Short-Term TSLA Price Movements - 2016

[racer26]

Thought that crossed my mind reading Tim Urban's post on Wait but Why delving into the BFR announcement yesterday. Elon made his tangent about the notion that the BFR's spaceship could also potentially be used for superfast suborbital transport of people or cargo on Earth (45 minutes worst case travel time).

Imagine if your autonomous Tesla can drive you to the airport, and then ride with you to wherever you're going, and then drive you around there.

 

[vgrinshpun]

Tell me, that being a lawyer, you can't see loopholes in that email.

Now imagine you are in charge of Tesla sales. Your target is set at 25,000 but your order book shows 15000. You can't advertise (Tesla policy) and you already pulled all other demand levers, like referral credit, pop-up stores, 2 year lease, MS60 etc. etc. You miss the target, your head rolls. What do you do?

Now imagine you are well known consistent Tesla bear, maintaining that Tesla loosing money on every car they sell, about proven to be wrong, all the demand levers and discounts notwithstanding. What do you do?

 

[Krugerrand]

This is ridiculous beyond words. Wow.

Especially when Elon just talked about how trust, integrity et al.

 

[esk8mw]

Tell me, that being a lawyer, you can't see loopholes in that email.

Now imagine you are in charge of Tesla sales. Your target is set at 25,000 but your order book shows 15000. You can't advertise (Tesla policy) and you already pulled all other demand levers, like referral credit, pop-up stores, 2 year lease, MS60 etc. etc. You miss the target, your head rolls. What do you do?

I feel sorry for you if you actually think this is a plausible scenario or a rational thought.

 

[Ulmo]

My thoughts exactly! The million dollar question...which metric?
He can't just be referring to delivery numbers can he? That is pretty much already expected by everyone at this point in time.

Something in between perhaps? Gross margin? The money intended to get to spend on Model 3 development and production and other clean energy pipeline items. Could be stated as: "The most ever money for Model 3 development and production and clean energy economic and transportation ecosystem", as an absolute (inflation adjusted) number. That's not # of deliveries or Earnings Per Share, because in between those two is investment, investment in the future of Tesla, investment in the #1 goal of the company as stated by the writer of that letter:

The Secret Tesla Motors Master Plan (just between you and me)
Master Plan, Part Deux

 

[Drivin]

The conventional way to look at Tesla's product portfolio is that its sole purpose is to generate $ through sales in order fund to the next generation of car. That is in fact what the original Master Plan on Tesla's blog stated back in 2006.

I see the Model S and Model X a bit differently. They do generate $, but not enough to cover the jump to Model 3.

That is because Tesla still isn't done with the second step of the first master plan.
The second step was to create an affordable EV. The Model 3 is that car as it comes in around the average price of a new car fits the bill of an affordable car, and with the number of pre-orders should be able to get Tesla to Step 3, an even more affordable car.

 

[MartinAustin]

Negative - clearly there are a lot of frazzled sales staff trying to complete as many sales/deliveries as they can by Friday evening, and are starting to get blurry vision and lose track of what is what. Clearly Elon/Tesla have set high goals for Q3 and this year in general (evidently haven't heard of "underpromise and overdeliver" - that's another discussion), and even without the leaked email from a couple of weeks back, we knew the pressure was high inside. Now that we are seeing a few breakages of the rules, Elon has had to step in and fix it, and tweeting the letter to the public before some staff have perhaps even had time to read it indicates his disappointment with the situation. He's basically dragging their asses and the company's dirty laundry out in front of the public. Nothing particuarly lovable about his technique, and the thing is, he set the high goals in the first place with the "80,000-90,000 for 2016" guidance.

Compare with Wells Fargo disaster that's going on. This Tesla stuff is nothing, really. And Tesla is nowhere near acting like other automakers - with middlemen dealers trying to extract as much profit as possible out of the industry,

Positive - Elon getting on top of this today allows Tesla to end the quarter ON the correct execution path and NOT off the rails, and without some mess of dodgy paperwork that needs to be followed up next week. Sales staff can now cancel some rushed deliveries and simply punt them into Q4 without pressure. IMO this probably means Elon feels pretty good about the numbers - the company can "back off" a bit from super-aggressive selling/delivery work. And Elon's wording that Q3 is "likely to be the best ever [quarter] in Tesla history" is an incredibly general statement - I don't think it just applies to deliveries. I think there is going to be more behind Elon's assessment than just vehicle deliveries. We may not find out exactly what until the Conference Call... or maybe we will find out before than. This message is reminiscent of the old days - 2013 and before - when Elon used to tweet and a nod here and there towards upcoming financial results. Of course he has become a lot more tight-lipped since, but it's refreshing to read this.

