Jonathan Wagner

Software, internet, tech, event-driven
Jonathan Wagner
Software, internet, tech, event-driven
Contributor since: 2012
Tesla is an incredibly high beta stock. Look how much it dropped based on a fire and the meh last earnings. With the announcement of the giga factory this gives it a lot of upwards potential but I don't think anyone should dismiss how volatile this stock can be.
At the end of the day people are trading this stock based on an unknown future and small things can push it in either direction before its major correction I correctly predicted that their earnings would be the driving event and on earnings day the fire happened and the stock broke downwards until the end of december losing almost 35%.
I agree that long prospects seem to better but I think longs need to be aware that it is going to be a bumpy ride.
If Tesla gets the funds for a giga factory, I would go long in a real way and ignore technicals for one simple reason and it has nothing to do with their actual product, it has everything to do with supply. Tesla would no longer be a car company, they would be a company that controls the world's entire supply of lithium ion batteries.
Not only would they be able to produce cheaper cars than all the other OEMs, they would also be the primary supplier of batteries when all the other OEMs realized they have to switch over to cheap EVs to be competitive. Tesla would essentially be holding the keys to the kingdom.
You have a bit of a sloppy cup and handle (william O'neils bread and butter) pattern going from October of last year to mid January this year, with the handle forming in the second part of January. The break out happened on february 10th when the high exceeded October's.
However, it's not perfect, generally if people are making trading decisions based on technicals you would expect there to be a large surge of volume where people are coming to the same conclusions on said perceived patterns.
The last 3 days in particular should raise alarm, a slight increase in price followed by volume halving each day, this is a small bear flag/pennant.
So from a pure technical perspective I would say if you were following any pattern before this, you have missed the boat and you are probably going to be looking at some choppy waters for the next 2 weeks.
If you were in before October 10th I would recommend stop lossing at just below 230 since if the price hits that gap it will most likely fill it.
There are some innovations with the Model S, but the main innovation is they just use a crap ton of batteries. This issue has been talked about to ad nauseam.
It's not that the other big car companies don't have the technical ability to stack a ton of batteries into a car, the issue is that they can't do it and maintain their margins.
In this situation I believe people mistake OEM reluctance to OEM inability. I swear people actually think that the Model S is this magical black box and all the other auto companies are running around yelling and screaming because they can't reverse engineer their technology, give me a break. It's not a technology issue, it is a margin issue.
The other OEMs have not only licensed their tech, but Daimler has right of first refusal (Daimler also has a director on Tesla's board).
I can't speak to potential cars sales in the future, I am not psychic. However, you may not be aware that while Tesla doesn't have "dealers" they do have marketing venues in pretty much every major mall.
Essentially it is a store that just has a Tesla vehicle in it. They rep inside are not allowed to actually sell to people but they do obviously talk the cars up.
I am not a technical purist, if you review my articles I have some very deep fundamentals one. I did one in April where it was 95% fundamental analysis based on over all market direction.
I generally adhere to the philosophy that all price fluctuations are affected by both technical and fundamental factors. At the end day it all comes down to one thing someone choosing to click the buy button or the sell button. People make this choice based on what they see in fundamentals, what they see in charts, or in some case no reason at all.
Technical analysis tends to work in situations with abundant herd like mentality. Herd mentality is at the strongest when you have people trading on expectations of the future.
I wasn't really trying to hit on the bigger picture in this particular article. It was more targeting the articles who have been using quasi technical/fundamental analysis to say Tesla is over priced.
You do not need to purchase a model s to buy the stock.
I swear, people don't read my article. I said more importantly that gas prices affect the consumer investor market. ::You do not need to purchase a model s to buy the stock::
I think you missed the "more importantly" part where I said gas prices affect the consumer investor market. You do not need to purchase or own a Tesla Model S to purchase the stock. There are many factors that go into why someone hits the buy button, I am proposing that gas prices are one of them.
Trading volume as a percentage of shares outstanding. To put another way the market capitalization should be viewed within the context of a stock's beta.
If you are comparing the market capitalization of high beta stock to that of low beta stocks you're going to get very skewed value propositions.
Whenever I read things like this I am remind of this quote, "The market can stay irrational longer than you can stay liquid."
The reason there is so much trading volume is irrational exuberance, it is a trait of start-ups. I am not saying that its market capitalization is rational what I am saying is that it should not be used as a justification to short.
There is not a single consistent example where market capitalization has been a good valuation of a company, just look at AMZN whose capitalization is through the roof.
Also when there are less shares outstanding stocks have more volatility, this is just an indisputable fact. If you don't understand why just look at the level 2.
