Author Archives: Scalper1

Tesla Stock Jumps As Model 3 Reservation Counter Nears 200,000

Loading the player… Tesla Motors ( TSLA ) stock rose on Friday after Thursday night’s Model 3 launch party in Los Angeles tallied ramped-up reservations and revealed a good-looking design with glass on the back half of the roof clear all the way to the trunk. A reservations odometer actually spun at times during the event, moving past 134,000 while the afterparty was still going strong, outpacing the estimates of Tesla analysts. At $35,000 per car, that would amount to almost $4.7 billion in potential revenue when the Model 3 is actually delivered. The deposits are $1,000 a pop and said to be fully refundable. “According to management, reservation orders surpassed 150K during the evening (and presumably still growing beyond our two incremental reservations early this morning),” Stifel auto analyst James Albertine said in an overnight research note. That “is roughly 10x the 15-20K we expected in the first days of the launch and 50% greater than the 50-100K we expected by the end of this year.” He added: “Thoughts. We are simply awestruck by the demand surfacing for the Model 3.” Elon Musk tweeted out in early afternoon that reservations had nearly hit 200,000. Thought it would slow way down today, but Model 3 order count is now at 198k. Recommend ordering soon, as the wait time is growing rapidly. — Elon Musk (@elonmusk) April 1, 2016 Musk’s comment about the wait time is key. Model 3 production will take time to ramp up. Even if the deliveries begin in late 2017, as scheduled, it could be well into 2018 or beyond before people reserving today actually get their Model 3. Shares rose as high as 247.90 on the stock market today , the best since early October. But gains pared to 3.5%, at around 238, in the midafternoon. Tesla is not currently highly ranked by IBD, with a Composite Rating of just 28 out of a possible 99, factoring in its earnings growth record, stock market performance and other metrics. The Model 3 pre-order window opened around the world Thursday at Tesla stores. “Orders for the Model 3 in the last 24 hours have just passed 115,000,” Elon Musk, CEO of the electric car maker, announced at the 8:30 p.m. Pacific Time launch. Lines at some Tesla stores had stretched far. The rest of the Thursday reservations were racked up during the event, where a bevy of Tesla Model S, Model X and Roadster owners conversed over the din of a DJ. “Orders for the Model 3 in the last 24 hours have just passed 115,000,” Tesla CEO Elon Musk just said. $TSLA #Model3 pic.twitter.com/ZWWb9LmhGj — Donna Howell (@IBD_DHowell) April 1, 2016 Several people IBD spoke with also ordered a Model 3 at the launch party. PCs were set up to take reservations online, with the general window for online reservations opening shortly before Musk took the stage to introduce the new car. Sleek, fast (we took a test ride) and smaller than its siblings, the  Model 3 is slated to roll off the assembly line in late 2017. It’s seen competing with the BMW 3 Series and similarly priced entry-to-midrange luxury vehicles from Volkswagen ‘s ( VLKAY ) Audi,  Daimler ‘s ( DDAIF ) Mercedes-Benz and Toyota ‘s ( TM ) Lexus, as well as electrics like the General Motors ( GM ) Chevrolet Bolt and a variety of hybrids. Tesla’s challenge now is ramping up production to meet the better-than-expected demand on time, and pushing down battery costs enough to profit with a car half the price of its last two models. About half of the current Tesla owners that IBD spoke with at the launch event expect the Model 3 to come out on schedule. The others wouldn’t bet on it. Tesla’s last model unveiling, also at its design facility in Los Angeles, was the Model X crossover in February 2012. After delays, that finally started going to reservation-holders at the end of September 2015. Bob and Linda Ashmore of San Carlos, Calif., have a Roadster and a Model S, and just put in a reservation for a Model 3. “We ordered one today here, so we’re looking forward to seeing what it’s actually going to look like,” Bob Ashmore told IBD as the launch party was getting started. He expects it to be built on time, and he and Linda have visited the factory several times. “They’ve got plenty of capacity,” Bob Ashmore said. “This has been a dream and vision of Tesla from the beginning,” Linda Ashmore said. “To get an affordable car for the masses.” RELATED:  Tesla Motors Model 3 Revealed .