 

[RobStark]

Huh?
As of January 2016, Apple had 43.3% of Smartphone subscribers.
This is up 0.3% from the October numbers.
comScore Reports January 2016 U.S. Smartphone Subscriber Market Share

Do you have any citations about the price elasticity in the market? It isn't clear that Android users would switch based on discounted iPhones.

Globally. Not US market share.

Google is your friend.

 

[AlMc]

As an investor in TSLA and self proclaimed 'cautious/realistic bull' I am having a hard time with the recent tweets/emails.

The plausible explanations for EM's professed ignorance to some of the discount sales going on after the leaked email about how important sales/delivery numbers in Q3 would be to being able to raise capital in favorable terms:

1. He truly had no idea indicating someone(s) in the management chain is/are inept. Unless there is a COO that seems fall back on EM's plate as the 'buck stops there'.

OR

2. If he knew, at best, he is doing a CYA.

Either way, this is a black eye on TM and a retracement on one of the fundamental policies that made this company *better* than the ICE manufacturers.

While my disappointment is one small data point (investor) I do not believe I am the only TM/EM/TSLA bull that is disappointed.

Am I selling more core shares. No. Will we probably get a bump from Q3 numbers, yes. Will I and other bulls make some $? yes. But this episode is disappointing none the less.

 

[Drivin]

Globally. Not US market share.

Google is your friend.

Where does Google say that Apple's share of the market is 18% globally and declining?
Their Q1 sales were 18% but that is not their share of the market.

As for your Tesla numbers, that also is not share of market, but sales within a period.

 

[Drivin]

Tesla Motors: 20,000 Deliveries Would Be Positive

Ben Kallo, one of the sharper analysts, seems to be low balling expectations in advance of Q3. If 20k is good, what is 25k as many on this board envision. I would say crazy good. Nice counterpoint to some of the Pacific Crest FUD about discounting.

it really depends on the guidance, doesn't it?

The guidance they confirmed after Q2 was 80-90k for the year.

If they do 25k in Q3 and have guidance that says they will 30k in Q4, then they will be in the middle of the yearly guidance, which would be ok.

If they steer to the low end of the guidance, not so ok.

 

[Fallenone]

I don't think tonight's tweet is that complicated. A PR move. Play innocent and also officially gives a stop to the discounts.

 

[esk8mw]

As an investor in TSLA and self proclaimed 'cautious/realistic bull' I am having a hard time with the recent tweets/emails.

The plausible explanations for EM's professed ignorance to some of the discount sales going on after the leaked email about how important sales/delivery numbers in Q3 would be to being able to raise capital in favorable terms:

1. He truly had no idea indicating someone(s) in the management chain is/are inept. Unless there is a COO that seems fall back on EM's plate as the 'buck stops there'.

OR

2. If he knew, at best, he is doing a CYA.

Either way, this is a black eye on TM and a retracement on one of the fundamental policies that made this company *better* than the ICE manufacturers.

While my disappointment is one small data point (investor) I do not believe I am the only TM/EM/TSLA bull that is disappointed.

Am I selling more core shares. No. Will we probably get a bump from Q3 numbers, yes. Will I and other bulls make some $? yes. But this episode is disappointing none the less.

Here's a plausible scenario. We know inventory cars pricing is set by an algo and this isn't able to be altered by sales employees except at the margins (waiving doc fees and the like). It is a function of age and miles. We also know the algo was set to "aggressive mode" for Q3. We know that Tesla put basically every car it owned up for sale, including all floor models, test drive cars, loaners etc.

Many floor models have 50 miles on the odo because they just sit in the showroom. We have multiple reports of stores selling basically every car available to it, even the display models. I have to imagine this triggers some high priority inventory orders at the factory since you need cars in the stores. As these replacement cars were being built and shipped out to go to the inventory fleet, they (mistakenly I assume) are automatically added to the "for sale" bin per Q3 "sell everything" policy. Per the algo, the spreadsheet spits out the aggressive inventory pricing for a 1 month old 50 mile car - and it's still a rather hefty $7500 discount. This shouldn't happen but the computer doesn't know any better because inventory usually doesn't turn over this fast.

