Short-Term TSLA Price Movements - 2016

[sundaymorning]

The current BIW MS line has production capacity of about 1200 cars/week, a capacity they reached in Q4 2015. Their MS capacity currently is also limited by the ramp up of the Model X that is being assembled on the same general assembly line as MS.

The bottom line is that as it stands right now, if the goal is to ramp MX production to 1000 cars/week, they can only produce about 1000 MS per week.

So as far as I am concerned, they are production constrained. I will believe that they reached the steady state limit of MS demand when they will be producing MS below their production capacity and all variants of the car can be had in US in 3 weeks or less. None of the above is true, so I think that claim that Tesla reached a steady state limit demand for MS is just not accurate.

V, you're one of the very few on this forum that has sufficient insight into this matter. Your research and data keeping is impeccable. Anyone who is new to this forum should look into the work V has done. There you will find comfort in which source to trust for your trades. Whenever TSLA loses a bit of steam, the old knuckleheads bring up "demand issues" as a scare tactic. This is what separates long term traders from short term traders, the longs just don't care to use FUD.

 

[schonelucht]

Not sure if anyone posted this. The CPO site completely void of cars. Someone tweeted Elon questioning this, and first he said he would check, later came back and said demand >> supply.

In a way this is bad news. Earlier Tesla managed to put out enough surprises and improvements to their car that owners sold theirs quickly to get the latest and the newest. That was especially clear on this forum where the most avid fans gather. This phenomenon has died down quite a bit and apparently with it the supply of CPOs. I don't see the current refresh having the same huge positive catalyst effect. Tesla really needs to get that 100kWh battery out of the door.

Guidance is always one of the most important deciders on stock price after ER. I am expecting Q2 guidance of 14500 model S (=10000 from 2015 + 45% increase in orders mentioned earlier) + 4500 model X (500/week for 9 weeks of productions). Higher than that and I am a buyer for sure.

 

[schonelucht]

So how many Model S can Tesla produce if, as you think, it would not be limited by demand? I would appreciate if you are able not just throw a number, but actually provide some reasoning about their capacity to produce MS.

Back in the second quarter shareholder letter of 2014, Tesla was confident they'd exit 2015 with an annualised production run rate of 100k. They have signalled no problems in building out their factories except for a slightly longer than anticipated factory shutdown in July 2014. Therefore there is no reason this number is/was not attainable. It is thus realistic to put Tesla's pure production capacity at somewhere between 20k (conservative) and 25k (aggressive) per quarter. I think the exceptionally steady average order backlog since early 2015 (exactly 8 weeks) despite huge variations/increases in demand is another element that points to Tesla matching production to demand. If demand was structurally higher than production capacity we should have seen a steady increase in the order backlog. Finally, if demand was structurally higher than production capacity, Tesla was foolish to give up 2k of margin on every sale in the first round of sales incentives and 1k in the second round.

 

[hoang51]

Does the market react on primary news, ie decreased deliveries, or on secondary news: slowing production ensures better QC and happier customers?

Both. It doesn't matter if more quality checks are done to make customers happier. Market cares for quotas to be met (vehicle production numbers), among other things. The reaction: sell (or negative), if quotas aren't met, among other things.

 

[Fast Laner]

Guten Morgen in's Forum,

kann jemand aus Deutschland die Aktion auf Xetra um 09:04:21 erklären?
Die Erklärung dann auf englisch bitte!

TESLA MOTORS INC. DL-,001 Times & Sales | A1CX3T | US88160R1014 | boerse.ARD.de


Danke

 

[AlMc]

Another interesting day ahead. Japanese automakers lower (strong yen) while European ones up. Choppy.

Stocks choppy as Asia tumbles; Italian banks hammered

 

[Johan]

Guten Morgen in's Forum,

kann jemand aus Deutschland die Aktion auf Xetra um 09:04:21 erklären?
Die Erklärung dann auf englisch bitte!

TESLA MOTORS INC. DL-,001 Times & Sales | A1CX3T | US88160R1014 | boerse.ARD.de


Danke

Frankfurt will always calibrate toward NASDAQ, the volume traded on NASDAQ is several thousand of that on Frankfurt. Last week Friday NASDAQ closed many hours after Frankfurt, so when Frankfurt opened this morning it immediately corrected to the closing price on NASDAQ.

 

[schonelucht]

I will believe that they reached the steady state limit of MS demand when they will be producing MS below their production capacity and all variants of the car can be had in US in 3 weeks or less.

Actually it kind of is. US waiting time was 4 weeks end of September last year. It was 3 weeks end of November last year, it was 3 weeks end of February this year, and it is perfectly on track to hit 3 weeks again by the end of this month. See the pattern? Once is an accident but 4 in a row is a pattern. Every three months exactly when Tesla needs it to make their numbers, wait times trend towards your magic 3 weeks number. Clearly Tesla is able to bring wait times to 3 weeks if it chooses so. Outside of those periods waiting times do run up but that's a deliberate decision by Tesla in the way it chooses to give preference to certain regions/models.

