
Tesla Tanks After Goldman Downgrades to Sell - sillypuddy
https://www.bloomberg.com/news/articles/2017-02-27/tesla-slumps-in-premarket-trading-as-goldman-downgrades-to-sell
======
JumpCrisscross
Tesla went public on 29 June 2010 [1]. Since then, it has traded 1,677 days.
It's average (median) movement, from open to close, is -0.01% (-0.09%). There
have been 50 days when Tesla stock _fell_ at least 5% and 53 days where Tesla
stock _rose_ at least 5%. So about 6% of the time, historically, it's "tanked"
or "boomed" by a similar amount. (By coïncidence, the average >=5% movement is
+7.452% while the average <=5% movement is -7.458%.)

Note: this is not a traditional presentation of volatility. Its point is to
narrate, not power trades.

\---

So what should you be looking at? One, there is heavy bearish sentiment around
Tesla, representing about 30% of its float [2]. Short interest ratio "is the
ratio of tradable shares being shorted to shares in the market" [3].

Two, Musk's reality-distortion field just faltered. None of Musk's companies
have ever been realistic about timelines. But having a Goldman Sachs analyst
publicly counter Tesla just a week after "Musk said the firm’s new vehicle is
on schedule to arrive in July" is a new level of assertiveness.

This is salient given Tesla's short-term need to raise boatloads of money. I'd
keep an eye on Musk positioning back-ups to Wall Street through political
channels, _e.g._ low-cost 'infrastructure' or 'domestic manufacturing'
financing and/or government contracts, while he repairs his warp field.

[1]
[https://en.wikipedia.org/wiki/Tesla,_Inc.#IPO_and_Model_S](https://en.wikipedia.org/wiki/Tesla,_Inc.#IPO_and_Model_S)

[2]
[http://shortsqueeze.com/?symbol=tsla&submit=Short+Quote™](http://shortsqueeze.com/?symbol=tsla&submit=Short+Quote™)

[3]
[https://en.wikipedia.org/wiki/Short_interest_ratio](https://en.wikipedia.org/wiki/Short_interest_ratio)

 _Disclaimer: this is not investment advice. Please don 't be a numpty and
trade based on Internet comments._

~~~
johan_larson
I wonder why Bloomberg didn't try to put this drop into perspective, somehow.
Surely there are traditional measures of volatility, and they could have
presented those. Why didn't they?

The simple answer is that bold statements grab more eyeballs, I suppose. But
is that all there is to it?

~~~
slackstation
Because news agencies make money from attention not accurate and usable
information. Also, financial market movement has so many factors that govern
their movement, that in the short term it looks random but, peoples' daily
need for news forces them to put a narrative to almost random short term
moves.

Now this movement seems clear but, I can't know and verify for sure unless I
have a representative sample of trader sentiments to know why they chose to
buy or sell the stock that day.

~~~
flukus
> Because news agencies make money from attention not accurate and usable
> information.

Doesn't bloomberg have a specific market that values accurate and usable
information over click bait?

------
tommynicholas
5% drop after a 30% rally is "tanking"?

Tesla stock will always be volatile it's fine. Stock was under $200 a few
months ago.

~~~
elmar
October 7, 2016

Elon Musk dumped by Wall St’s Goldman, Morgan now that he really needs them

[http://www.biznews.com/global-investing/2016/10/07/elon-
musk...](http://www.biznews.com/global-investing/2016/10/07/elon-musk-dumped-
goldman-morgan/)

------
michaldudek
It baffles me how all these smart people completely don't get Elon or Tesla.

Maybe it's hard to understand for some that money is not the ultimate
motivator? I'm pretty sure that Tesla could be a profitable company today if
they stopped all investments and just focused on selling amazing Model S (who
needs AP2?) (best car ever made in opinion of many reviewers!). But they're a
tech company that happens to make cars (among many other things), not a
traditional car company. That's why they should be valued at tech company
criteria. They're doing what all the tech "unicorns" are doing - burning
through cash by investing in stuff that will give them massive advantage in
the future. Why profit when you can grow massively? (hello Gigafactory! hello
Solar City!)

Sure, I can see how this is not a company to invest in during daily trade. But
it's not a company that ever said it's in it for the quick buck. 10 years ago
it was failing in delivery of Roadster. 5 years ago it was failing in delivery
of Model S and 2 years ago it was failing in Model X. If you ask me, I'd love
to fail on the scale Elon and Tesla fail. Unless something really really
random happens, Tesla is not going down anytime soon. Sure, M3 is risky, Solar
City deal might be iffy, but I think some of the smartest people in the world
are running this company, they're not gonna flip it.

I mean, a chat app aims to be valued at $25bn vs a company that delivered
almost 200k feats of engineering in the last 10 years and everyone is laughing
at their current valuation of $40bn. What is wrong with the world?

~~~
nikdaheratik
If you're planning on holding onto the stock long term, the best advice is to
just ignore this and ride it out.

The issue is that mass market auto making is _hard_ , it's intensely
regulated, and it has a large potential to cost alot of money to build a
factory, acquire the parts you need, and handle any liability issues. Their
job is to be skeptical and that makes sense as they're lending out billions of
dollars to a company that's going to need tens of billions to get everything
working.

------
KirinDave
It is almost like there is a secondary agenda here. It's difficult to see how
anyone arrived at these conclusions.