An overeager sales staff is all too happy to push out these cars to very satisfied customers. They wonder if this was intended or not, but hey Elon said sell everything and the system says it's available, so...

I agree the head of sales or whatever should have been aware of this possibility, but I don't think this is a widespread thing. My guess is we are talking about 2-300 cars here. Any PR headaches about Tesla being a place to haggle are officially destroyed - as I've predicted like 500 times in various threads - and Elon has made clear that new cars are full price only. Life goes on and Tesla gets to keep "severe discounts for floor models" as a future potential demand lever rather than a baseline expectation of its customers.

 

[BobSk]

As an investor in TSLA and self proclaimed 'cautious/realistic bull' I am having a hard time with the recent tweets/emails.

The plausible explanations for EM's professed ignorance to some of the discount sales going on after the leaked email about how important sales/delivery numbers in Q3 would be to being able to raise capital in favorable terms:

1. He truly had no idea indicating someone(s) in the management chain is/are inept. Unless there is a COO that seems fall back on EM's plate as the 'buck stops there'.

OR

2. If he knew, at best, he is doing a CYA.

Either way, this is a black eye on TM and a retracement on one of the fundamental policies that made this company *better* than the ICE manufacturers.

While my disappointment is one small data point (investor) I do not believe I am the only TM/EM/TSLA bull that is disappointed.

Am I selling more core shares. No. Will we probably get a bump from Q3 numbers, yes. Will I and other bulls make some $? yes. But this episode is disappointing none the less.

I read Elon's email word by word, twice. This is exactly what I wanted to see.

"We either win in a way that is fair and right or we lose with our honor intact and accept the consequences."

"Finance will also be reporting every case of a car sold for less than list price, along with the reasoning for doing so, which I will be reviewing personally."

I know with absolute certainty that I can always trust Tesla to do the right thing. This is the number one factor to ensure a long term success.

 

[vgrinshpun]

I am not sure whether this just happend, or was done some time ago, but looks like Tesla re-introduced P90D. I seem to recall that upon introduction of P100D variant the P90D was eliminated from the available options for new orders.

The kicker is that the P90D used to carry a $20K premium over the 90D, but now premium is upped to $22.5K ($114.5K - $92K).

Discounts, discounts everywhere...

 

[DaveT]

The heavily discounted new cars have been publicized in Tesla's system for the past two weeks. Every store in the U.S. has been pushing these cars and pushing them hard. My rough guess is that 500-1500 of these new cars w/discounts have been sold. (Note: I could be wrong, and perhaps we'll never know unless Tesla eventually discloses how many new cars were sold at a discount.)

 

[AlMc]

Here's a plausible scenario. We know inventory cars pricing is set by an algo and this isn't able to be altered by sales employees except at the margins (waiving doc fees and the like). It is a function of age and miles. We also know the algo was set to "aggressive mode" for Q3. We know that Tesla put basically every car it owned up for sale, including all floor models, test drive cars, loaners etc.

Many floor models have 50 miles on the odo because they just sit in the showroom. We have multiple reports of stores selling basically every car available to it, even the display models. I have to imagine this triggers some high priority inventory orders at the factory since you need cars in the stores. As these replacement cars were being built and shipped out to go to the inventory fleet, they (mistakenly I assume) are automatically added to the "for sale" bin per Q3 "sell everything" policy. Per the algo, the spreadsheet spits out the aggressive inventory pricing for a 1 month old 50 mile car - and it's still a rather hefty $7500 discount. This shouldn't happen but the computer doesn't know any better because inventory usually doesn't turn over this fast.

An overeager sales staff is all too happy to push out these cars to very satisfied customers. They wonder if this was intended or not, but hey Elon said sell everything and the system says it's available, so...

I agree the head of sales or whatever should have been aware of this possibility, but I don't think this is a widespread thing. My guess is we are talking about 2-300 cars here. Any PR headaches about Tesla being a place to haggle are officially destroyed - as I've predicted like 500 times in various threads - and Elon has made clear that new cars are full price only. Life goes on and Tesla gets to keep "severe discounts for floor models" as a future potential demand lever rather than a baseline expectation of its customers.

