The expansion is easily paid for by the cars themselves and I fully expect Tesla to be barely profitable while it grows hard meaning that we will see high P/E numbers purely because the E part will be compressed due to R&D and CapEx allowing for faster and faster expansion. Once Tesla reaches a critical level of exposure (most of EU, parts of Asia etc) the CapEx will start to slow down somewhat and the EPS will rocket up reducing the P/E to more standard ranges.
I hate AMZN valuation, but it is a good example where rapid expansion at close to no net profit is reasonable. I think the AMZN train is going on for too long as it's now well past a decade, but there are reasonable expectations that AMZN should keep expanding with every $ that they make therefore showing no real profit. With Tesla I think it won't be quite net zero game, but will show regular profit, but I fully expect this to be small and would say that a better valuation would be to consider pure car sales profit removing warranty costs as the basis for EPS to value the company because that is a better indicator. Tesla could decide to not build a single new store or supercharger for one quarter and show blowout EPS, but instead they invest the money for the future.
So taking 2014 40k sales at ASP $95k (still expanding to new markets with first cars mostly high value high option) and profit margin of 25% (I think they will target 30%) gives ~$1B profit and a forward P/E of 20. That's not too bad for a company growing at 100+% YoY. And I left out the CapEx and R&D costs on purpose as I expect Tesla to take almost all of the profit to expand as already outlined. If we assume 50k MS and 30k MX in 2015 with 100k ASP (MX will be 10% higher cost and initial year will be higher config + signatures) we get $2B profit barring any expansion costs with forward P/E if it remains as it is just 10. Doubling that again for 2016 (realistic, but will require substantial capital, which I've not computed if it'll be doable from net income purely) we get P/E of 5 with static stock price.
Yes, I'd have to discount those numbers back 1,2,3 years, but at 5% rates that wouldn't be too big a change, possibly adding 1 to the P/E number so for a simple exercise I left that out and the whole capital usage part would need a separate investigation, but looking at pure income I don't see TSLA as grossly overvalued. It just values in reasonable growth over the next 4-5 years. And I'd even say that it's not fully pricing in Gen-III, it can be reached with purely MS, MX sales.
Just my $0.02�
Oct 31, 2013
pfq1982 Realist, I think you are missing something important. Auto manufacturers pay their dealers for parts and labor related to warranty issues. This is a major source of profit to the auto dealers. Tesla saves on this margin by doing the work themselves at the service center. It's all contained within one entity.
So you have to adjust for this markup to make a real comparison. I don't know what the markup is, but lets use 40% as an example (labor is probably a cash cow for dealers). Simplistically, if a dealer charges $100, that's what the Germans accrue for warranty, but the real dealer cost is $60. Tesla would accrue the true cost for warranty since they do it themselves, so $60. That's 40% less than the Germans.
Tesla 3% warranty accrual happens to be 40% of the 5% accrual you mention.
Is it conservative? Probably not, but I also don't think it's crazy.
- - - Updated - - -
I haven't heard of this before. Are you saying they would cut open a pack and replace a bad group of cells, then re-seal it?�
Oct 31, 2013
bonnie As a stock holder, I hope so. It makes sense to refurbish.
As a Roadster owner who had a battery replaced, I know so. At least for Roadster batteries. (But no 'cut open', just 'open'.)�
Oct 31, 2013
Realist I don't know if Tesla has a real cost advantage here. The car makers cannot afford to give away to much profit to the dealers.
Furthermore Elon Musk always had a strong focus on the best possible service + generous warranty.
When taking about complexity ICE vs. Tesla Model S. We all know that the Model S is a great handling machine with it's low centre of gravity and the battery sitting on the floor. But the battery is also exposed to damages from the ground.
If you touch the ground in a conventional ICE there's nothing to worry about but hitting a serious bump in the Tesla can damage the battery. I believe this might also become an issue on insurance.
This is just one example of things that can happen in a completely new car.�
Oct 31, 2013
anticitizen13.7 This is all speculative. And it addresses none of the other points I raised earlier.
Nothing to worry about?
Have you ***ever*** worked underneath a petrol car? Oil pan, exhaust system, fuel tank� just some of the things that grounding out can seriously damage. There's a reason why Jeep and Subaru owners buy skid plates if they anticipate driving over rough terrain.
The kind of driving or mishap that would damage the Model S battery would also cause massive and expensive damage to a petrol car.
