Short-Term TSLA Price Movements - 2016

[RobStark]

How will Tesla be very profitable in a year or so with 13,000+ solarcity employees?

They are employees not retirees or welfare recipients.

Sales and marketing employees will be gone replaced by Tesla employees.

This will reduce cost of an installed kWh of rooftop solar by at least $1.

More sales,more revenue, and less overhead. The dreaded "synergies."

 

[Seesaw]

This group keeps recycling the arguments. I had thought we had come to an understanding of SC several weeks ago. We were told that SC would have some difficulties raising money during the take over period and might need bridging loans, and that's what the bond issue was. The plan was always to beta test early production close to the factory in order to fix early production flaws. Using employees for this is logical and efficient, since they obviously live close and attend the factory regularly. We have no indication that raising money is difficult for Tesla. The apparent danger for Tesla is all the negative sentiment from vested interests actively opposing them.

I still don't get how SC's funding would dry up because of merger talks? It's a $2.6 billion company.

 

[electracity]

I think absolutely everyone expects huge SolarCity layoffs. Musk avoided the word layoff but he kept talking about "cost savings" from "sales" and saying stuff like "within the first year".

Musk explicitly said that they expect to start growing solarcity again next year, IIRC. If Musk intends to reduce staff by thousands, the recent layoff of a 100 central office workers seems silly.

Regardless of what happens with layoffs, future Tesla financials are the sum of the two companies. Perhaps solarcity financials look great after cutting 6000 employees. But whatever happens after the merger the implications on TSLA SP are highly significant.

 

[Drivin]

Sales and marketing employees will be gone replaced by Tesla employees.

This will reduce cost of an installed kWh of rooftop solar by at least $1.

More sales,more revenue, and less overhead. The dreaded "synergies."

1. Tesla doesn't do marketing.
2. "Sales" people at Tesla are very different from what is required to actively "sell" solar. The reason Solar has a high cost of sales is because it is a more difficult sell. Tesla "sales" people are closer to order takers who can enthusiastically explain the product. I never had a hard sell experience visiting any the 4 different stores I have been to. Solar on the other hand...between the mailings, handouts at stores, the ads on TV/radio, the installers at Home Depot and Lowes, the door-to-door people, etc.

It is a huge leap of faith to believe that the current low-key style of the Tesla store will work for selling solar.

 

[schonelucht]

SCTY will be around 5% of the merged company's value.

But it adds a much larger percentage of (short term) debt, which is really the scary part.

 

[Fallenone]

Musk explicitly said that they expect to start growing solarcity again next year, IIRC. If Musk intends to reduce staff by thousands, the recent layoff of a 100 central office workers seems silly.

Regardless of what happens with layoffs, future Tesla financials are the sum of the two companies. Perhaps solarcity financials look great after cutting 6000 employees. But whatever happens after the merger the implications on TSLA SP are highly significant.

The 100 layoffs is for people sitting in offices and need a severance package. Those standing in malls doing the field work can be told let go on the site and receive nothing and therefore don't need to be announced

 

[Vitold]

I'm not sure.. The SolarCity deal continues to be a big concern for me.

In a way I think the email is a little unfortunate - it helps at the moment, the problem is it may take away from the positive angle of any good financial result. People will say the result was engineered by deferring costs etc. and also suggests the quarters after may be tough. but probably by then the email would of been forgotten.

Since leak was to be expected, I read EM email as a commentary on nearsightedness of some of the investors while at the same time warning anyone who is shorting. Also it informs Tesla employees - who lost their free snack-bar - that they will get it back in a few weeks.

 

[hockeythug]

Breaking news folks: Morgan Freeman, long Tesla.

 

[winfield100]

(IMO Republicans ought to love TSLA. Its an American company, using American talent, to manufacture an American product that bests anything the world has to offer, and they're building it in America. What's not to love?)

the loss of campaign contributions from Auto dealers associations, etc

 

[NOLA_Mike]

Breaking news folks: Morgan Freeman, long Tesla.

Phil LeBeau on Twitter

 

[RobStark]

Breaking news folks: Morgan Freeman, long Tesla.

I always knew God was on our side.

 

[RobStark]

the loss of campaign contributions from Auto dealers associations, etc

That is for local and State level Republican officials.

