Event?

TSLAreportsitsQ4earnings,Feb。

19th,aftertheclose?

Theoptionsmarketisimplyingabouta12%onedaymove,whichisslightlybelowthe4quarteraverageof15。

5%,butabovethe8quarteraverageofabout10。

75%?

TSLAfirstwentpublicinmid-2010。

Sentiment?

WallStreetanalystshavebeenmixedonTSLAthroughoutthestocks435%returnoverthepastyear。

Thereare7buys,5holds,and3sellsonTSLA,withanaverage12monthpricetargetof$161?

ShortinterestinTSLAremainsveryelevated,at37%oftheoutstandingfloat?

Infact,totalshortinterestinTSLAapproacheditsall-timehighinJanuary,justshortofits32。

3millionsharehighfromthespringof2013:

TSLAshortinterest,CourtesyofBloomberg

ThetotalfloatinTSLAisonly79。

4millionshares,thoughhereare122。

6millionsharesoutstanding?

ElonMuskownsmorethan28millionshares,orabout23%ofthecompany。

OptionsOpenInterest?

Totalopeninterestisslightlyskewedtowardsputs,withacalltoputratioofabout0。

9?

However,theonemonthaveragedailyvolumehasfavoredcallsbyaratioof1。

5to1,asTSLAstockhasralliedmorethan30%sincethestartof2014。

Thereareonlytwostrikesthathaveover10kofopeninterest:

-Feb22nd200calls

-Mar22nd200calls

InJan15expiry,the200callsareonceagainthelinewiththemostopeninterest。

PriceAction/Technicals?

AfterTSLAsIPOinmid-2010,thestockessentiallytradedinarangebetween20and40in2011and2012?

Whenthestockfinallybrokeabove$40inthespringof2013,itwasofftotheracesforTSLA?

Asaresult,the1yeardailychartcapturestherelevantactioninTSLAoverthelastyear。

Thestockhasnotlookedbacksincethatbreakoutabove$40lastspring?

TSLAismakinganewall-timehighthismorning:

TSLAdaily,50daymainpink,150daymainyellow,CourtesyofBloomberg

TheSeptember2013highof$194。

50(redline)wasbrokenlastMonday,ondecentvolume?

Thestockhasheldacoupleoftestsof$194。

50sincethen,andgappedhigherthismorning。

Therising50dayand150daymovingaveragesarebothinthe155-170area,whichisnowimportantsupportonthedownsideafterthemid-JanuarymovehigherinTSLAsharesonthenewsofbetter-than-expectedModelSdeliveriesforthe4thquarter。

Fundamentals/Valuation?

Teslaisaverydifficultcompanytovaluesincesomanyinvestorsareinterestedinthelong-termprospectsoftheelectriccarasadisruptivetechnology,ratherthansimplythediscountedcashflowvaluationofthecompany。

Asforearnings,analystsexpect1。

53inearningsin2014,3。

09in2015,5。

13in2016,and7。

28in2017,though3yearsisaneternityforTesla?

Therefore,inTSLAscase,thelong-termearningspotentialisthekeyforthestock。

TSLAisnowa$25billionmarketcapcompany,abouthalfthesizeoftheAmericangiants,FordandGM?

Ofcourse,TSLAsmainattractiontoinvestorsisitssignificantlyhighermargins,andpotentialscalabilityforamassmarketcarinthefuture,giventhetechnology。

AttheJanuaryautomotiveconferenceinDetroit,Tesladetaileditspotentialplanforthemassmarketcar?

HerewasGSresearch:

OntheGen3thecompanystateditintendedtokeepthepriceofthevehicleessentiallyunchangedinthemid$30krange,despitethefactthattheFederalBuyersCreditwillexpireputtingtheadditionalburdenoncostperformance。

Keycostdriversarereducedcomponentscoststhroughvolumediscounts,designimprovements,fixedcostleverageandofcourseimprovementsinthepowertrainwherethecompanyexpectsanannualcostreductionof5-10%ayear。

RangesbeingdebatedfortheGen3are200miles,300milesandevenpossiblya400milevariant。

Onceagain,theactualdetails,bothfinancialandtechnological,willbecrucialtothesuccessofTSLA?

Fornow,speculationreigns。

Volatility?

ImpliedvolatilityinTSLAisabitlowerthanusualaheadoftheearningsevent,comparedtotheprior3earningsreleases,when30dayimpliedvolwasbetween80and90:

30dayimpliedvolatilityinTSLA,CourtesyofLiveVolPro

AbigreasonwhyTSLAimpliedvolatilityisloweristhatthereislessuncertaintysurroundingtheearningseventafterTSLAdisclosedinmid-Januaryits4thquartercardeliveriesofnearly7,000ModelScars?

Moreover,ElonMuskhascontinuedtobequitevocalaboutthecarandthecompanysstrategyinthepastmonth?

Giventhatthestockisatanall-timehigh,thestockmightactuallybemorevolatileafterearningsifthestockgoeshigherontheearningsevent,ratherthanlower?

Regardless,the50levelislikelyaspottobuyimpliedvolatilityinTSLAifitgetsthere。

OurView?

ElonMuskistrulyamodern-daypioneer?

InvestorsinTSLAhavesignificantconfidenceinMusksabilitytodeliveronhispromiseofrevolutionizingthecarindustry?

Inthepastyear,thesuccessoftheModelShasbeenreinforcedthatconfidence。

Surprisingly,sentimentsurroundingTSLAsharesremainsquitenegative,exhibitedbythestubbornlyhighshortinterest?

Thevaluationisobviouslyrich,butforamomentumnamewithaninnovativetechnologylikeTSLA,investorsaremuchmoreinterestedinsalesgrowthandtechnologicalmomentum。