You cannot be serious. I'm done with this thread.�
Oct 31, 2013
Discoducky Ah, but they do and that is a delta. Dealerships in the US are typically very profitable for their owners and good salesman (I have first hand experience)
Taking the same debris and impacts to an ICE would do considerable more damage to the car overall and is much less protected. The armour plate protecting the battery is a model of sufficient engineering and that hypothesis has been demonstrated in the field.
Also, I think that your focus on the risks and dangers facing TM and the Model S are good to call out. But I'm still waiting to hear about something that proves to be a real negative to the overall business model for current or future. Currently, I haven't heard one. When I visit this thread I still feel compelled to invest more in TM as your advocating is not very persuasive.�
Oct 31, 2013
Realist The difference is that people know how to handle petrol cars and their damages. There is no experience on a design like the Model S.
It's a risk, nothing more.
I think that Tesla's business model can succeed but the financial risk do not justify the market cap. The valuation dicsounts the best possible world in about 4-5 years from now.�
Oct 31, 2013
mershaw2001 Don't be done with this thread. I am glad to hear arguments from shorts, even though they are specious, and have someone like you point out how they are wrong. I don't work on cars enough to know that you could buy skid plates etc.�
Oct 31, 2013
Mario Kadastik I bought a skid plate for my Evo X. Was told by a guy who builds rally cars from them that every Evo should have a skid plate because there are many fragile details down there, that people have gotten 30-40% car price repair bills from running over a simple brick while cars height dropped (i.e. coming down and turning up on the road) or just hitting a curb. I had recently to swap the pump for 4-wheel drive and it cost me 15% of the car market value. For a freaking simple pump!!!�
Oct 31, 2013
anticitizen13.7 Ok, I will stay around!
Here's my response:
For the majority of drivers who are NOT going off-road, there is no difference in how a driver handles a petrol versus a Model S automobile. In either case, drivers MUST if possible avoid driving over debris on the road, or risk damage to undercarriage components. Any type of car that strikes serious road debris is at risk for very expensive damage.
It is true that battery packs are expensive to replace if they are damaged today. However, several years from now, economies of scale and advances in technology will likely lower costs substantially. Remember what LCD monitors cost in the early 2000's? Now LCD monitors cost very little as they are a mass produced, mature technology.
With regards to the market cap: yes, the price reflects a lot of risk, but this is the nature of relatively new companies. Looking 4-5 years down the road, we still don't have a good idea of what Tesla's potential will or won't be. 2017-2018 should be around the time of the G3/Model E launch. Nobody knows for sure what the demand or profit will be when Tesla goes for 300k+ units/year. Trying to quantify this is largely futile in 2013 because anything could happen. In my estimation, you either have faith that the product and people will succeed in the long run, or believe that they won't succeed. Predicting exact results or valuation is impossible.
I think the odds are good that Tesla will change the automobile industry permanently. I don't aspire to own any more petrol cars. Children I know all want a Tesla. People pose for photos with the Model S at Tesla stores. The only other product line I can think of that generates this kind of craze is the iPhone.�
Nov 1, 2013
eidco It's crazy statements like this that cause people to snap back at Realist. "Very little chance"?? How about "a chance it won't survive" or even "little chance"?
Obviously you're entitled to your opinion, but really...that's over the top.�
Nov 1, 2013
Jonathan Hewitt I agree. Realist has stated many possibilities but makes it sound like they are absolutes. There are a ton of possible risks but none of them may materialize. Maybe a year ago it was worth shorting the stock, but Elon has proved he knows what he is doing so IF things go horribly wrong I attribute it more to bad luck, not inherent flaws.
At this point I think it's more likely GM will go bankrupt (again) than for Tesla to go under.�
Nov 1, 2013
Robert.Boston The best evidence against Realist's short case, to my mind, comes from Tesla's successful recruitment of senior executives. You don't leave top positions--dream positions, really--at established companies like Apple and Aston Martin without doing your homework, very carefully, about Tesla. These executives know more about the car business than any of us, and they have better access to Tesla corporate details. Undoubtedly a large part of these gentlemen's comp package is in ATM options, so if they thought these options were going to be worthless, they wouldn't have joined Tesla. But they did. QED.�
Nov 4, 2013
Realist Yes but they get these options for free. They don't take any risk.
3 years ago we saw Dany Bahar coming to Lotus and during that time he burned more than 50% of cash and almost ruined the Company. Former Apple Retail chief Ron Johnson went to JCP only to leave the Company a few months later.