Amazon, PayPal, Square Fight For Small-Business Payments

Amazon.com ( AMZN ), PayPal ( PYPL ) and Square ( SQ ) are locked in a battle to win business from small and midsize businesses, according to recent announcements and a Bloomberg report. PayPal subsidiary Braintree is adding a service, Braintree Auth, that will allow merchants using all-in-one Web store builders such as BigCommerce to integrate Braintree more easily, the company wrote in a blog post Thursday . “Braintree shares our vision of enabling great e-commerce experiences for retailers all over the world,” said Troy Cox, senior product director at BigCommerce, which offers an all-in-one e-commerce Web platform. “With the launch of Braintree Auth, merchants have greater flexibility and more options to efficiently and securely run their businesses.” PayPal stock was up nearly 2%, above 39, in afternoon trading on the stock market today . The company is an IBD Leaderboard stock and has an IBD Composite Rating of 92, where 99 is the highest. The stock is below a 40.03 entry, trading just above an earlier entry at 38.62. Square stock was down 5.5% Friday afternoon, near 14.50. The company has a 59 CR, which measures key metrics such as earnings and sales growth. Though Braintree has been collaborating with partners such as BigCommerce for about a year , the announcement comes a day after Square said it was , for the first time, enabling anyone with a website to use Square to process a payment. Both Auth and Square aim their new website technologies at small and midsize companies. Such companies are Square’s core market; the company has about 2 million merchants. PayPal has more than 13 million merchants. According to Bloomberg , e-commerce leader Amazon has been succeeding in attracting small and midsize businesses to Amazon Payments, the platform it re-launched in 2013. “There’s a market for selling your soul to the devil,” Wedbush analyst Gil Luria told Bloomberg. “When you accept Amazon Payments, you get access to the coveted Amazon customers. The trade-off is you are opening your kimono to your biggest competitor.” Bloomberg says large retailers are unlikely to sign on because they do not want to give Amazon any such access to their customers and data.

Happy Hour: Build Your Own Smart Beta

I don’t own smart beta funds because I don’t believe they fit my strategy. Instead, I stick with a simple approach, four funds – a U.S., developed international, emerging markets, and treasury bonds – adjusting the allocation based on valuation. Basically, I move from expensive to cheap and if all equities are expensive then move from expensive to bonds. That’s the simplified version. I don’t believe smart beta would add enough “extra return” due to the adjustments. It’s very possible – I haven’t tested it – that I’d get a lower return from smart beta funds due to poor timing and higher costs, so I just stick with the lowest cost approach. Why pay more for something that I might not get? That’s the way I see it. It’s not perfect but it fits my mentality and it’s easy to manage. But if I could design the ideal smart beta fund around my strategy, it’d be based off a global index weighted by quality and price. The highest weighting would go to the highest quality, lowest priced stocks and move down from there. And I really see no reason to own every stock in said index. I’d eliminate all the highest priced, lowest quality stocks or expensive junk. And it would maintain a “cash position” if too many stocks exceeded a specific low quality and/or expensive limit. And it would do it all at a low cost. Pipe dreams, I know. Maybe someday it will be possible to build personally customized funds at a low cost. If it happens, I’m certain someone will screw it up. Anyways, the point of this was because of a slew of smart beta articles I saw this week. Smart betas “market-beating returns” are nice to look it. That’s the draw and the downfall. Too often people pick funds based on performance – not what best fits their strategy – because they don’t have a strategy or their strategy is to chase performance. So most investors will never see those returns. They’re not willing to accept periods of less than market returns to get the excess return over time. Most investors will get better returns simply by being more robotic. Less mistakes lead to higher returns over time. Doing nothing more often with a basket of basic index funds will get you a better return than chasing the best performing smart beta funds. All their doing is spending more money (via higher fees) to make the same costly mistakes. Once you’ve got doing nothing down pat, then look into smart beta and factor tilts. If it fits your strategy, then use it. And if not, then don’t. Last Call