At the Federal level it seems Republicans are cheering/hoping Tesla fails so they can say Obama's support for Green companies/initiatives has been a complete failure and add Tesla to the list along with Solyndra.

I think of 21 "Green" companies receiving Federally backed loans and/or grants during the Obama administration 3 have been bought out, there is Tesla and the rest failed.

If Tesla becomes the next established automotive OEM then all the money spent on "green jobs of the future" will have an excellent return.

If Tesla goes belly up then it becomes a Republican 30 second TV add for a generation.

 

[GBleck]

I always knew God was on our side.

Interesting he was discussing SpaceX. Kind of enforcing my thought that some of last weeks dip was misunderstanding the Falcon9 pad anomaly.

 

[MitchJi]

I'm not sure.. The SolarCity deal continues to be a big concern for me.

Yeah, I see SCTY as a variable (an uncertainty for TSLA) but it's not the whole story for Tesla's future. The greater story is model 3 is coming and there's huge demand and tesla will be very profitable in a year or so. That is the big picture.

Simple.

A) There won't be 13,000+ SCTY employees joining the TSLA fold. This is one of the biggest areas for cost cutting, as you can have a combined sales force. I imagine a goodly portion of the SCTY installers will remain afterward, but they can then ALSO be leveraged for things like EVSE installs for TSLA products.

B) As I mentioned before, in comparison to TSLA, SCTY is tiny. Its less than 5% of the combined company. So no matter what, its going to have a minimal impact on TSLA's bottom line.

C) Model 3 and the ridiculous demand that will ensue once they're shipping in quantity. SCTY is <5% today, with just S+X. Once Model 3 starts raking in the cash, the SCTY chunk will likely be even smaller.

There is a spectrum of feelings about the SCTY merger mirrored by knowledge. In general the more you know, the more likely you are to be in favor of the merger. Elon said that the fund managers he explained the merger to are 100% in favor of the deal. The obvious question is what did he tell the fund managers that he didn't tell everyone else? Synergies (layoffs) and plans for new products and price reductions, because he doesn't want to Osborn SCTY and TE sales. So I believe that the new products will be compelling.

(IMO Republicans ought to love TSLA. Its an American company, using American talent, to manufacture an American product that bests anything the world has to offer, and they're building it in America. What's not to love?)

Greed, corruption, lack of integrity etc. Do you really believe that every republican politician who claims that global warming is a hoax believes that?

 

[Quesder]

Breaking news folks: Morgan Freeman, long Tesla.

Now is he an important fund manager and his opinion is import, or because he had acted as God?

 

[MitchJi]

Excellent MS 60D review:
Review: the entry-level Tesla Model S 60D

<Snip>
The price for a 60kWh with rear-drive is £53,400, and does 0-62mph in 5.5 seconds. This ‘D’ version with dual motors and all-wheel drive adds £4,400 and subtracts 0.3 seconds.

Yes, that’s a mountain of money. But Tesla has got stuck into the murky world of monthly payments in an effort to take more chunks out of the mainstream posh saloon market. The result is you can get a Model S on a PCP deal for £395 a month, if you avoid ticking options.

That’s competitive with the likes of a BMW 330d, and when you factor in far cheaper servicing and running costs, plus free Supercharging and zero road tax, the 60kWh Model S starts to look awfully tempting.
<Snip>
Fact is, even this baby Tesla is an obscenely fast car, purely because of the instantaneous nature of the performance. I know you must be bored of reading about electric motors hitting max power from the get-go by now, but honestly, the way this supposedly base-spec Tesla rockets from 0-30mph would destroy a red-blooded super-saloon like an M5. This makes it a terrific urban car, despite the usual Model S girth.

More numbers if you please.
The 0-62mph is ‘only’ 5.2 seconds, which looks a bit limp when the P100D is set to halve that, and yes, beyond 70mph (where applicable of course) you are aware of the relative lack of power compared to Tesla’s other offerings. It’s not Ludicrous speed. But it’s still Naffing Fast speed. And quiet. Top speed is 130mph and claimed range is 253 miles.
<Snip>
What else is new?
It feels expensive inside. Tesla’s obviously been stung by criticism of the Model S’s tinny trim and synthetic-feeling leathers not living up to the prices demanded, and has responded. This test car was largely the best-assembled, nicest finished Tesla I’ve encountered, besides a faulty lid that stopped the main cubby hole remaining open.