A former Aston Martin employee doesn't mean anything. In fact AM is a niche player with a weak financial position.
Most people in these forum have absolutely no clue how to value a business. They constantly focus on the growth prospects. Still, Tesla is a Company which burns cash. There are no share buybacks, no dividends, only dilution through options and convertibles.
This is a momentum stock, any fundamental analysis is useless. If the market value goes down to 10 b$ or 90$ there is absolutely nothing that will protect you from sliding further. It can crush to 50$ in days and the market value would still be overblown in relation to book value or any other ratio.
Of course greed can drive it to 300$ or 250$ tomorrow post earnings. I really don't care about that. In the long term there is still very serious risk to this stock.�
Nov 4, 2013
Mario Kadastik Have you seen the german interview from last week where Elon claims they are operations and cash flow positive. He refuses to detail how much because of the upcoming earnings call, but he did say that both were positive. This means that they are able to produce cars and finance their cap ex and R&D and STILL have money reserves increase. So your cash burning excuse is pretty much over, very likely with tomorrows Q3 report.�
Nov 4, 2013
Realist Honestly, no.�
Nov 4, 2013
Mario Kadastik That no I presume was about the video and if you've seen it I guess? If so, then here it is:
Tesla-Chef Elon Musk im Interview - Frontal 21 - ZDFmediathek - ZDF Mediathek�
Nov 4, 2013
Mario Kadastik [Moderator: snippy quote removed]
I think that's bound to end up in snippiness
In Estonia we have a saying that for every two Estonians there are three opinions.�
Nov 4, 2013
Realist Thanks for the video.
A positive cash flow would be a surprise.
I think Tesla will have a very hard time to achieve a healthy and sustainable cash flow. A single positive number is not going to change my point on Tesla's current valuation.
Expectations are sky high.�
Nov 4, 2013
NigelM Mod Note: It did.�
Nov 4, 2013
anticitizen13.7 Buy backs and dividends are important valuation benchmarks for mature companies that generate more cash than they need for R&D and operations. This is useful for a company like Apple or Verizon or Intel. It's pointless for a company like Tesla which must reinvest everything in order to grow to potential.
Is TSLA something of a bet? Yes. Some folks here are willing to take that risk and I don't see why you keep harping on people being "clueless" about business and automobiles.
And many of us here are well aware that TSLA is a risky bet with very high volatility. I've repeated warned people not to bet everything on one stock.�
Nov 4, 2013
NigelM I disagree. Options aren't "free", they are a component of an individuals remuneration package. There is real risk for the employee that their annual income would be less than expected if the options are underwater. There is further risk involved for senior exec's in the potential resume impact of a business failure.�
Nov 4, 2013
lolachampcar And back out with my play money (long position remains). Thanks Realist for drawing my attention to the dip.�
Nov 5, 2013
bhuwan @realist probably the on;y person happy on this forum !!!!!�
Nov 5, 2013
NigelM Congrats to him. I didn't buy into his rationale but he's looking like he's in the money tonight.�
Nov 5, 2013
aznt1217 His rationale was wrong but his bet was right for now. It was a bloody earnings beat but the market is acting irrational
They expanded, grew cash in the bank and bumped up guidance. Kind of proves there is demand, no?�
Nov 5, 2013
sub He needs to get out quick while he can make a small profit. Nothing wrong with playing the short term swings of TSLA, I almost bought puts today. I didn't expect this, but I thought we could see a small to medium bump then some profit taking.�
Nov 5, 2013
bonaire "Cash balance nonetheless increased by $49 million to $796 million"
My finding is:
Shares used in per-share calculation (basic and diluted) grew by 3,668,000 shares
Cash flows provided by financing activities $24,216,000 (what is this?)
Of the positive $49MM, $24MM appears to be due to new financing and there was some dillution during Q3. Half of cash-flow positive was due to financing activity - but what is it from? They already had cash.
For me, I saw this coming since late summer. And once the analysts started calling for 7000+ sales in Q3, I couldn't help but short some shares. Now with the CapEx posted in the shareholder letter and now talk of a "giga factory" and all that - it seems like costs will continue to rise and fund managers will start to step back from supporting their blocks of shares they hold and sell into strength. I do see sideways and "downways" trading and eventual 140s coming. With all channels broken, stop-losses being taken out and frustration, there may be some tough days ahead.
