TSLA Market Action: 2018 Investor Roundtable

[RobStark]

. Camry will likely sell less than 30,000 units in either September or October, and Model 3 will likely have ramped to 7,000 or more weekly rate by then. The cross over will happen by October.

This is in large part because the Highlander is on sale and the Model Y is not.

If you want a brand new sub $70k Tesla the Model 3 is the only game in town.

Once Tesla starts exporting Model 3 to Europe and Asia I am not so sure it will beat Camry on a monthly basis in the US.

 

[ValueAnalyst]

This is in large part because the Highlander is on sale and the Model Y is not.

If you want a brand new sub $70k Tesla the Model 3 is the only game in town.

Once Tesla starts exporting Model 3 to Europe and Asia I am not so sure it will beat Camry on a monthly basis in the US.

Model 3 will not be exported until 2019, so my point stands: Model 3 will be the top selling sedan by October, ahead of Camry.

 

[Causalien]

There's a reason why r/wallstreetbets refers to weeklies as FD's, and if you don't know about WSB or what FD stands for it's a very offensive phrase so don't bother finding out if you are easily offended. I dipped my toes into a few calls last week and I have no idea what I'm doing but they are January 2019, sure they are more expensive but I have the luxury of time to wait out dips that you don't get with weeklies and other short term expiration calls.

Heh, wasn't going to comment on wallstreetbets, but since someone else did it for me.

The first day of the stock price fall was basically Real wall street margin calling all the FD from WSB. I am pretty sure that some professionals have started monitoring and margin hunting them as every single stock they've been buying FD on has fallen in the past month and wiping them out.

 

[RobStark]

Model 3 will not be exported until 2019, so my point stands: Model 3 will be the top selling sedan by October, ahead of Camry.

This fundamental trend is in stark contrast to the 4x to 5x differential in the two companies' valuations.

A few months at the end of 2018 does not make a fundamental trend.

Nor does it have implications for the two companies valuations.

 

[Tslynk67]

As a few have been asking, Tesla Daily did a nice podcast all about shorting: Tesla Daily: Tesla News & Analysis by Rob Maurer on Apple Podcasts

 

[EinSV]

Right now, I don't think there is any clear guidance from Elon/Tesla on the timeline to 10,000/week. I'm personally hoping to see the 6,000/week by the beginning of September. Clearly, Elon's pattern has been to guide for a max weekly rate rather than a sustained rate. Perhaps this time will be different, but I tend to doubt it. I'm optimistic that a sustained rate of 6,000/week is achieved by November, and perhaps 7,000 by the end of the year. I really really wish Elon had changed to guiding for quarterly production this time, rather than the max weekly rate. That would take the pressure off focusing with everything they've got for the highest rate possible in the last week of the quarter.

Without more guidance from the company I am also thinking 7K/week by 12/31/18 and 10K/week sometime in 2019 would be reasonable targets. At this point the focus is on achieving profitability and cash flow positive plus growth consistent with that so growth will probably not be as fast as it has been.

IMO quarterly targets during the Model 3 ramp would not have been a good idea. Since the goal is to ramp up production, downtime to improve the line is a positive since it gets you closer to your goal even though it might hurt quarterly numbers. As they get closer to 10K/week it will eventually make sense to provide quarterly guidance.

 

[ValueAnalyst]

A few months at the end of 2018 does not make a fundamental trend.

Nor does it have implications for the two companies valuations.

If Model 3 monthly sales can exceed Camry with 2x to 3x ASP, then $35,000 version in late 2018 or early 2019 will make it permanent.

Sales and having the leading market share and brand surely have implications on valuation.

 

[Unpilot]

Heh, wasn't going to comment on wallstreetbets, but since someone else did it for me.

The first day of the stock price fall was basically Real wall street margin calling all the FD from WSB. I am pretty sure that some professionals have started monitoring and margin hunting them as every single stock they've been buying FD on has fallen in the past month and wiping them out.

Dipped my toe in that reddit area....got a bad case of herpes/syphilis and checked right back out.
Assumption of average age...17.

 

[Remus]

Model

Model 3 will not be exported until 2019, so my point stands: Model 3 will be the top selling sedan by October, ahead of Camry.

There's no timeline for reaching 7000 per week for model 3. Even if there is the beat will be temporary and in one declining market. I agree this is not helping our cause.

Toyota and Honda get where they are now by selling fuel efficient, reliable cars. They can charge higher price for those boring boxes. What we do need to educate the mass is EV's low energy cost and far less moving parts. Tesla can totally beat them at their own game. So we Tesla owners should often brag about our energy cost and our (lack of) trip to the dealers.

 

[Causalien]

Dipped my toe in that reddit area....got a bad case of herpes/syphilis and checked right back out.
Assumption of average age...17.

College aged I think. I remember a wave of people started joining after Robinhood started allowing basically anyone to sign up with margins and options. Almost everyone on wsb uses robinhood. It's a disaster in the making. Thankfully, they don't have too deep of a pocket. Most have 5k to 30k. I've seen one who traded from 300k to 1mil... With parents money though.

 

[RobStark]

If Model 3 monthly sales can exceed Camry with 2x to 3x ASP, then $35,000 version in late 2018 or early 2019 will make it permanent.

Sales and having the leading market share and brand surely have implications on valuation.

In the foreseeable future Tesla will make a max of 10k Model 3s per week, half of which will be for export.

If we round up that means 21k per month in the US on average.

That doesn't beat the Camry.

