TSLA Drops 12% in After Market Hrs after Q3 Earnings Released

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So @"Edmundo Braverman" finally woke up and sold his stake before this sell-off (slow clap), and I barely held onto my puts but will likely sell them tomorrow...

I thought the call was interesting. Musk and the CFO insisted that they are still supply contrained, but the real question is by how much? There were some good questions from the analysts and I think overall they did a good job answering, so was surprised to see the stock slide from ~9% to 12% during the call.

Discuss.

Comments (41)

Nov 5, 2013

Props to Aswath

Nov 5, 2013

Many among us knew this would happen. Timing it is a totally different story:

Bondarb:

i know nothing about Tesla, but I am certain that this will eventually end in tears just like any other bubble...however my suggestion for bears is to be patient, do not try to short now, and for sure do not buy wickedly over-priced puts. I saw too many people lose their jobs trying to short the housing bubble in 2005-07...never, ever try to pick a top in a situation like this. My guess would be that this story's evaporation will neatly coincide with the end of Fed balance sheet expansion next year and that the initial push-down will be 30-40% quite quickly, so there will be no need to have called the exact high.

Going to start shorting once things simmer down post market open.

Best Response
Nov 5, 2013

If it drops another $125/share from here, WhiteHat will almost breakeven.

    • 3
Nov 5, 2013
DickFuld:

If it drops another $125/share from here, WhiteHat will almost breakeven.

Beat me to it...

Obviously the stock is overvalued, even the CEO admitted it.

At some point over the next 3 years there will be a massive plunge, and then those who bought at $150+ per share will lose everything - as they should.

Long term however Tesla is going to be the most valuable "car company" (I use the term loosely because it's really a technology and engineering firm) in the world.

Nov 5, 2013
evilbyaccident:
DickFuld:

If it drops another $125/share from here, WhiteHat will almost breakeven.

Beat me to it...

Obviously the stock is overvalued, even the CEO admitted it.

At some point over the next 3 years there will be a massive plunge, and then those who bought at $150+ per share will lose everything - as they should.

Long term however Tesla is going to be the most valuable "car company" (I use the term loosely because it's really a technology and engineering firm) in the world.

If Tesla is long-run the most valuable car company in the world [more valuable than Toyota at $200B, Ford at $70B, etc] then I don't think anybody will complain that they bought a piece at $150, valuing the business at

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Nov 5, 2013

LOL, you dick

Nov 5, 2013

According to this article, (http://seekingalpha.com/article/1802882-the-next-m...) AH drop-off attributed to the fact that it is a momentum stock and subject to price hits when options aren't available.

Overall I think there'll be an opening bounce past 160, then it'll peter-out to a new low around 140-150s? Or I'm hoping for this to happen so I can get out without being shredded :P

Nov 5, 2013

@Whitehat , any thoughts? Have you sold any of your puts or just written it off by now?

Fair disclosure, I lost a small position (worthless puts at $23/sh expiring in Jan 2014)...

@Dickfuld, no need to be a dick about it.

Nov 5, 2013

It's all fun and games.

Nov 6, 2013
WallStreetOasis.com:

@WhiteHat , any thoughts? Have you sold any of your puts or just written it off by now?

Fair disclosure, I lost a small position (worthless puts at $23/sh expiring in Jan 2014)...

@Dickfuld, no need to be a dick about it.

Plenty of people were dicks in the other thread. Goes around comes around.

If I had asked people what they wanted, they would have said faster horses - Henry Ford

Nov 5, 2013

In case anyone is curious what the bear case was at $30/share six months ago, here it is:
http://www.wallstreetoasis.com/blog/tsla-taxpayers...

If anyone is new to investing, this is the best example I can think of as to why it is important to not be overconfident when making an investment decision. The thesis is well thought out, but, obviously missed some crucial pieces of information. The whole tone forces the OP into a box....he can never admit he is wrong without shame because he vilifies management and basically says that anyone who disagrees is an idiot. This causes the doubling down when the shit is hitting the fan. One thing to remember is that it is extremely unlikely that the person buying or selling something to/from you is an idiot. Possible, yes. Likely, no.

If you are willing to really learn, learn from the mistakes from someone who is probably smarter than you. Don't just buy into the hopes of someone who was lucky. The post from WhiteHat is probably the most valuable post on WSO if you are able to think about it critically, what went wrong, and what you can do differently in the next situation.

    • 1
Nov 6, 2013
DickFuld:

In case anyone is curious what the bear case was at $30/share six months ago, here it is:

//www.wallstreetoasis.com/blog/tsla-taxpayers...