Of course, there are new toys too, chief among which is a worryingly titled ‘Bioweapon Defense Mode’.

Eh?
Tesla says, and I quote: “The [BDM] filter is 100 times more effective than all other premium automotive filters removing at least 99.97% of particulate exhaust pollution and effectively all allergens, bacteria and other contaminants from cabin air.” So it ought to protect you from fumes if you’re gridlocked on a hot day.
<Snip>
Overall a good Tesla then?
Correct. It’s starting to feel very ‘complete’ now, the Model S. Of course there are niggles. The instrument screen wantonly displays irelelvant information, AutoPilot remains imperfect (why does it need to sit so left-biased in the lane?) and there’s the cubby hole lid’s appetite for fingers.

However, there’s all the performance we could realistically need, sensible and accurate range, an overall deeper sense of quality and what many EV-curious folk have been crying out for: a more competitive, accessible finance option.

The 60D won’t become your new darling of YouTube drag races, but it’s the best all-round Model S yet.

 

[vgrinshpun]

(IMO Republicans ought to love TSLA. Its an American company, using American talent, to manufacture an American product that bests anything the world has to offer, and they're building it in America. What's not to love?)

Some of them do. Glen Beck loves Tesla and heaps praise on Model S, while scorching Texas for not allowing sales of Tesla cars.

It is dangerous to paint the picture with too wide of a brush...

 

[sunhelm]

I don't think that will happen as long as Google and Tesla are developing competing autonomous driving systems. Plenty of other deep pockets out there who would be happy to fill in for Larry and Sergey though.

Then again, there's always God himself.
Carl Quintanilla on Twitter

 

[racer26]

But it adds a much larger percentage of (short term) debt, which is really the scary part.

Is it really though? SCTY's debt is backing a humongous asset that will continue to pay predictable income for the next 20 years. SCTY has been shut out of good rates for lending, and so had to give really nice interest rates in order to get it financed. TSLA has more clout, and can negotiate better terms. How much better do SCTY's lending terms have to get before the profits from the asset cover the financing and its no big deal?

the loss of campaign contributions from Auto dealers associations, etc

Yes, let's support the companies that are literally taking American jobs and sending them overseas. This is the corruption of the American political system at its best. My point is pretty much exactly that: If republicans ACTUALLY support the notions and ideals that they purport to support, then TSLA should be one of their favourite companies. That they are not is evidence of corruption. Numerous studies have shown that the American automakers are the worst offenders on foreign content in their cars. Honda and Toyota both have more north american product in their north american built vehicles than GM or Ford.

Greed, corruption, lack of integrity etc. Do you really believe that every republican politician who claims that global warming is a hoax believes that?

No, I think they're corrupt paid shills, and that's a huge problem.

Some of them do. Glen Beck loves Tesla and heaps praise on Model S, while scorching Texas for not allowing sales of Tesla cars.

It is dangerous to paint the picture with too wide of a brush...

Well sure, there is always an exception to the rule - people like him should be celebrated and held up to be the example of what a good politician should be. I cannot believe that some states have been so bought by the incumbent automakers that they actually enacted anti-Tesla laws where none existed before. It should be seen as political suicide to do something so against your stated wide-scope views -- and the people SHOULD revolt and unseat the politicians that do these things.

Unfortunately, I come from the land of Maple syrup and mountees, so I have no actual voice on such issues.

 

[electracity]

B) As I mentioned before, in comparison to TSLA, SCTY is tiny. Its less than 5% of the combined company. So no matter what, its going to have a minimal impact on TSLA's bottom line.

Solarcity books PPA sales as payments are received. You can't simply compare gross revenue and come out with a meaningful comparison. Solarcity does little manufacturing, and their lease obligations are off balance sheet. You need to look at P&L and cash flow. The combined liability of the two companies may exceed $20 billion next year.

Tesla can not possibly provide store sales in the short term to replace solarcity's 1/3 U.S. market share. Solarcity has a very large inside and outside sales force that feeds that volume. Tesla has 50-60 U.S. stores.

The idea that the model 3 is going to be a boundless cash machine negating solarcity missteps is fantasy.

I would expect a big shift by Tesla away from chasing solar market share if Musk had not mentioned continued solarcity growth.