When Model Y is introduced the overall demand for Tesla sub $74k vehicles will expand but also cannibalize some Model 3 demand.


The fundamental valuation for Toyota is based on the profitability of global annual sales of ~10M units not whether Camry beats Model 3 in the USA.

 

[ValueAnalyst]

There's no timeline for reaching 7000 per week for model 3.

Do you expect Tesla to just stop at 6,000 weekly rate, after having more than doubled it three times for the last three quarters?

 

[ValueAnalyst]

In the foreseeable future Tesla will make a max of 10k Model 3s per week, half of which will be for export.

If we round up that means 21k per month in the US on average.

That doesn't beat the Camry.

When Model Y is introduced the overall demand for Tesla sub $74k vehicles will expand but also cannibalize some Model 3 demand.


The fundamental valuation for Toyota is based on the profitability of global annual sales of ~10M units not whether Camry beats Model 3 in the USA.

You are making a lot of assumption with which I do not agree. I don't expect Tesla to stop at 10,000 weekly rate, and I don't expect half of U.S. production to be exported either. The more likely scenario is that Tesla pushes the existing Model production line to 7,000 to 8,000 weekly rate with low CapEx and mostly software improvements, as heralded many times by Elon. Only then, I expect Tesla to copy/paste its production lines at a quicker-than-expected rate in China and Europe. Also, FSD features that Tesla will soon introduce will accelerate the demand shift I am predicting. Finally, note that Model 3 production does not need to get to Camry's current 30,000 monthly U.S. sales rate, as consumers will delay/cancel decisions to buy ICE when rumors of imminent $35,000 version hit later this year. You have also repeatedly ignored my argument around rising oil prices. I'm done with this back and forth.

 

[jbih]

And how many 3 orders converted to S or X? Probably about 10,000.

I believe there were

Do you expect Tesla to just stop at 6,000 weekly rate, after having more than doubled it three times for the last three quarters?

I'm wondering: At what point of the S-curve are we, in the exponential or linear growth phase? How much equipment can Grohmann produce? Is Grohmann able to ramp up production 2x, 4x, ...?

 

[ValueAnalyst]

I'm wondering: At what point of the S-curve are we, in the exponential or linear growth phase? How much equipment can Grohmann produce? Is Grohmann able to ramp up production 2x, 4x, ...?

I believe 6,000 to 7,000/8,000 is the logarithmic section of Model 3 Phase 1, some time after which we will start the next exponential cycle.

I think, and this is complete WAG, Elon will run Model 3 at 7,000 to 8,000 weekly rate until profitability is proven and short squeeze happens.

 

[jbih]

Ignore the first part of my previous post, I'm still fighting with the editor... Another thing though: If I remember correctly, Elon said that the Model Y production line will be another level. They may fundamentally rework the production at Fremont to get to 10K (if that still is a viable goal).

 

[mongo]

I believe there were

I'm wondering: At what point of the S-curve are we, in the exponential or linear growth phase? How much equipment can Grohmann produce? Is Grohmann able to ramp up production 2x, 4x, ...?

Grohmann does the design and assembly (at least for initial units). Third party machine shops can be used for part creation (and overflow assembly).

 

[mmd]

The "**** up" theory is certainly a valid alternative but he gave the "tsunami of hurt" comment ~8 months before anything was observed on the metaphorical beach. For comparison, the "short burn of the century" comment was made 2 months ago.

The "short position explodes" comment was made ~2.5 weeks ago and predicted to take place in ~3 weeks. Don't know if the "burn" and "explosion" are part of the same event. We should know in 1 week maybe, 6-8 months definitely

May be you are all giving too much credit to Elon for his longer term stock moving power. He was right one time 5 years ago. Isn't a broken clock right more often?

But here is also what he said just a week ago, and how it unraveled.
Elon Musk says naysayers are in for a 'rude awakening' about Model 3 production numbers (TSLA)
Tamberrino: Tesla will deliver 22000 Model 3 vs. 28000 consensus estimate for Q3.
Elon's leaked email: "They're in for a rude awakening "
(Elon said nothing when Erikson estimated 30000 Model 3 deliveries; or it didn't leak. )
Actual Model 3 deliveries: 18440

Yeah, I did consider that the rude awakening could've been meant for some other people.

I think this whole hoopla over 5k for a week or 6k for a week in August is meant as a big distraction from the real misses and financials. All the talking heads on TV and newspaper are now talking about this, instead of the actual quarterly numbers as they do for all other companies.This was front page news in SJ mercury news last week!

So, now I'm thinking, what should I expect for the "short explosion"?
Will my negative position of -$X (due to short) become positive by exploding? Or will the number of shares shorted explode, so the total short position explodes? This is a tough one.

 

[Remus]

Do you expect Tesla to just stop at 6,000 weekly rate, after having more than doubled it three times for the last three quarters?

It's still only your guess. And I already said even if it will reach 7000 it will be temporary when Tesla ramp up export, only to give short more talking points, except this time a valid one.

There are many reasons why Tesla may not reach more than 7000 per week for model 3 at sustained rate. After reaching cash flow positive they have the luxury to frequently twick the pipeline to further reduce cost. Currently most robots are still blind. Adding vision to the system and training eye-hand coordination of the robots may also cause pipeline pauses.

And there are model y, pickup, next gen s and x, etc, which also take resources

 

[RichardL]

I would be interested to see details of how many cars an individual line for Ford or Toyota produce a week, to compare with the apparent 2500/wk for each M3 line.

When they produce 30000/month Camrys, presumably that is not a single, very productive line?