You are correct, I was wrong. To amend my previous statements then, the luxury market saturation is still an issue then, but they are targeting a different luxury market. Based on Tesla's most recent sales it doesn't appear that they are peaking.
However, admittedly, if Tesla's gen3 is not going to be available within the next 3 years then they would be facing competition from other OEMs I am sure.
Not all companies are a start-up automotive company. Tesla's first product was a luxury car and their new product is their FIRST mass market vehicle. This isn't just another product in a long line of already existing products.
If all companies had the same value proposition it would be pretty easy to become a trillionaire. Every company is different and needs to be considered uniquely.
In terms of Tesla, those familiar with it, know of Elon's strategy from the start. Create a vehicle to show their is demand (roadster) then create a high end luxury vehicle (model-s) and then create a mass market vehicle (model-x). This is actually a plan that Elon outlined when he started Tesla not something he made up as he went along. So the Model-X represent the final step in his plan which is why it is so important.
That is astoundingly bad logic. The two vehicles are at completely different price points and targeting completely different markets. Even a fresh marketing grad knows the difference between luxury markets and mass markets.
None of this matter though, because you were totally wrong. New information has come out that shows that Tesla Model S has not peaked in terms of sales.
Author didn't even mention model X, people buy the future not the present. Sales of the Model S slowing down is irrelevant.
Everyone is missing the most important point (again). What matters for TSLA is what the fed report says regarding their vehicle. Whatever ends up being in that report is going to have a profound impact on this stock in either direction.
Thanks for the info, this is a bit unrelated, by why the sudden boom in wind? I imagine there are tax credit reasons but was there some kind of innovation I am not aware of?
Seriously? 3 Fires in a 100 million miles driven or whatever is not an issue. Quite frankly RSA, this is stupid and I don't use this word lightly. Over the years all the OEMs have had to do massive recalls for things that were far more dangerous to the driver's of their vehicles.
You are totally wrong, it has nothing to do with risk about fires, the only factor that has ever mattered is margins. If this is the conclusion you have drawn, you're not late to the party, you just walked out the door.
Also Tesla's sales are still a fraction of a fraction of the sales of the big boys, they don't care about Tesla's luxury car, they do care about their potential affordable long range vehicle which is why GM announced they are going to build a long range $30,000 vehicle.
I have seen you write this argument several times, and it is an interesting one. However, what I haven't seen you write about is the rate at which the grid is shifting to clean energy. I live in an area where literally in the past several years empty fields have become completely filled with wind mills.
However I understand the concept of scale, and I would like you to validate that the grid is not moving to clean energy as quickly as everyone thinks it is.
Things like in the next 10 years X% of total power will be generated by clean sources or every year clean energy grid production only increases by X%.
Everyone on the other side of this argument will say the same thing, your premise only works if the energy flowing into these batteries comes from dirty sources.
It's all wrong because the statistics people are using don't adjust or account for all the days prior to the previous 2 months that zero Teslas caught fire.
The cars are identical it is not like something changed. So how do you justify all the previous months where there wasn't fires.
I am not really sure it is obviously a design flaw. If this was a design flaw you would expect these fires to be happening at some regular interval and they haven't been, there was no fires before the last two months.
Everyone is talking about statistics and what not but what I haven't seen a single person say yet which is surprising given the amount of Tesla advocates is that this could be the result of the cluster illusion.
http://bit.ly/1d9TSdP
Essentially when you have random events sometimes they will "cluster" to make it look like there is a pattern when one doesn't actually exist. This is why some people think they have luck when they are gambling.
The bubble has popped. Some fears about costs Tesla would incur was then made significantly worse by the fire. I think this was just really bad luck. To have an event occur like this so shortly after their earnings.
So once all the smoke clears and the price drops off this company and its stock will become realistically valuated. Though I smell a turn coming in the market
I have built some massive projects, and I as a solo developer was pretty much the mobile division of a publicly traded company for a bit.
There is a couple reasons why this is so challenging. The first is that there are a lot of laws in place regarding storing medical data and you're not allowed to use the cloud. The second is you're dealing with a lot of non standardized data sources. This is actually a common problem in the USA in particular because they don't nationalize data sources. For instance in Canada there is a national MLS database where as in the USA every state and sometimes every municipality runs their own MLS.
After it all trickles down past management what you would probably find is that the number of developers behind this relatively small and whoever they were, were not very good.
They could of easily hired a Microsoft or a Google to do this but for whatever reason they didn't. It's really hard to make a prediction on when all these problems would be resolved without know how and what is built.
It boggles my mind, some of the most complex websites were built by one or two kids in their garage, meanwhile a project with one hundred million can't be delivered properly.
