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Gut check time for Tesla shareholders

Tesla stock hit a record high this week and Q4 financial reports are due any day. Sell or hold?
2014 Tesla Model S

Whenever I, or any writer I know, writes a story about Tesla that is not entirely positive (called a love-letter by some in the auto news business) we receive odd comments back. They call the writer names and often make reference to the writer trying to short the Tesla stock. I guess they think that our page views and reach is so great we could move the stock market.

I have never owned an auto stock. Having had some exposure to the world of mutual funds and similar financial companies I learned long ago I wasn’t smart enough, inside enough, or frankly that much in need of money that I could win in the stressful world of buying and selling stocks. At Torque News we once had a writer, Frank Sherosky, who did trade securities, but he left a year or so ago.

According to CNN Money Tesla stock hit an all-time high this past couple of days. I don’t know much about stocks, but I have heard that point of it all is to buy the stock when its price is a certain dollar value and then to sell that stock when its value is somewhat higher. If that is done then the government(s) and the stock seller get to split the profits. It would seem to me that with the stock at an all-time high, and with the fourth quarter SEC filing due in the coming day or two, that this might be an interesting time for those holding Tesla stock. Sell now, or wait and see if the news is good?

On the other hand, are Tesla stockholders in it for the money? Some surely are. However, many may not be. They may also be in it to support a company they love, that is doing work they think is important. Regardless of one’s position on Tesla and its stock, the coming few days should be interesting.

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Comments

Jim (not verified)    February 11, 2014 - 9:59AM

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It is common for the Tesla fan boys to harass, slander, bully, and try to censor skeptics and critics of Tesla. They can't handle facts, logic, knowledge or reason that goes against Tesla. They give Tesla a bad name, not all Tesla enthusiasts are horrible. The Tesla fan boys will say or do almost anything to try to keep the Tesla bubble expanding.

The Tesla model S. still has defects that make it a fire hazard. Tesla charger connections are still overheating, melting and burning. Tesla is Junk.

On 1/9/2014 Elon Musk said that replacement adapters that are part of the recall would be mailed out within two weeks. A month later Tesla customers have still not received the replacement adapters that are part of the Tesla model S. recall.

Tesla is big on making promises and hype, but short on delivery. Tesla needs to start making safety a top priority. Tesla needs to stop playing blame games and games with semantics. Tesla needs to stop lying. Tesla needs to be proactive instead of reactive. Tesla is being a follower of technology, rather than a leader. The Tesla model S. is an E-Pinto.

John Goreham    February 11, 2014 - 11:13AM

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Yikes. Quite a rant! Good point about the adapters not being supplied on time. The rest I have trouble agreeing with. Removed from this is a claim about injuries. Feel free to comment with news links if you have some. Also some name-calling type phrases removed. Thanks for commenting.

TheWiz (not verified)    February 11, 2014 - 9:16PM

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@Jim
Actually it wasn't a recall of the chargers by Tesla, it was a voluntary replacement. It was the News that sensationalized the word "recall".

"The Tesla model S. still has defects that make it a fire hazard."
Really, name them. I can name many fire hazards that exist in ICE vehicles. Mostly routing of the fuel lines, vibration / pinch pints, as well as electrical cable routing of cables. How long in years / decades have these cars been in production and there's still issue?

"Tesla charger connections are still overheating, melting and burning."
Really? Please show your sources and real people who have photos / videos of these chargers burning up.

"Tesla is Junk."
Thats a statement people usually give when they're not mentally competent to have an adult discussion and have steam blowing out of their ears. Just my 2 cents and view. I actually believe they're a very amazing car, one that's still in early stages of development, and looking forward for the technology and industry to make it better.

"A month later Tesla customers have still not received the replacement..."
This sounds more like a production / supply thing, I don't think they can just pump out 29,000+ of these things in a month and do proper testing of them.

"The Tesla model S. is an E-Pinto."
Anyone who puts that type of line out there is looking for sensationalization and seriously didn't do any deep research on the topic or manufacturer he's trying to make an argument about. Anyone who puts words out there like that I truly don't take seriously.

B Cooper (not verified)    February 12, 2014 - 4:01PM

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Mr. Goreham's piece was on the Telsa stock, not so much on their product. Quite frankly, Telsa has room to run due to the high level of innovation and market penetration in such a (relatively) short period of time. From a value investor perspective, Telsa would be sell because there is no value at the current valuation compared to Tesla's peers. From the perspective of a growth investor, there is room for stock appreciation due to the low penetration and the potential to reach a broader market with lower price models. From a technical/speculator perspective, Telsa is ripe for acquisition. In a short time, Telsa has become THE electric car manufacturer, like it or not. If I were a board member of Ford, VW or other manufacturer, I would be war gaming an acquisition of Telsa and seriously considering a 'checkbook engineering' approach to electric vehicle technology. Cisco, Intel, Apple, etc... all employ this approach to acquiring new technology and eliminating potential competitors.

My gut check tells me that because Telsa is admired (again, like it or not) by the media and industry and has accomplished what Huyndai, Kia, Honda took decades to accomplish in a relatively shorter period of time. Couple that with the potential of a mature auto manufacture's engineering and production capabilities, I see Tesla being acquired in the next 3-5 years. Valuation is tough, because I believe this notion is already baked into the current stock price.

Frank (not verified)    February 12, 2014 - 7:37PM

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Looked at the TSLA stock chart using my own chart parameters that include day, hour and 10-minute bars. All look strong on the bullish side. The 200 day MA is at 139.76, far below the stock's price of 198 area as I write. Even my triple moving averages of MA5, EMA17 and EMA 43 are all in order, below present price but positive and point upward. So, that spells strong bull, but that's also past performance. Here's a link from my Thinkorswim platform - (REF: tos.mx/Jsjj93 )

What will the stock do next with earnings report day coming up? I have no idea where it's going; and neither does anyone else. If you are already long the stock, then pulling out may not make sense, but protection does if you want to protect profits. That's where options and option spreads come in.

Regarding the earnings day, I would pay attention to the conference call afterward. Forward looking statements will have their effect on the stock volatility. The stock may correct; it may not, but volatility is almost a given.

Some traders, like me, will sell put options beforehand for income as the premium crashes after the news. Even if the stock remains stagnant, I will make money on the time crush of the option.

Bottom line, though, is that Tesla as a company and as a stock is in a strong position. A pullback may be the opportunity to get more long. Like Jim Cramer of CNBC often advises, though, it may be wise to wait and see how the market reacts; then play accordingly.

John Goreham    February 12, 2014 - 9:38PM

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Frank, thank you so much for this. I can barely follow it, but what I take away is that "buy" "hold" and "sell" are only some of many things one can do with Tesla stock at this point. For those wondering, this is the Frank mentioned in the story.

Frank (not verified)    February 13, 2014 - 10:47AM

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OK, let me reword a bit. You remember that old biblical saying, "To everything there is a purpose." Well, there is a time to buy, a time to hold and a time to sell. I use the technical indicators to help me decide which camp I want to be in. In this case with TSLA, I have no present position. However, if I did, I would hold and perhaps use a put option for insurance, IF I believed the earnings report may have negative surprise. Now IF I was looking to buy (which I am), I would wait until AFTER the report and buy at a discount on any pullbacks. Better to buy wholesale rather than retail.

Hope that helps, as I live with this stuff everyday and forget that not everyone gets my jargon.