~~~
hodder
Tesla investors are learning a hard lesson that just because a company is cool
and makes amazing products, that does not make it a buy at any price. There is
almost no way to justify the current valuation and Goldman is simply
reiterating that.

I have a really nice coffee mug in front of me right now. Best mug I've ever
used. Is it worth 1200 dollars? No.

Price matters.

~~~
mikeash
With a market cap of about $40 billion, I don't think they're learning that
yet.

If the price drops to reflect something vaguely resembling the company's
current size, rather than wild dreams of massive growth, then they might be
learning that. But the current price is still way high if you just look at the
present or even the near future.

~~~
Udik
I often reflect that if Elon Musk died (god forbid) the shares of Tesla would
drop to a fifth or a tenth of their current value in the space of a few hours.
It's incredible how much a single person can make the difference.

~~~
sixQuarks
very true in this case, because Elon is a once-in-a-generation, perhaps even
once-in-a-century type of person. On the other hand, if he keeps going at this
pace for another 15 years, there is a very good chance that Tesla will be the
most valuable company in the world. That's the whole risk/reward situation
with Tesla, if he dies or loses his abilities with older age, shit hits the
fan, otherwise you got a 20-bagger in your hand if you wait 15 years.

~~~
ygjb-dupe
wow. The hero worship is strong with you. I agree that he has accomplished
some pretty cool things, but calling him a "once-in-a-century" or "once-in-a-
generation" person ignores all of the other people who have been as or more
successful than him in multiple dimensions of success.

~~~
sixQuarks
please name some of these people who have been as or more successful - and
don't go by wealth alone. I'm talking disrupting multiple, huge industries
with innovative products.

~~~
MegaButts
I think Elon has accomplished a lot, but I think you're ignoring the fact that
every one of his companies is still surprisingly risky. Tesla might not get
another loan and it could go under in a year. SpaceX has fantastic margins,
but they still have significant hurdles with failed launches (although this is
true of rocketry in general) and navigating a political landscape. Solar City
was going under when Elon saved it by combining it with Tesla, a very
controversial move.

Elon has yet to run a profitable electronic vehicle company. Elon has yet to
run a stable alternative to NASA. Elon has yet to ween the world off its oil
dependence. He is working towards all of them and it's great! But he hasn't
succeeded in disrupting any of them yet, because all of the alternatives still
exist and are as healthy as ever.

~~~
sixQuarks
you're avoiding the question. Name someone else that has done more impressive
things than what Elon has already accomplished.

~~~
brianwawok
Ben Franklin Thomas Edison Ghandi

~~~
gordon_freeman
It's 'Gandhi'.

~~~
brianwawok
Apologies, been a while since I played Civ ;)

------
elmar
Anyone knows the status of these loans?

Elon Musk Is Borrowing Another $150 Million From Goldman Sachs To Buy More
Tesla Stock (2013)

[http://www.businessinsider.com.au/elon-musk-
borrows-150-mill...](http://www.businessinsider.com.au/elon-musk-
borrows-150-million-to-buy-tesla-2013-5)

------
frgtpsswrdlame
Once people realize that the self-driving dream won't be taking place anytime
in the foreseeable future, I'd expect another big drop.

~~~
gr3yh47
i'd say the next 5-10 or even 20 years certainly falls under the 'forseeable
future'

~~~
frgtpsswrdlame
>i'd say the next 5-10

And I'm gonna say you're delusional.

The thing I'm really curious is about how much of Tesla stock is self-driving
hype? I still believe in electric cars. Also will Elon's web of companies come
crashing down when progress on the self-driving front starts to falter?

~~~
JumpCrisscross
> _will Elon 's web of companies come crashing down when progress on the self-
> driving front starts to falter?_

Are you confusing Tesla with Uber? Uber _needs_ self-driving cars to justify
its valuation. Tesla doesn't. It just needs production volume. If anything,
very near-term self-driving cars might be _bad_ for Tesla because it would
reduce aggregate demand for cars.

~~~
frgtpsswrdlame
>Are you confusing Tesla with Uber?

