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Tesla stock (TSLA) one week after the Q1 2016 Report

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Post Q1 Report Action

The technical response of the stock market to last week’s Tesla Q1 2016 report has been mostly negative. The stock lost quite a bit since last week, standing at around $208 when I write this, but overall 12-month Analyst Price Targets have actually increased with the average raising from $253 to $277, indicating that the Top Analysts did not see the report as negatively as this past week’s market action.

This is a small sample of the reactions from Top Analysts, noting that none of them changed their position to BUY, SELL or HOLD.

Adam Jonas of Morgan Stanley, reiterated a BUY with $333 price target, commenting that “we forecast ~70k units in 2016 (vs. the reiterated guidance of 80-90k shipments), which is composed of ~16k Model X and ~54k Model S units. In 2Q, we forecast ~17k deliveries–inline with the outlook.”

Charlie Anderson of Dougherty resumed coverage of TSLA with a BUY and price target of $500, noting that “the focus coming out of the Q1 report is on managements decision to pull-forward its production goal of 500K vehicles from 2020 to 2018. While this aggressive schedule certainly increases the risk of nearer-term stumbles, it also significantly pulls forward the earnings power. Tesla has set a goal to produce 1MM vehicles by 2020, roughly 2x what most observers previously believed. Our view is that demand is not the question; it is solving the manufacturing challenges deftly as they come.”

Brian Johnson of Barclays reiterated a SELL with $165 price target.

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Ryan Brinkman of J.P. Morgan reiterated a SELL with $185 price target, as he “Doubts Tesla Motors Can Meet Accelerated Production Target.”

Colin Rusch or Oppenheimer reiterated a BUY with $385 price target, indicating that “we believe the critical characteristic of TSLAs business model over the next 24 months will be operating leverage. We believe the company can achieve 15%+ incremental operating margins as it ramps the Model 3. We modeling TSLA reaching 500k vehicles in 2019 vs. the target of 2018, noting the company has a history of setting nearly unachievable goals. Effectively we are accelerating ramp by a year from our previous expectations, but calculate that if the company reaches its 500k vehicle target in 2018 and 1M in 2020, our EPS estimates will prove ~30% too low.”

See the table below from TipRanks (tipranks.com) for a complete summary of the current top analyst ratings.

TSLA analyst coverage [Source: TipRanks]

TSLA analyst coverage [Source: TipRanks]


Swing Trading TSLA using the MACD

This is the first post where I will start outlining techniques that traders may want to use when trading TSLA stock.

I am mostly a “swing trader”. Swing Trading is a short term trading method that can be used when trading stocks and options. Whereas Day Trading positions last less than one day, Swing Trading positions typically last two to six days, but may last as long as two weeks (for TSLA sometime six-seven weeks). Swing traders use technical analysis to look for stocks with short-term price momentum. These traders aren’t interested in the fundamental or intrinsic value of stocks, but rather in their price trends and patterns.

There are a number of technical indicators that swing traders use. Today I will cover the MACD. The Moving Average Convergence Divergence (MACD) is a trend-following momentum indicator that shows the relationship between two moving averages of prices. The MACD is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA. The Exponential Moving Average (EMA) is a type of moving average that is similar to a simple moving average, except that more weight is given to the latest data.

The good thing is that you really do not have to calculate any of these indicators yourself, as pretty much all trading platforms that I know of provide you with such indicators as an option when displaying the stock chart of a given security.

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The following stock chart from Wall Street I/O shows the TSLA market data as “candlestick” (showing open, close, high and low of the day) for the past year, plus it also shows the MACD for the same period.

Source: Wall Street I/O

Source: Wall Street I/O

One technique that swing traders use is to enter a “long” trade when the MACD “crosses to the bulls”, and exit the trade when the MACD “crosses to the bears”. I have indicated these points in the chart for the huge run up between the February low and April high.

Micah Lamar is the CEO of Wall Street I/O (wallst.io), where together with his team of experts he helps people learn stock and option trading. Disclosure: I have been a subscriber to wallst.io for a few years.

This past weekend, Micah run a “MACD Validation” experiment on TSLA 1-year behavior up to last Friday close. The results are as follows.

Micah found that “if one had bought TSLA stock exactly a year ago, and held it for the full year, one would have incurred a $30 loss per share.