Give me a hundred million dollars, I could finish it for them.
It is true that we live in modern times. First world nations don't have roaming armies of bandits and I think world wide American military presence can be scaled back drastically. I read one report that in some countries US troops make up something like 10% of their military and I think that is a bit absurd.
Also I believe policing the world is one thing, but claiming to be police in order to full fill strategic logistical and political interests is the worst of all. I also thinks this contributes to the huge negative image of the USA. Where was the USA during the various genocides that were happening in the world? I am sure if there was oil involved the USA government wouldn't of mind stopping innocent people getting butchered with machetes. No one wants a police officer who chooses what is wrong or what is right based on what makes him the most money.
John, you totally misunderstand me, and I think I am arguing to agree with you to be honest.
I am going to use a very basic historical example of why military presence happens in the first place with super powers. When you become a super power your citizens end up trading with all types of people and when they are attacked they complain. As a government you have to defend YOUR people.
When Rome place troops to protect their caravans they didn't only protect themselves they protected others, it was totally worth the cost. Spending 5 million in troops to defend a trade post is worth it if it generated billions for your country in trade.
If you were to pull all american military presence from the world any local company that depends on imports/exports would have their future in jeopardy especially if they trade with a region that is unstable.
Again I am not talking about beefing up military presence or declaring war (which you are trying to say is the same thing) I am talking about defending American interests.
When you travel to another country or trade with another country do you really want no American support?
I think fidelity might of just revealed they think a bear is coming for the market in general. If you think a bear is coming the first thing you do is unload the stocks you think are most over valued.
@John How does American military presence have anything to do with the Iraq war? The international american military presence did not start the war, it was the government. They declared war and than mobilized troops, you're trying to connect two unrelated things. Military presence IS not the same as declaring a war on a sovereign nation, it also comes with a different price tag.
When I was in boxing I stayed in a hotel with a massive dude from Iraq, who accidentally knocked out the Canadian champ during a practice match. Anyways when I was there he told me that his brother got out right before Saddam gassed an entire village, this incident never made it to the news.
He said, and I quote, "I am sad about 9/11, but I am so happy the USA is doing something about Saddam" I actually don't think the the Iraq war was right but I want to point out that this doesn't make Saddam any less evil.
They don't pay taxes, but they do loan the USA credit to not only pay for the military they have in their countries, but also for the bailouts of financial industry.
@Todd I was speaking to John, and yes I was talking more about stabilization than globalization.
@John There is a good talk by Steven Pinker that I like to recommend people watch about violence in the modern world http://bit.ly/18vQiu5
There is actually a pretty big difference between sovereign wars, and piracy (or terrorist) wars. This is something I think really needs to be talked about. The economic and physical damage of chasing down the pirate (terrorist) Osama Bin Laden was astronomically more expensive than the USA maintaining stabilizing forces internationally. Chasing down pirates is not something new. Great Britain almost went bankrupt trying to do the same thing.
Spend several hundred billion dollars stabilizing the world, that's horrible. Spend a trillion+ chasing down a terrorist or taking out governments that are not democracy, that's ok!
The point I want to make is that I don't necessarily disagree with you, but I think there needs to be a distinction made between stabilization and interference. Protecting lanes for travel is completely different than trying to take out opposing regimes like Iraq and fulfilling PNAC wet dreams.
I guess I should state that I believe the best option is single payer health coverage systems. The fundamental problem with the concept of health insurance is that you can still get emergency care if you do nothing or don't have it. When people get sick and either don't pay or go bankrupt this cost is already translated to the tax payer.
I cannot be stopped from getting emergency care in the USA, so in a round about way the USA already had a single payer healthcare system it was just completely broken. Obamacare is an attempt to fix a bad system but completely misses the core of the problem.
The main argument I hear ad nauseam in support of Obamacare is this concept of unhinged liability, not having to pay for others getting sick. Everyone already does and has paid for everyone else getting sick before Obamacare was even rolled out. If Obamacare actually gets large participation, it might work, but other wise it just creating an additional financial burden on people.
As for facism, I am not sure if you actually have a shallow understanding of it or if you are purposefully demonstrating a shallow understanding in order to make a point. Facism governments do not require dictators in a traditional sense. The authoritarianism can derive from a government entity or even a corporate one. When a government becomes so closely linked with private profit and regulation it starts to pick winners and losers. Since the government has a direct link to a large portion of citizen revenue any private entity they choose to work with instantly becomes a winner when applied at a national level. Facism does not come in a single shade.
What other private industry in the USA has the government telling them how much profit they are "allowed" to make? This is so obviously the start of the USA's next complex, the first was the military industrial complex and now you have the health insurance complex.