No, although I think Uber is in dire straits itself. A lot of laypeople buy
Teslas not just because they are electric but because of a general feeling
that they "are the future." The self-driving dream goes a long way towards
driving this consumer sentiment. If self-driving peters out in the way I
suspect it will, Musk/Tesla begin to lose some of their luster. If traditional
car brands can bring in affordable electric cars which also look good, what
will Musk have left? His image is necessary and part of that image is placed
in self-driving.

~~~
djrogers
> If self-driving peters out in the way I suspect it will

I think the current capabilities in 'self driving' are already driving a lot
of attention and sales. Even if it 'peters out' in a few years with only
refinements on the current abilities, people love the idea of a car that can
park itself, come when summoned, handle the drudgery of stop-and-go commute
traffic, and predict/prevent some accidents.

Those features alone are good enough to make a $35k car very desirable.

------
OliverJones
Wall Street really doesn't like companies doing things with a promised payoff
beyond the present fiscal year. That's what they're doing at TSLA. Sure, a lot
of it ("Gigafactories!!!!!") is ego driven, not economy-of-scale driven. But
they will need the manufacturing capacity as electric storage becomes more
common.

Don't forget, TSLA is an energy company. Their present products have wheels
because rich dopes like me will spend money on them, and because there's some
low-hanging fruit in transportation energy in this decade (not this fiscal
year).

But long term their products are going to be as ubiquitous as household
electric meters and just as boring.

If I had a bunch of shares of TSLA and a kid entering college, I might sell
some of them at the present price. But that doesn't make them a bad
investment.

~~~
idiot_stick
> _Don 't forget, TSLA is an energy company._

Boy are people going to have to do some explaining if Tesla winds down Solar
City, which I see as a major possibility.

> _But long term their products are going to be as ubiquitous as household
> electric meters and just as boring._

I'd love to know how people are so confident that it's going to be Tesla that
wins this. This isn't Tesla vs GM, Tesla vs Toyota, Tesla vs Ford; it's Tesla
vs Everyone. If you were betting, you would really bet on Tesla vs one of
about 15 other, huge companies in pool? That seems insane to me.

~~~
djrogers
> if Tesla winds down Solar City

Why would they wind down a profitable financing arm of the company? Auto
makers get a huge chunk of their revenue from financing, as do solar lease
companies. Lots of synergy there, and just about zero downside to continuing
Solar City operations.

------
jacquesm
This is just Goldman trying to get better terms for their loan.

~~~
idiot_stick
> _This is just Goldman trying to get better terms for their loan._

In the vaunted halls of Silicon Valley, maybe. But people in the finance world
are starting to wonder if this thing can hold up. Others have been wondering
for a while.

------
exhilaration
I wish it would "tank" a little further so I could buy some shares.

~~~
alexro
If you like to risk buy Bitcoin instead. None of the Bitcoin buyers who held
on the investment ever lost money.

~~~
jlgaddis
I bought $11,000 USD worth of BTC at $7. I sure wish I had held on to it.

~~~
thefalcon
Out of curiosity, and if you don't mind sharing, why/when did you get out of
it?

------
M_Grey
IIRC wasn't there just a debate here on HN about the wisdom of shorting Tesla
stock?

~~~
angstrom
There's also a fitting debate about blindly follow GS.

~~~
M_Grey
I can't imagine that anyone would be so foolish as to do that today, even if
they had been so inclined years ago.

------
cryptozeus
5% down != tanks

~~~
trimbo
11% since earnings.

------
lutusp
This narrative explains why there can be no "winning strategy" in equities
investment (apart from investing in an index fund). The widely followed
analysts who recommend selling TSLA shares based on what they _expect_ to
happen, make their prediction come true by speaking publicly (an "announcement
effect") -- compare the rate of change in the stock price when the "experts"
aren't offering their advice to the public.

It also builds the reputation of the analysts -- the more correct calls they
make, the more wise they seem. The more wise they seem, the more the public
follows their advice. The more the public follows their advice, the more
"correct" calls they seem to have made.

The real winners are those who make their moves _the day before_ the experts
speak, which is why insider trading is illegal.

[http://arachnoid.com/equities_myths/](http://arachnoid.com/equities_myths/)

------
nodesocket
I wouldn't call it tanking. I'd say correction. Since Dec 2nd, $TSLA has been
up over 40%. Today's action brings it down to up 35%.

[https://www.google.com/finance?chdnp=0&chdd=0&chds=1&chdv=0&...](https://www.google.com/finance?chdnp=0&chdd=0&chds=1&chdv=0&chvs=Linear&chdeh=0&chfdeh=0&chdet=1488256521671&chddm=22678&chls=IntervalBasedLine&q=NASDAQ:TSLA&ntsp=0&ei=B_60WImPCIHRjAH27rbYBA)

------
mjgoeke
Part of me really wants to read this headline as - "Tesla retaliates with
heavy armored vehicles after creditor denounces them to the public"

------
ChicagoDave
I'm not generally a conspiracy theorist, but Trump is friends with the oil &
gas industry, Tesla and the gigafactories are a direct threat to that
industry, and GS is embedded deeply in this administration.

Tesla is doing what we as a world should be promoting, that is to stop pushing
oil & gas exploration and pushing sustainable energies.

There is an energy war. Tesla is doing better than anyone expected from a
science perspective. There is a lot of money at stake in oil, gas, coal, and
electricity (in its current form).

I expect this administration to drop the EC subsidies at some point, but
retain the O&G exploration subsidies.

The Koch brothers are probably somewhere in this mix as well.