If anyone is new to investing, this is the best example I can think of as to why it is important to not be overconfident when making an investment decision. The thesis is well thought out, but, obviously missed some crucial pieces of information. The whole tone forces the OP into a box....he can never admit he is wrong without shame because he vilifies management and basically says that anyone who disagrees is an idiot. This causes the doubling down when the shit is hitting the fan. One thing to remember is that it is extremely unlikely that the person buying or selling something to/from you is an idiot. Possible, yes. Likely, no.

If you are willing to really learn, learn from the mistakes from someone who is probably smarter than you. Don't just buy into the hopes of someone who was lucky. The post from WhiteHat is probably the most valuable post on WSO if you are able to think about it critically, what went wrong, and what you can do differently in the next situation.

Spot on. Any time I read a series of posts or investment views that reek of hubris a bunch of warning bells usually start going off. Fundamental/value investing is tough, really tough. Maintaining humility and self-doubt are pretty important to not blowing up.

    • 1
Nov 5, 2013

Expensive to short this one, just start selling the premium. Grow some brass ones and start selling those calls, I'm sure you want get man-handled too bad

Nov 5, 2013

Just to call a spade a spade but WH and BH basically called out everyone that disagreed and acted with such hubris. They dismissed people such as myself doing equally if not more thorough analysis and taking the opposite position (and quite frankly being right) as inferior to them. So I'd say DFs comments are totally fair given that context. I mean just because you write long posts doesn't mean you are right nor better than other people.

Also, as stated above you can't fall in love with a position and allow that to blinded you to reality. A good investor/business person knows when to admit mistakes and move on.

Nov 6, 2013

I got in at 55 and am holding at least until Tesla becomes a long term holding for me. The expectations were absurd with whisper numbers of 7000+ cars sold in the quarter. Look, Tesla met its own projected sales, beat EPS estimates, and had 21% margins. That's really good. It's just that Tesla has a history of annihilating expectations.

If Tesla really does build the giga battery factory it could potentially make enough batteries to source to other electric car companies. Again, Tesla is more than just a pure car play, it's an innovation and technology play which is why it's valued as such. In the long run, I love the direction of the company and they've always had a long-term vision, which is what you inherently want. The quarter-driven culture leads to crazy price fluctuations, but as a long-term investor who sees the potential for a mass produced electric car to fundamentally change the industry, I find this prospect quite exciting.

...and at least personally, AMAVF and VJET have balanced out Tesla's losses for me ;)

Nov 9, 2013
Xepa:

I got in at 55 and am holding at least until Tesla becomes a long term holding for me. The expectations were absurd with whisper numbers of 7000+ cars sold in the quarter. Look, Tesla met its own projected sales, beat EPS estimates, and had 21% margins. That's really good. It's just that Tesla has a history of annihilating expectations.

If Tesla really does build the giga battery factory it could potentially make enough batteries to source to other electric car companies. Again, Tesla is more than just a pure car play, it's an innovation and technology play which is why it's valued as such. In the long run, I love the direction of the company and they've always had a long-term vision, which is what you inherently want. The quarter-driven culture leads to crazy price fluctuations, but as a long-term investor who sees the potential for a mass produced electric car to fundamentally change the industry, I find this prospect quite exciting.

...and at least personally, AMAVF and VJET have balanced out Tesla's losses for me ;)

How much innovation has taken place in the past year or two? Is TSLA attempting to use the existing tech it developed and commercialize it as quickly as possible? Or have new features and upgrades been put in recent vehicles?

I don't follow the stock or the company as closely as most ITT, but I get the impression that TSLA is trying to monetize all of its R&D from the past several years. However, that is giving competitors a chance to catch up (i.e. BMW). Could hurt the growth prospects.

In my view it is extremely hard to continuously innovate while attempting to mass produce a product to capture market share (see Apple).

Nov 6, 2013

Waiting on the sell-off and buying for the long term. Worked for FB hoping it works again.

Nov 6, 2013

STILL sliding...tried to hold 150, couldnt....down to 148!

Nov 6, 2013

147!

Nov 6, 2013

146! wow, you can just hear the bubble deflating...

Nov 6, 2013

151, I feel this thread has turned into a play-by-play in the stock sports game hahaha.

Nov 6, 2013

sold my puts once it stablized ~150 :-)

Nov 7, 2013

Thinking about getting in again ~$140. Thoughts?