If one had bought and held TSLA stock while the MACD was bullish, one would be up $22 for the year.

If one had sold (short) TSLA stock while the MACD was bearish, one would be up $51 for the year.”

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Someone trading both sides (long and short the stock) would be up a whopping $73, or a $30% gain.

Of course, trading the same entry and exit points based on the MACD with put or call options instead of stock would have resulted in returns 10 to 100 times or better than if just trading TSLA stock.

Micah indicates that “TSLA is a great stock for swing traders: the reason is that it has so much “beta.” A high beta indicates that a security is much more “volatile” than the rest of the market. Most high-tech stocks like TSLA have a beta of greater than 1, offering the possibility of a higher rate of return, but also posing more risk.

As far as where TSLA is today, it is still in “bearish” territory (as far as the MACD and other indicators are concerned), which for me it means that it is untouchable on long trades as “too risky”, and since I do not like to play on the downside for stocks of companies that are in my “buy what you know” list, I will not trade it again until the MACD crosses back to the bulls.

 

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Elon Musk

X changed how everyone gets paid, and this lawsuit shows why

X sued a Bitcoin account network over fake payouts as its creator pay model shifts

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Elon Musk’s X has taken a Bitcoin-focused engagement ring to court, and the case doubles as a receipt for how differently the platform pays creators today. The company filed suit in the High Court of England and Wales against Vivek Kumar Sen and Zamyang Sherpa, alleging the pair ran six accounts, including @Vivek4real_, @Bitcoin_Teddy and @TrendingBitcoin, as one coordinated operation to fake the kind of engagement that used to translate directly into money.

According to the filing, first reported by Gizmodo, the accounts posted near identical “BREAKING” crypto headlines seconds apart, in one case 11 seconds, then had three more handles like, reply to and repost the material to manufacture what X called “a false appearance of genuine, human communication and interaction.” X says the scheme pulled in at least £207,384, about $278,000, and pegs its own investigation and remediation costs at another £75,000. The accounts were suspended August 18. X general counsel James Burnham announced the case on X last weekend, writing that the company “will act forcefully to protect our platform and the earnings of genuine creators.” Musk’s own reaction, posted shortly after, was three words: “Don’t mess with 𝕏.”

The timing lines up with a a recent update to how X pays its creators. The program these accounts allegedly gamed, Creator Revenue Sharing, launched in mid 2023 and paid out based on how much a post got engaged with. Originality was never part of the formula, which is exactly how the platform ended up flooded with recycled clips, copy pasted “BREAKING” posts and replies engineered purely to farm reactions from paying subscribers.

X tried patching the model more than once, including an April cut to aggregator payouts and a March regional weighting change that Musk personally paused hours after it was announced. X retired Creator Revenue Sharing for good on September 7 and opened its replacement, Original Content Rewards, the next day.

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The new math is stricter. Payouts now come only from qualified impressions, meaning unique Home Timeline views from Premium subscribers where at least half the post is visible, and replies no longer count toward eligibility at all. Copied posts, reuploaded media and reposts without meaningful changes are explicitly excluded. Allegra Jacchia, senior product manager for Creators at SpaceXAI, which now runs X’s product and AI work following xAI’s acquisition of the platform, put it bluntly, saying the goal is to reward creators who bring original ideas and perspective, “not those who have become best at gaming the system.”

Read that way, the lawsuit isn’t really about six crypto accounts. It’s X putting a dollar figure on what the old incentive structure cost, then suing to collect it right as the new one goes live. For live updates on how the case and the new rewards program shake out, follow @Teslarati on X.

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Elon Musk

Why automakers keep turning down Elon Musk’s Tesla Full Self-Driving offer

Elon Musk confirms no automaker has ever accepted Tesla’s offer to license Full Self-Driving software.

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Elon Musk gave a brief answer on X Monday that confirmed that Tesla’s standing offer to license Full Self-Driving to other automakers still has zero takers. Sawyer Merritt wrote that “Tesla has for years openly invited other automakers to license FSD. None of them have accepted,” responding to a prediction from Boom Supersonic founder Blake Scholl that Tesla would eventually open FSD the way it opened its Supercharger network to rival brands. Musk’s reply to Merritt was one word: “Exactly.”