I haven't listened to the call recording yet. But the frustrations of people listening to it made it sound like they blamed or are blaming Panasonic for battery shortages?�
Nov 6, 2013
Realist From what I see this earnings report was spot on with guidance. The people obviously expected magic from the company. No real surprise considering the lofty price Levels.
They guided 25% gross margin for Q4. The ASP will be the deciding factor in achieving this goal. They are already taking priority orders for P85+ models so they are trying everything to bump up current margin levels. Expectations are very high. Some Analysts like DB expect gross margin 30% and above in 2014 with deliveries at 30.000k minimum. Therefore European ASP levels have to be sky high as well. This is a highly optimistic view. I still believe Tesla will not meet expectations in Europe at neither volume and ASP.
R&D has seen only 10% increase. Less than I expected. Clearly negative.
Selling and administrative expenses are exploding. Obviously Tesla�s expansion plans play a huge role here but it also underlines my theory of rising warranty costs. I believe these costs will continue to eat into profit. Still cash flow saw an improvement which is positive.
Furthermore I don�t understand Tesla�s constant talk about the GEN III. There hasn�t been a single prototype yet, still they are already talking about a �giant battery factory�. I don�t think that it�s a good idea to be that open on future plans regarding competition.
I don�t know what the price action will be in the coming days and weeks. Analysts still seem to be in the bullish camps. I stick to my view of the current market cap being overvalued. Therefore I stay short for the time being.�
Nov 6, 2013
nikwest I would have agreed to this a couple of weeks ago. However living really close to a Tesla Store in Germany I quite saw quite changes in store traffic the last couple of weeks. While it looked like there wasn't a lot of interest a couple of month ago, there seems to be a lot now. The store is always busy when I pass by. At some point this higher interest must lead to more sales. After all the Model S is a good product. And once there are more Model S driving around this will help too. Also the investment in Service Centers and Stores in Germany has been quite impressive. I'm not so negative about sales in Germany anymore as I have been before.�
Nov 6, 2013
ItsNotAboutTheMoney The talk about Gen 3 and Gigafactory wasn't that great and a lot came from 1 analyst who's an ueber-bull focused on long-term prospects.
I wouldn't be as pessimistic as you on the ASP because they are production constrained and as long as they have that constraint they'll have a higher percentage of high value cars per quarter. Part of that is because test cars and loaners tend to be higher spec so the line-jumpers will always have high ASP. So, you'll have 3 to 6 months of high constraint followed by prioritization of high ASP vehicles on the wait lists, followed by increased production and a gradual lowering of ASP. So, I 'd expect ASP to be high in 2014 and fall away from there, aside from an early boost in 2015 from the ramp up of Model X.�
Nov 6, 2013
Zzzz... I disagree. Tesla is supply limited(li-ion cells). And would be limited for another couple years. So no point to increase R&D atm. I got a feeling that whole X model was postponed for one year because demand for Model S exceed Tesla's production constrains. And few recent price increases were direct consequence of strong demand.
Elon talks about gigafactory because it is a real threat and legitimate issue that could limit Tesla grows in few years from now. If everything would go according to plan, Tesla would need more li-ion batteries(in terms of kWh) that what was produced in the whole world in 2012... So time to take actions about that is now... But it is not clear if Tesla could convince Panasonic/BYD/LG chem/Samsung to actually do something about it. May be next year? Anyhow, the li-ion factories plus supply chain(cathode material) have a lead time of several years.
You seen afterhours/premarker TSLA price? You would love it!�
Nov 6, 2013
Realist nikwest, I agree on your point.
However, I believe lower ASPs are a big question mark. Since January 2013 Porsche has sold app. 2200 Panameras and 40% of these cars are Diesel models with an ASP well below 100.000.
If Tesla sells 1k Model S in 2014 it would be a huge success by german standards. Yet there will be far less people opting for the 85kw S or P+. To me the 60kwh clearly looks like the best value here.
Of course the Model S is a unique car but it's also very expensive by european standards.�
Nov 6, 2013
lolachampcar They are talking about the GigaFactory because Tesla's reason for existing (G3) requires massive CapEx soon with batteries being a lot of the unknown expenditure. They are talking a lot about Panasonic and "no batteries" because analysts do not get the idea of production constrained. Simply asking about other development deals with MB and the like show that the analysts do not get "we do not have enough batteries".
