Market Analysis

Buy Panic TSLA

Each bubble has its poster child. Is $TSLA it this time?
I can’t say, but I can spot a buy panic when I see one. This morning $TSLA seems to have peaked for the moment at $940.

Absolute vertical panic buying, it’s basically a reversion train wreck waiting to happen, technically speaking:

People can choose to believe all kinds of things about the fundamentals or growth prospects of any given stock and that’s fine. But there used to be something called discipline and reason when buying stocks.

This behavior here is dot.com type behavior. Get me in an any price. Market cap added by the tens of billions added every day without an actual earnings story behind it yet. It’s all future projections. And hey, maybe the come true, who am I to say.

What I’m saying is that vertical moves like this are not sustainable and there will be reversion pain.

How to define reversion pain? Easy, basic technical reconnects.

So let’s have a look at a couple basic ones of interest.

Firstly the stock we can all agree is ridiculously overbought:

The stock is far outside the daily Bollinger band and massively above its daily main moving averages.  Check the 50MA and laugh.

But it gets better. Here’s the weekly view:

The weekly 5 EMA is at 661, the upper weekly Bollinger band at $714. While both are moving higher both are at risk of reconnecting eventually.

Here’s a monthly log chart:

Rational investor behavior? Please. Blow-off topping move? Possible.

Upper monthly Bollinger band is at $656, the monthly 5 EMA at $589.

My main message: If you like $TSLA fundamentally there will be better entry points. If you think it’s a short, best of luck.  It’s a beast right now and it reeks of an undisciplined buying panic here n February 2020.

Buying panics in February are not unprecedented. After all that has happened before as well:

Good times. I’m kidding, I’m kidding. Or am I? Maybe we revisit on May 1.


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Categories: Market Analysis

11 replies »

  1. I have said it many times here: this is a TULIP market…and will end in a total tragedy for everybody. When this Tulip bursts, and it will, people will go even more “insane”….one should prepare for a society collapse.

  2. Tsla a game changer. Generational shift here. Hoping stock will plateau here awhile before resuming its upward trend. Much more than a car company. Tesla is the leading concern when it comes to reversing climate change. Catch up by others will take years.

    • How many years behind is the tycan, or leaf or the other 20 models coming out this year. 1 or 2 years ?
      Once the range and fast charging goes past range anxiety, what else can they compete on ?
      They have some good stuff, but 175B valuation is detached from reality. They should be at around 50B

      • I think many publications misss the simple fact that Tesla is more than a car company and cannot be treated as one. Treat them more like a technology company.

        1 – Tesla is more than a car company. As a quick example, they’ve sold (or are about to finalize the second phase of) a $100 million dollar pair of battery arrays in Australia.

        2 – they’re about 2 billion miles of real-world autonomous driving data ahead of everyone else. Their in-car software and hardware is years beyond any other auto maker, including Audi’s fancy multi-screen dash console. More screens don’t mean good tech.

        3 – their FSD hardware, down to the chip level (nna), is much much faster at processing fps from the cameras.
        CPU: 1.5
        GPU: 17
        NNA: 2100

        4 – the new solar roof and powerwall. Tesla offers a holistic energy independence solution from generation, to storage, and transport.

        Still, it’s over bought and some of that is from shorts covering their positions, I’m sure.

        • None of what you said (which is all true) has anything to do with the violent technical stock move called a short squeeze. Tesla didn’t just become a great company in the past month or two the stock is squeezing with short sellers trying to cover positions.

          See beyond meat in summer 2019 or Tilray 2018 for reference.

          It’s a great technology company experiencing a rare technical stock phenomenon. $400/share would still be above fair valuation based on debt, revenue stream and previous earnings…

  3. Stock chart patterns like $TSLA are insulting to one’s intelligence.
    The “get me in at any price” crowd has a death wish.

  4. You must be a short selling journalist looking to compare apples to oranges or in this case tulips to TSLA. I could go on and tell you that the 15% short outstanding or the low 54% institutional ownership compared to other techs/cars should alarm you but how about stripping it down and speaking about just fundamentals. TSLA’s battery, supercharging, and energy storage is light years ahead of its competition.

