Connect with us

Investor's Corner

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

Published

on

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.”

Advertisement

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

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.

Advertisement

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.

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.

Advertisement

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.”

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.

Advertisement

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.

 

Advertisement
Comments

Investor's Corner

Tesla investors may be in for a big surprise

All signs point toward a strong quarter for Tesla in terms of deliveries. Investors could be in for a surprise.

Published

on

(Credit: Tesla)

Tesla investors have plenty of things to be ecstatic about, considering the company’s confidence in autonomy, AI, robotics, cars, and energy. However, many of them may be in for a big surprise as the end of the $7,500 EV tax credit nears. On September 30, it will be gone for good.

This has put some skepticism in the minds of some investors: the lack of a $7,500 discount for buying a clean energy vehicle may deter many people from affording Tesla’s industry-leading EVs.

Tesla warns consumers of huge, time-sensitive change coming soon

The focus on quarterly deliveries, while potentially waning in terms of importance to the future, is still a big indicator of demand, at least as of now. Of course, there are other factors, most of them economic.

The big push to make the most of the final quarter of the EV tax credit is evident, as Tesla is reminding consumers on social media platforms and through email communications that the $7,500 discount will not be here forever. It will be gone sooner rather than later.

Advertisement

It appears the push to maximize sales this quarter before having to assess how much they will be impacted by the tax credit’s removal is working.

Delivery Wait Time Increases

Wait times for Tesla vehicles are increasing due to what appears to be increased demand for the company’s vehicles. Recently, Model Y delivery wait times were increased from 1-3 weeks to 4-6 weeks.

This puts extra pressure on consumers to pull the trigger on an order, as delivery must be completed by the cutoff date of September 30.

Delivery wait times may have gone up due to an increase in demand as consumers push to make a purchase before losing that $7,500 discount.

More People are Ordering

A post on X by notable Tesla influencer Sawyer Merritt anecdotally shows he has been receiving more DMs than normal from people stating that they’re ordering vehicles before the end of the tax credit:

Advertisement

It’s not necessarily a confirmation of more orders, but it could be an indication that things are certainly looking that way.

Why Investors Could Be Surprised

Tesla investors could see some positive movement in stock price following the release of the Q3 delivery report, especially if all signs point to increased demand this quarter.

Advertisement

We reported previously that this could end up being a very strong rebounding quarter for Tesla, with so many people taking advantage of the tax credit.

Whether the delivery figures will be higher than normal remains to be seen. But all indications seem to point to Q3 being a very strong quarter for Tesla.

Continue Reading

Elon Musk

Tesla bear Guggenheim sees nearly 50% drop off in stock price in new note

Tesla bear Guggenheim does not see any upside in Robotaxi.

Published

on

tesla showroom
Credit: Tesla

Tesla bear Guggenheim is still among the biggest non-believers in the company’s overall mission and its devotion to solving self-driving.

In a new note to investors on Thursday, analyst Ronald Jewsikow reiterated his price target of $175, a nearly 50 percent drop off, with a ‘Sell’ rating, all based on skepticism regarding Tesla’s execution of the Robotaxi platform.

A few days ago, Tesla CEO Elon Musk said the company’s Robotaxi platform would open to the public in September, offering driverless rides to anyone in the Austin area within its geofence, which is roughly 90 square miles large.

Tesla CEO Elon Musk confirms Robotaxi is opening to the public: here’s when

However, Jewsikow’s skepticism regarding this timeline has to do with what’s going on inside of the vehicles. The analyst was willing to give props to Robotaxi, saying that Musk’s estimation of a September public launch would be a “key step” in offering the service to a broader population.

Advertisement

Where Jewsikow’s real issue lies is with Tesla’s lack of transparency on the Safety Monitors, and how bulls are willing to overlook their importance.

Much of this bullish mentality comes from the fact that the Monitors are not sitting in the driver’s seat, and they don’t have anything to do with the overall operation of the vehicle.

Musk also said last month that reducing Safety Monitors could come “in a month or two.”

Instead, they’re just there to make sure everything runs smoothly.

Jewsikow said:

Advertisement

“While safety drivers will remain, and no timeline has been provided for their removal, bulls have been willing to overlook the optics of safety drivers in TSLA vehicles, and we see no reason why that would change now.”

He also commented on Musk’s recent indication that Tesla was working on a 10x parameter count that could help make Full Self-Driving even more accurate. It could be one of the pieces to Tesla solving autonomy.

Jewsikow added:

“Perhaps most importantly for investors bullish on TSLA for the fleet of potential FSD-enabled vehicles today, the 10x higher parameter count will be able to run on the current generation of FSD hardware and inference compute.”

Elon Musk teases crazy new Tesla FSD model: here’s when it’s coming

Advertisement

Tesla shares are down just about 2 percent today, trading at $332.47.

Continue Reading

Investor's Corner

Elon Musk issues dire warning to Tesla (TSLA) shorts

This time around, Tesla shorts should probably heed his words.

Published

on

Credit: Tesla

Elon Musk has issued a dire warning to Tesla (NASDAQ:TSLA) short sellers. If they do not exit their position by the time Tesla attains autonomy, pain will follow. 

Musk has shared similar statements in the past, but this time around, Tesla shorts should probably heed his words.

Musk’s short warning

The Tesla CEO’s recent statement came as a response to Tesla retail shareholder and advocate Alexandra Merz, who shared a list of the electric vehicle maker’s short-sellers. These include MUFG Securities EMEA, Jane Street Group, Clean Energy Transition LLP, and Citadel Advisors, among others. As per the retail investor, some of Tesla’s short-sellers, such as Banque Pictet, have been decreasing their short position as of late.

In his reply, Elon Musk stated that Tesla shorts are on borrowed time. As per the CEO, TSLA shorts would be wise to exit their short position before autonomy is reached. If they do not, they will be wiped out. “If they don’t exit their short position before Tesla reaches autonomy at scale, they will be obliterated,” Musk wrote in his post.

Tesla’s autonomous program

Tesla short sellers typically disregard the progress that the company is making on its FSD program, which is currently being used in pilot ride-hailing programs in Austin and the Bay Area. While Tesla has taken longer than expected to attain autonomy, and while Musk himself admits to becoming the boy who cried FSD for years, autonomy does seem to be at hand this year. Tesla’s Unsupervised FSD is being used in Robotaxi services, and FSD V14 is poised to be released soon as well.

Advertisement

Elon Musk highlighted this in a response to X user Ian N, who noted that numerous automakers such as Audi, BMW, Fiat-Chrysler, Ford, GM, Honda, Mercedes-Benz, Volkswagen, and Toyota have all promised and failed in delivering autonomous systems for their vehicles. Thus, Tesla might be very late in the release of its autonomous features, but the company is by far the only automaker that is delivering on its promises today. Musk agreed with this notion, posting that “I might be late, but I always deliver in the end.”

Continue Reading

Trending