I respect the information you have brought to me and this forum and you explanation is certainly plausible, as are mine.

I read Elon's email word by word, twice. This is exactly what I wanted to see.

"We either win in a way that is fair and right or we lose with our honor intact and accept the consequences."

"Finance will also be reporting every case of a car sold for less than list price, along with the reasoning for dong so, which I will be reviewing personally."

I know with absolute certainty that I can always trust Tesla to do the right thing. This is the number one factor to ensure a long term success.

Well, we trusted that TM will always charge everyone the same amount for a similar *new*
vehicle as well. So, I no longer agree that we can *always* trust TM.
Again, I am not selling any shares tomorrow because of this, I am just disappointed in this situation. I guess I just held them to too high a standard.

I am a small investor and minuscule cog in the TM wheel

 

[AlMc]

The heavily discounted new cars have been publicized in Tesla's system for the past two weeks. Every store in the U.S. has been pushing these cars and pushing them hard. My rough guess is that 500-1500 of these new cars w/discounts have been sold. (Note: I could be wrong, and perhaps we'll never know unless Tesla eventually discloses how many new cars were sold at a discount.)

Since EM has pledged to look at all the deals someone will know But I am not expecting it will be shared with us.

 

[DaveT]

As an investor in TSLA and self proclaimed 'cautious/realistic bull' I am having a hard time with the recent tweets/emails.

The plausible explanations for EM's professed ignorance to some of the discount sales going on after the leaked email about how important sales/delivery numbers in Q3 would be to being able to raise capital in favorable terms:

1. He truly had no idea indicating someone(s) in the management chain is/are inept. Unless there is a COO that seems fall back on EM's plate as the 'buck stops there'.

OR

2. If he knew, at best, he is doing a CYA.

Either way, this is a black eye on TM and a retracement on one of the fundamental policies that made this company *better* than the ICE manufacturers.

While my disappointment is one small data point (investor) I do not believe I am the only TM/EM/TSLA bull that is disappointed.

Am I selling more core shares. No. Will we probably get a bump from Q3 numbers, yes. Will I and other bulls make some $? yes. But this episode is disappointing none the less.

I'm deeply disappointed at the moment.

First, it appears that Elon didn't know about the new car discounts going on. I can understand how it happened. He probably okayed heavy discounts on inventory cars for the Q3 delivery push, and he didn't intend for new cars (never driven) to be added as "inventory cars subject to inventory discount". Somehow though, Tesla was producing more cars than were ordered and those cars were piling up. And so, they added those cars as "inventory cars" and included a discount with them. There was probably some miscommunication and misunderstanding between Elon and his management team that allowed this to happen.

It's concerning that Elon didn't find out about all of this until today, when he replied to a tweet. Now, I understand that Elon is busy and all (especially w/his Mars presentation) but for the CEO to find out this late about a firesale going on with his new cars is... disappointing to say the least. Elon and Tesla is in desperate need of a COO. Someone like Tim Cook. Let Elon be S Jobs... but please let's stop the madness and stop having Elon try to be S Jobs and T Cook at the same time. The Model X rollout was a fiasco, and now we have this new car discount fiasco. How are we not going to have a fiasco w/Model 3 rollout.. with an operationally-challenge organization that Tesla is at the moment?

The board should be on Elon, pressing him to hire a COO. I hope the board is involved and not afraid to press Elon. Somehow though, I doubt this.

This new car discount fiasco reminds me of the scene in the Revenge of the Electric Car where Elon enters a warehouse filled with Roadsters needing repair before they're sold. And he holds his head in disbelief saying in effect, "What's going on here?"

It's like he finds out Tesla has sold hundreds of new cars at heavy discount, and he tells his team, "What's going on here?!? It's our policy to never give discounts on new cars!!!" And people are look at each other w/wide eyes and then look to the ground like they don't know what to say.

Seems like stuff that happens at an amateur company, not a company that's trying to change the world.

 

[3Victoria]

EM is managing the company. He is reassuring customers that he will maintain his standards and step in personally. We know he likes hands on. I find it refreshing, actually. I also note he has been quite busy recently. Some here like to crucialize unnecessarily, and to micromanage from their couches.