Nov 7, 2013

think it could far MUCH further...especially if this crash in Tennessee turns out just to be a fender bender...

Nov 7, 2013

I have no dog in this fight, but I could see a scenario where the stock goes up someday and the "I told you so"s on this thread are humbled. Maybe not, just think it's a bit early to tell. And I'm not saying there isn't money to be made on both sides.

Nov 7, 2013

I've got a buy limit in at $135. We'll see what happens.

Nov 8, 2013
Edmundo Braverman:

I've got a buy limit in at $135. We'll see what happens.

you get filled? @ $133/sh now

Nov 8, 2013

This slide is not totally linked to the call. The Model S had its 3rd accident related fire in the last 6 weeks, this hit the media yesterday as well. Musk and Tesla are in trouble if they can't get this fire issue under control.

Follow the shit your fellow monkeys say @shitWSOsays

Life is hard, it's even harder when you're stupid - John Wayne

Nov 10, 2013
heister:

This slide is not totally linked to the call. The Model S had its 3rd accident related fire in the last 6 weeks, this hit the media yesterday as well. Musk and Tesla are in trouble if they can't get this fire issue under control.

3 accidents can cause this? I have an ingenious idea.

We take shorts/puts out on them. We buy maybe a dozen Model S's. Then comes the fun part, we hire people on craigslist to drive these cars and smash them and thus ignite the engine. The stock will tank further and we will profit like it's 2005.

But on a serious note, I'm glad I sold my position off in Tesla. They're just too volatile to gauge anymore.

Once I did bad and that I heard ever. Twice I did good and that I heard never.

Nov 8, 2013

No fill yesterday. Waiting around to see if it drops further.

Nov 9, 2013

Not interested in getting near this stock until things cool off, but I'm very surprised to hear so many people talking about TSLA as a legitimate long-term business. Last I checked, their entire EBITDA was government subsidies, and the feasibility of electric cars is dubious, at best. Driving a (heavy) car powered by plugging into a power grid supported by coal plants is not helping pollution. Nor is driving a car with a 150-mile range and a 45 minute refuel period viable. Sure, this is trendy now, but what happens when that hype goes away?

Nov 10, 2013

Clearly you are lacking long term vision on this front. Not that it will happen 100% but the investment thesis is that the company will come down the learning curve, reduce costs and be price competitive. I mean, last I checked there were tons of unprofitable companies that were public and that didn't have positive cash flows. its the name of the game so learn to play with it or be against it.

NorthSider:

Not interested in getting near this stock until things cool off, but I'm very surprised to hear so many people talking about TSLA as a legitimate long-term business. Last I checked, their entire EBITDA was government subsidies, and the feasibility of electric cars is dubious, at best. Driving a (heavy) car powered by plugging into a power grid supported by coal plants is not helping pollution. Nor is driving a car with a 150-mile range and a 45 minute refuel period viable. Sure, this is trendy now, but what happens when that hype goes away?

Nov 10, 2013
ke18sb:

Clearly you are lacking long term vision on this front. Not that it will happen 100% but the investment thesis is that the company will come down the learning curve, reduce costs and be price competitive. I mean, last I checked there were tons of unprofitable companies that were public and that didn't have positive cash flows. its the name of the game so learn to play with it or be against it.

NorthSider:

Not interested in getting near this stock until things cool off, but I'm very surprised to hear so many people talking about TSLA as a legitimate long-term business. Last I checked, their entire EBITDA was government subsidies, and the feasibility of electric cars is dubious, at best. Driving a (heavy) car powered by plugging into a power grid supported by coal plants is not helping pollution. Nor is driving a car with a 150-mile range and a 45 minute refuel period viable. Sure, this is trendy now, but what happens when that hype goes away?

The company isn't "unprofitable", it's running on government fumes. Unlike Twitter, which could run at negative EPS for a decade, a manufacturing company needs to maintain profitability to finance its assets.

Also, unless Elon Musk is going to subvert the laws of physics, the electric car will never be "environmentally friendly" while we continue to run on coal power. Even presuming we can get the range up-to-par with gasoline cars, we are able to miraculously charge the battery in 5 minutes and reduce the weight to within standard automobile range - which, I might add, is ridiculous - you still need to expend the same amount of energy to put a car in motion. Having that energy be produced by a coal-firing power plant is decidedly "eco-unfriendly".

This "company" is absurd.

Nov 11, 2013

i cant believe that 25% of the float is short. Like when are they going to cover?

Nov 11, 2013
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Nov 11, 2013