Wednesday, May 29, 2013

Tesla (TSLA) - This is a New Company; The Paradigm Shift Continues; Part 3 of 3.

TSLA closed Tuesday at $110.33, up 13.7% with IV30™ up 20.6%. The LIVEVOL® Pro Summary is below.

Tesla Motors, Inc. is an electric vehicles and components manufacturer.

This is a follow up to two recent posts, one written on May 9th (three weeks ago) and the other on May 15th (two weeks ago):

Tesla (TSLA) - Earnings Explosion Spectacle Hides Vol Shift -- This is a New Company -- A Paradigm Shift is Complete

Tesla (TSLA) - May Skew Stays Parabolic; Vol Diff Opens... And Some Stuff You May Not Have Known...

I have included the symbol summaries at the time of the original posts:



Unbelievably, from that post three weeks ago, the stock is up another 50%; just incredible. Here are a few snippets from that post where I claimed that TSLA had turned into a "different" company in the eyes of the market; that the risk paradigm had changed and we could see it just after earnings were released.


We can see that while May vol is down 18.3 vol points, Jun vol is up 1.2 vol points... yeah, earnings are out, yet the second month shows higher vol... as does Sep, Dec, Jan '14 and Jan '15. Yeah, across the board outside of the front month, the option market reflects greater risk in TSLA stock from the short-term to the multi-year long term.

This is called a paradigm shift (well, that's what I call it) -- this company is now seen as a riskier entity. That's not bad news, in fact, for TSLA it's based on extraordinarily good news (earnings results). But TSLA is now a different company... and in this case, good for them... next level please...


Interesting that I used the phrase "next level" as the stock is now up 50% in three weeks after more than doubling in the first five months of the year. This was a $35 stock to start the year and is now trading well above $100.

Let's take a look at the two-year chart for TSLA as of the close on Tuesday (5-28-2013). The top portion is the stock price, the bottom is the vol (IV30™ - red vs HV20™ - blue vs HV180™ - pink).

We can see the meteoric rise, and the even more abrupt move of late in one direction : "stock up". TSLA is now a almost a $13 billion market cap firm. Here's another snippet, this one from the post two weeks ago:

One quick update before we get going... After I wrote the post on May 9th, I actually walked into a TSLA dealership and spoke to a salesman. He was a shareholder (or so he said). I have no idea if what he said was true, or if it is already common knowledge, but according to him the firm sold 2,600 cars last year, and this year they are going to break 20,000. The cheapest model is $70,000 and the most expensive is $113,00. They are at full capacity -- which according to him was 500 cars per week -- and every car made is to order so production = sales.

Further, at this point TSLA has one version -- one car -- in nine colors (or whatever). They are introducing a new model and... a right hand sided version of the current model (yeah, that would mean Europe). He also said the cars have ~470 HP -- or essentially, they are electric Lamborghinis with 300 miles to the battery charge which costs ~$9 when on absolute empty to recharge (in 8 hours).

Now the price move feels quite "bubbly" -- not that TSLA isn't absolutely killing it on the operational front (and earnings front), but my goodness the rise of late doesn't feel driven by fundamentals (it's neither steady but upward sloping, nor is it one big pop) but rater momentum (several consecutive weeks of upward movement). I just wonder, will this company become the next GM (the good GM, not the bad GM)?

I have included the one-year IV30™ chart in isolation, below.

We can see the pattern I made reference to in the earlier posts -- namely, even after earnings, the implied has started to climb again. In my opinion that means the firm has moved into a new risk paradigm -- i.e. a higher risk firm. Could it just be short-term? Yeah, could be. Could it just be put buyers (to hedge) and call buyers (to spec) as the stock leaps? Yeah, could be. Do I think that's the only part of the story? No, I don't. And why not?... Again, it's the longer-term implied vols that have my attention.

Let's turn to the Options Tab,for completeness.

Across the top we can see tat Jun vol is in the 90% range and rose nearly 17 vol points today (5-28-2013), alone. But look at Jul and Sep (and even Dec and Jan '14). All above or near 80%. Keep in mind, as of 5-5-2013 (so 23 calendar days ago), all of those monthly vol levels (including Jan '14) would have been above the annual high in IV30™. Again, the firm is ow different -- changed... like I wrote about AAPL.

AAPL - Earnings Preview – Some Things You May Know, and Some You Do Not"

Apple (AAPL) - This Just Isn't the Company it Used to Be... And it Never Will Be Again."

Apple (AAPL) - "Just the Facts Ma'am" -- Well, that Supports the Opinion: "Everything has Changed. The Old AAPL is No More."

AAPL - Everything has Changed. The Old AAPL is No More. The New AAPL is a Riskier Entity and the Market Doesn't Know What that Means Yet

Apple (AAPL) - Have We Moved into a Totally New Volatility Paradigm for This Company? Has Everything Changed?

But this time, the stock is rising... a lot...

Hello TSLA, where are you going now?...

This is trade analysis, not a recommendation.

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