It's funny but everyone just takes for granted that Tesla can now build 50K S&X next year. That is an incredibly hard task and yet we all know Tesla can do it. Everyone's attention is now shifting to G3. I find that stunning for a company that, up until the middle of last year, had managed to build 2400 "violins". Well done.�
Nov 6, 2013
Robert.Boston Agreed - the frequent statements about GenIII are needed to keep investors focused on the long run in which Tesla is selling 500k+ cars annually. Without this scenario, TSLA ceases to be a growth stock and its value collapses - after all, selling 40k-50k annually of Model S/X simply does not support current market valuation, even after yesterday's stock price adjustment.�
Nov 6, 2013
Realist Either way they need a lot capital for GEN III. Generate that through cash flow will be almost impossible.
I've increased my short today at 150. We still have an out of orbit market cap.�
Nov 6, 2013
Norse I hoped you do that.�
Nov 6, 2013
Mario Kadastik How? Short selling restriction was in place from market open???�
Nov 6, 2013
ZenMan
He can still short, but must sell on an uptick.
"The alternative uptick rule (Rule 201) imposes restrictions on short selling only when a stock has triggered a circuit breaker by experiencing a price decline of at least 10 percent in one day. At that point, short selling would be permitted if the price of the security is above the current national best bid."
Copied from: http://www.sec.gov/news/press/2010/2010-26.htm�
Nov 7, 2013
neroden I wouldn't understimate the valuation of a "S/X only" Tesla. First of all, I think the company can support a substantially higher Price/Sales ratio than the typical car company, due to a higher-margin structure. Second, I think the *world* market for Model S/X is more like 100K; Model S alone is easily selling 20K in the US alone. Some have questioned the motivation behind the fast international expansion of Tesla; I believe this is intended to get decent economies of scale prior to Gen3.
That said, the stock's still pretty pricey, and I haven't bought any since it was quite a lot cheaper.�
Nov 8, 2013
Realist The media coverage with further fires could see demand falling.
If this should be the case Tesla will need more external capital injections to keep on going.
I don't think the car is unsafe. But with sentiment turning to the worse we can hit prices below 100 rather sooner than later.�
Nov 8, 2013
lolachampcar Good luck with that one.
Musk is no fool. A simple, verifiable comparison of ICE v. MS fires will do the trick provided it comes before Faux Knows and the Shorts get into high gear.
It amazes me that some people can spend their lives looking for, and enabling, all the bad things. What a waste.�
Nov 8, 2013
JRP3 I'm not so sure three fires so closely spaced will be easily dismissed by statistics. Statistically these incidents have been given a much greater amount of attention than any other in recent memory, and that's what will matter, unfortunately.�
Nov 8, 2013
Realist It's just a trade, nothing more.�
Nov 8, 2013
lolachampcar It helps in general to have a compass. Without one, the pursuit is naked greed.�
Nov 8, 2013
Realist You see greed turning into fear right now.�
Nov 8, 2013
NigelM Shorts are not greedy? We all are, it's human nature.
Stay civil please.�
Nov 8, 2013
bonnie Not everywhere.
Settle.�
Nov 8, 2013
Realist Obviously the price action speaks for itself.�
Nov 8, 2013
bonaire Wall Street (and many individuals) are cannibals. They will turn a momentum stock that they rode from 100-190 and turn into a manipulated momentum short taking it down from 190 to 100 in chunks of 5 and 10. Today, I watched an online forum "pump" like crazy from 132 to 140 with everyone screaming "time to go long". Many screaming are those who were preparing to short again once it reached the top of the downward channel about 140. I suspect it is a traders' stock right now and retail investors either have to trade with them or ride the roller coaster. Realist is simply stating that he is trading without emotion. Using fundamentals and financials to make decisions.�
Nov 9, 2013
Realist Well exactly.
All the excuses, the explanations and forecasts. Useless. Stocks act on fear and greed. Trends can be very powerful. You have to create your view and act. But ALWAYS protect your money. Never increase red positions. Don't put good money into bad.�
Nov 9, 2013
Yggdrasill Never increase red positions?
That's the silliest thing I've ever heard. It's exactly when stocks have fallen that there is an opportunity to buy. (Provided it is a solid company that will succeed in the long term.)�
Nov 9, 2013
Realist And of course you know that the company will succeed in the long term.�
Không có nhận xét nào:
Đăng nhận xét