It is not the first time Musk has made this point. He said something similar in November, when he called legacy automakers reluctance to adopt FSD “crazy,” and Tesla has floated the offer publicly since at least 2021. Scholl’s prediction touches on something real. Once NACS became the de facto charging standard, adoption from Ford, GM, Rivian and others followed within about a year. FSD licensing was supposed to work the same way once Tesla built enough of a lead that switching made sense for everyone.

The case for licensing now is stronger than it was two years ago. Waymo and Zoox are logging hundreds of thousands of unsupervised autonomous miles, along with Tesla’s own Robotaxi fleet. Every automaker still selling driver assist systems that lag FSD has given the robotaxi conversation to Tesla, Waymo and Zoox by default. Licensing FSD would let a GM or a Ford compete on the same field without spending a decade and billions of dollars building a stack from scratch, the same argument Tesla made when it opened the Supercharger network to bring more EVs onto its chargers.

But FSD is not a connector standard. As one reply to Musk’s post pointed out, licensing FSD is not a software license the way NACS was a plug spec. It requires adopting Tesla’s eight camera layout and its onboard compute architecture, meaning a licensee’s cars would effectively become Tesla hardware wearing someone else’s badge. That is the visible obstacle. The less visible one is data. A licensed FSD stack would report back the same telemetry Tesla collects from its own fleet, giving Tesla a continuous read on how a competitor’s cars are actually driven, where they struggle, and how often drivers intervene. For an automaker trying to build its own autonomy program, or simply trying to keep its build quality and safety record private, handing Tesla that visibility could be a bigger cost than the hardware bill. It is the reason the Supercharger comparison only goes so far. Opening a charging plug cost Tesla very little. Opening FSD would cost a rival something it cannot get back.

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Elon Musk

Tesla eyes supply partners for Optimus mass production

Tesla certified three Chinese suppliers for Optimus mass production, signaling its robot timeline is accelerating.

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Concept rendering of Tesla Optimus in mass production

Tesla’s robotics team traveled to Ningbo, in China’s Zhejiang province, on September 16 and spent the following day auditing component suppliers for Optimus, according to a Bloomberg report cited by RobotAIGeek. The visit moved three manufacturers from provisional status to certified mass production partners: Tuopu Group, which handles actuators and chassis components, Ningbo Joyson Electronic, a sensor supplier, and Zhejiang Sanhua Intelligent Controls, which builds thermal management systems. All three already supply parts to Tesla’s electric vehicles, and the audit reportedly came with fresh orders that supply chain reports put at an initial batch of roughly 5,000 units.

Tuopu, Joyson, and Sanhua built their manufacturing base serving the automotive industry, where tolerances and volume requirements are already close to what a mass produced humanoid robot demands. Sanhua in particular has history here. Teslarati reported last October that the company had received a roughly $685 million order for linear actuators tied to Optimus, a volume industry watchers estimated could cover around 180,000 robots once production ramped.

Supply chain reports tied to this week’s audit put Tesla’s near term production goal at about 1,000 Optimus units a week by late September, rising to 2,000 to 2,500 units a week by the end of the year. That pace would put real weight behind the timeline Tesla has been building toward since May, when it wound down Model S and Model X production at Fremont to convert that floor space into a dedicated Optimus line targeting one million units annually. JPMorgan analysts who toured the factory in August confirmed the conversion took roughly four months, a pace Musk has called unprecedented for a facility that size.

New drone video shows Tesla’s Optimus Factory reaching a turning point

Fremont is only the first phase. A second, larger Optimus plant is rising at Gigafactory Texas, where drone footage shared by Joe Tegtmeyer last week showed the structural steel nearing completion on the north end of the building. Tesla has said that facility is meant to eventually support production of up to 10 million units a year, though volume output there is not expected before 2027.

Commercial sales of Optimus are still targeted for the second half of 2027, but production is expected to start well before then. JPMorgan analyst Rajat Gupta has said Tesla’s “Optimus Academy” program, which uses early units to collect real world training data inside Tesla’s own facilities, is expected to be running later this year. Bloomberg Intelligence analyst Ian Ma described the Ningbo audits as “a positive commercialization signal for China’s humanoid supply chain,” noting that sentiment could improve further if the visit leads to confirmed supplier nominations and larger orders. The Solactive China Humanoid Robotics Index rose about 1.4% on the news, though it remains down roughly 30% for the year.

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