Here is a side by side from 2015 and 2016 at present date : (note that we are already 3 days beyond the 4/29/2015 already)

US and Canada was late June for all models except one, it is June now for all models. GB was October, it's late June now. Europe was July across the board, it's late June now except for Switzerland (likely most important European country this quarter) where it's even June. China was August, it's late July now. Australia was October, it's again late July this year. Hong Kong (another important market) dropped from late September to late July. Japan was September it's now August.

Clearly average waiting times went down (from 8.3 weeks on average last year at this point in time to 5.75 weeks today). There is only one logical explanation : Tesla is consistently able to match production with demand. Sometimes average waiting times go up but that's due to batching and the fact that it is not necessary to instantly track demand to uphold sales. Tesla is NOT demand constrained on the model S.

 

[Julian Cox]

I wanted to caution against expecting significant TE earnings in 2016.

I am very excited with the overall ostensible change in strategy ($250kWh-->$470kWh) as it bodes well for the TE income in 2017 and beyond. I do not believe, however, that we will see significant contribution to the top and bottom line from TE during this year. I just do not believe that TE will have enough cells before the GF Phase I is operational toward the end of this year.

The two data points come from the Proxy Statement issued by Tesla for the shareholder's meeting and another from the projected 2016 Energy Storage volume by the exclusive Tesla partner that supplies by-directional inverters for the PowerPacks - Dynapower Corporation.

From the Proxy Statement: "We recognized approximately $4.9 million in revenue from SolarCity during fiscal year 2015 for sales of energy storage products governed by this master supply agreement, and anticipate recognizing approximately $44.0 million in such revenues during fiscal year 2016."

Dynapower projects that in 2016 total installations in 2016 to be around 100MW, and at the end of 2015 had a backlog of 75MW of energy storage inverters.

Even if we conservatively assume that all 100MW of the inveters by Dynapower will be supplied through Tesla, and a 1:2 ratio of MW of inverters to MWh of BES, given the list price of $470/kWh, the total 2016 top line contribution could be a maximum of $94M, with perhaps a little less than half of this showing up on the bottom line.

So in 2016 the TE earnings will be within $44M - $94M range.

Sensible question to which there may be a good answer at the networked monitoring and control level:

Why would a large multi MW+ scale PowerPack installation not use a single giant inverter from Seirmens etc for cost and round trip energy efficiency? Meaning why would Dynapower be exclusive to all PowerPacks or even most of them?

 

[Fast Laner]

Frankfurt will always calibrate toward NASDAQ, the volume traded on NASDAQ is several thousand of that on Frankfurt. Last week Friday NASDAQ closed many hours after Frankfurt, so when Frankfurt opened this morning it immediately corrected to the closing price on NASDAQ.

I am talking about someone selling quite an amount (1512 shares) at 210 Euros triggering stop losses down to 199 Euros.

 

[Julian Cox]

Does the market react on primary news, ie decreased deliveries, or on secondary news: slowing production ensures better QC and happier customers?

Fascinating question. Answer; both, current answer: On balance mildly primary.

Can think of the actual news as a kind of sine wave. Can also view market sensitivity to news in terms of directionality and amplitude of market reaction as another sine wave. Yet another sine wave belongs to sentiment surrounding stocks in general. Stock reaction is a function of collision of these three - some kind of diffraction pattern.

This is why the positive spin on bad news is more interesting than the bad news sometimes and vice versa when the negative spin on good news is more interesting. Within reason it's isn't indecipherable but it's like paining on a canvas that keeps changing colours - so if you ask what hapens if I paint red or blue ink on or some mixture of the two on it - you also have to figure out what color the canvas is at that time - maybe the outcome is insufficient to be visible, no change, some purple or even black. Also worth noting that attempts to repeat spectacular visible effects tends to result in a mud color, necessitating artists and any art lovers seeking such effects to come up with new ideas.

 

[drinkerofkoolaid]

Is Tesla launching something on May 5th? Someone on Twitter mentioned something about a launch party. There is the big conference on May 5th and May 6th at the Tesla factory, and the earnings release on the 5th. Is there something I'm missing?

 

[vgrinshpun]

Back in the second quarter shareholder letter of 2014, Tesla was confident they'd exit 2015 with an annualised production run rate of 100k. They have signalled no problems in building out their factories except for a slightly longer than anticipated factory shutdown in July 2014. Therefore there is no reason this number is/was not attainable. It is thus realistic to put Tesla's pure production capacity at somewhere between 20k (conservative) and 25k (aggressive) per quarter. I think the exceptionally steady average order backlog since early 2015 (exactly 8 weeks) despite huge variations/increases in demand is another element that points to Tesla matching production to demand. If demand was structurally higher than production capacity we should have seen a steady increase in the order backlog. Finally, if demand was structurally higher than production capacity, Tesla was foolish to give up 2k of margin on every sale in the first round of sales incentives and 1k in the second round.