  5. TSLA shot up from $580 to as high as $659 in after hours after posting “adjusted basic EPS”
    of $2.14/share vs the consensus $1.62. Note this is “adjusted” EPS – not GAAP. Revenues
    also “beat.” And of course in the press release plus the earnings call Elon Musk was at his
    best making promises that are not even remotely probable of being fulfilled and that I highly
    doubt he ever has the intentions to fulfill. In addition, some media outlets, like CNN Business,
    were erroneously reporting that Tesla recorded its first ever annual profit.
    Tesla is supposed to be a “growth” company. But YoY for Q4 automotive revenues rose just
    1% – total revenues (including service + solar) just 2%. The gross profit fell 4%, operating
    income dropped 13.3% and GAAP net income plunged 25%. The Model S and X deliveries
    were down 29% and 23% YoY for the full year. The Model 3 deliveries were up 46% YoY but it
    takes two to two and a half Model 3’s to produce the revenue effect of selling one Model S
    and three Model 3 deliveries to produce the revenue from a Model X. And the Model 3 has a
    lower profit margin than both of the other two vehicles. Likely the expiration of the tax credit
    on December 31st in the U.S. and several other countries “pulled foward” a significant
    number of Model 3 sales into Q4. The revenue, profitability and delivery numbers in no way
    reflect growth company metrics.
    The journalists who are reporting that TSLA recorded a full-year net profit are completely
    incompetence at reading a financial statement and ignorancant of the difference between
    GAAP income vs “adjusted” income.
    The graphic above is excerpted from Tesla’s financial “brochure.” The 10-K probably won’t be
    out for about 3 weeks. Tesla posted Q4 GAAP EPS for Q4 of 58 cents (vs the $2.14
    “adjusted”). The number reported for Q4 is highly problematic for several reasons which I’ll
    flush out when the 10-K is released. For the full year the Company had a GAAP net loss of
    $862 million.
    The GAAP net income of $105mm in Q4 was 17% below the
    consensus of $126mm. Regarding net income, Tesla generated
    $133mm of income from selling Zero Emission/Greenhouse Gas
    credits to the big OEMs who need them – for now – to remain in
    compliance with environmental regulations. Net of these credits,
    Tesla lost $28 million in the quarter (before the fraudulent
    accounting manipulation). Subtracting these credits from the
    full-year loss, Tesla’s 2019 net loss attributable to shareholders
    is $1.5 billion.
    The problem with this reliance on the sale of these credits to
    generate income is that, starting this year, the buyers of these
    credits (GM, Audi, Chrysler, etc) will soon be selling more than
    enough EVs and hybrids to remain in compliance. This source of income for Tesla will thus
    eventually be non-recurring.
    And naturally Musk issued delivery guidance for 2020 in excess of 500k vehicles. In January
    2019 Musk issued delivery guidance for 2019 that had to be revised lower by mid-year. The
    guidance for 2020 is below the top end of the 2019 guidance he issued for the year in
    January 2019. Tesla’s full-year 2019 reported deliveries came in 41% below the high end of
    Musk’s original 2019 guidance. The point is that Musk’s “guidance” is worthless.
    But there’s more. Hyundai will start producing the Kona EV in their Czech plant. Hyundai
    plans to deliver 80k EVs in Europe and 2020 and Kia plans to deliver 60k. This 140k between
    the two companies. Tesla delivered around 110k in the EU in 2019. This competition with
    better quality control, reliability and service is going annex market share from Tesla, including
    Tesla’s Model Y which is supposedly going to be available before June. By the way, the
    Model Y is a faux crossover “SUV” for which the third row is a cost upgrade and doesn’t look
    much different than the Model 3.
    In my opinion, 2020 could be a bloodbath for Tesla in terms of deliveries. Not only is the
    global auto market contracting, but the much larger, better funded and operationally credible
    OEMs will be flooding the market with competitive EVs that will significantly cannibalize
    Tesla’s market share.
    From Short Sellers Jourrnal

  6. TSLA is going to save the world and deliver us from evil. Elon is an engineering God. Everyone knows whoever comes to market first will dominate the world forever, just ask Henry Ford…uh, what a second, news flash from Wolf Steet TSLA analysis below:

    Tesla’s Annual Red-Ink Parade.
    And Tesla isn’t a high-growth miracle tech company or data company or whatever. It’s an automaker in a stagnating industry. Tesla’s total revenues inched up only 2.2% in 2019 compared to 2018, and its automotive revenues edged up only 0.7% in 2019.

    To top it off, Tesla reported a net loss of $862 million for the year 2019, despite selling $594 million in “regulatory credits.” These are tax credits that Tesla obtains from the US government and governments of other countries for building EVs. Tesla loses money every year and cannot use those credits, so it sells them to other automakers that are making money.

    Tesla lost money every single year ever since it started disclosing its financials, from 2008 through 2019.

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