Here is the full quote from the Q2 2014 you are apparently referring to: “Provided that we execute well and there are no serious macroeconomic shocks, Tesla’s annualized delivery rate should exceed 100,000 units by the end of next year.” Needless to say that neither of the two conditions that were included in the above statement were met: there were indeed serious macroeconomic shocks and Tesla clearly did not execute production expansion and ramp well. The 100K was also clearly predicated on producing both MS and MX. In spite of serious macroeconomic shocks , the fact that they did not reach 100K by the end of 2015 has nothing to do with demand and has everything to do with the production expansion and ramp. Even though there were serious macroeconomic shocks, without the benefit of the meaningful contribution from the MX deliveries, they were still able to deliver more than 55K Model S vehicles in 2015, a 57% increase over the 2014.

As I am looking at the data, they are just not consistent with the view that some seemingly maintain independently from the reality – that Tesla hit the demand ceiling. What I see is Tesla steadily growing their production to meet the steadily expanding demand, the latter one being ahead of the former.

I also do not see thesis of Tesla throttling their production to match demand as being supported by data.

Take Q4 2015, when Tesla produced about 13,800 Model S, while delivering around 17,200. If Tesla can just throttle production (and there is no real Model S production capacity limitation of 1200 cars/week) why didn’t they just throttled production to more than 1400 Model S cars/week to deliver 17,200 cars? There was certainly no advantage to back-loading the deliveries within the quarter to deliver more cars that was produced instead: This strained delivery channels and increased risk of not meeting guidance because a single transportation hiccup could have ruined chances of meeting the delivery goals.

In Q1 2016 Tesla delivered 14,820 cars, 12,420 of them being Model S. While we do not have data on how many Model S were produced in Q1 yet, the production most likely went down from 13,800 MS produced in Q4 2015. The reason for this reduction is well known – problems with meeting expectations on the speed of MX ramp. Since both vehicles are assembled on common general assembly line, the QA/QC issues with MX inevitably affect MS production. If I to believe the throttling theory, should I accept the notion that Tesla “engineered” QA/QC issues with MX as an excuse to slow the production of MS to musk the “real” problem, which is demand? My apologies, but this throttling theory just does not work for me.

 

[techmaven]

We may very well see that demand is closer to production than it has been in 2012-2015, but that doesn't mean that Tesla is demand constrained. Simply, we would see a more aggressive marketing campaign coming out of Tesla if that were the case. Delivery counts cannot be used to examine demand in the case of Tesla. That has been the case since 2012 and I don't see any signs why that still isn't the case.

I also don't like using Tesla's delivery estimates as a hallmark of anything in particular. Too many ways that's an unreliable indicator, including the major factor that someone needs to remember to manually turn the scorecard. And Tesla is terrible at doing that. It is about as reliable as the coming soon Supercharger map - sometimes an accurate statement of intent, but usually unreliable in terms of specifics.

 

[Johan]

I am talking about someone selling quite an amount (1512 shares) at 210 Euros triggering stop losses down to 199 Euros.

The trades between €199 and up happened before the trade of 1512 shares. That big sell happened at 09:06, the lower priced trades happened before that. After that big trade the price has hovered around €208-210. €210 is roughly $241 so harmonizes nicely with NASDAQ pre-market. The sub €200 trades were arbitrage opportunities.

 

[NOLA_Mike]

Is Tesla launching something on May 5th? Someone on Twitter mentioned something about a launch party. There is the big conference on May 5th and May 6th at the Tesla factory, and the earnings release on the 5th. Is there something I'm missing?

There's a Falcon 9 SpaceX launch planned for May 5 - could that be the "launch party" ?

 

[Irishjugg]

Tesla has several locations that look like traditional car dealers. I will accept that they are no longer production constrained when I see new, non demo cars on these lots.

You will never see that. Tesla's strategy will be built to order for a long time, if not forever. There will not be inventory cars on lots that aren't demo cars.

 

[drinkerofkoolaid]

There's a Falcon 9 SpaceX launch planned for May 5 - could that be the "launch party" ?

Interesting. Two major events happening on the 4th (The first day of the conference and the earnings report), followed up with two major events on the 5th (The second day of the conference and the SpaceX launch), followed up with and a party in Hawthorne. Coincidence? Big week for Elon.

Note: Type in my original post. The conference is on the 4th and 5th.

Amazingly the World Energy Innovation Forum has not been mentioned by any big media outlets.

Note: Thank you Fred @Electrek.co for noticing my post.

Tesla will host the ‘Word Energy Innovation Forum’ at the Fremont factory this week – keynote from Elon Musk

 

[JRP3]

Tesla is NOT demand constrained on the model S

Agree.

 

[tanner]

Anyone think we'll recapture the 250 range or is that just wishful thinking?