2017 Investor Roundtable: TSLA Market Action

[racer26]

solid 1Q17 deliveries would be great, but given the shutdown, I don't know.... not something to count on and therefore to put money on at this moment.

I made a post yesterday with my expectation based on VIN tracking - I'm expecting 1Q17 deliveries to be 26-27k, well ahead of 1H17 guidance to 47-50k.

more M3 news could be great, depends on what news. Again, not much concrete to bet on at this moment.

M3 mules doesn't really say much.....

M3 is literally the only thing that matters to SP - any evidence that it is still on track for a July start of production should provide upward pressure. Much of the last year's worth of stagnation in SP is because of the market fearing M3 will be late.

Not familiar with TA cell production startup at GF, but wouldn't anything ramping up at GF be built-in to the current SP arldy?

GF cell production came online in January for TE. M3 requires that GF start producing the TA cells (which was expected to happen right around now). Baked into SP already? Maybe, but I think the SP currently includes a big discount on the market not trusting that TSLA is in fact on track to start shipping Model 3s to the first customers in July.

^ said, I'm long.... I'm just being realistic with where I think the stock will be in the next couple months, which is flat...

At some point, the market will realize that Model 3 is real and more-or-less on time. I think when that happens, many shorts will fall over themselves heading for the exits.

 

[neroden]

nasdaq hit an ATH today and then closed down 2%... that was weird... the fact that the market rallied so hard for T's ideas is beyond my comprehension... "i'm gunna cut taxes more than anyone... spend 1T on infrastructure plan... provide healthcare to everyone... and build the most biggest military ever"

it doesn't take a genius to realize this is all BS...

Well, sure, but what does this (or the price of tea in China) have to do with Tesla? I have a valuation model for Tesla. It doesn't depend on Trump. It depends on model 3.

 

[neroden]

Tesla pivoted from an auto company to a solar and energy company. While it is always subject to macro headwinds, the next revolution in energy is coming. When the traditional oil suppliers are putting up solar farms, that should be a huge red flag for oil, coal, LNG, and traditional energy.

I've mentioned this elsewhere, but:
-- Exxon is borrowing money to pay the dividend
-- Chevron is borrowing money to pay the dividend
-- BP and Shell are now asking their shareholders to accept their dividends in "scrip" (company stock) rather than cash; while this is optional, it's being offered because neither has enough cash to pay their dividends

Oil stocks have become sucker bets. There's still a lot of money in them for some reason. When the dumb money starts fleeing, there will be a visible market collapse, because these companies are such a large component of the market, and the bank stocks which are an even larger component are invested in them too. Shouldn't hurt Tesla though.

 

[Xorbit]

This does bolster my belief that Tesla is a decent choice if you want your stock results uncorrelated with the market....

Thanks for posting! I'm sure institutional money is all ears. They love uncorrelated assets! All we need now is for the Sharpe Ratio to increase: TSLA +0.79 S&P500 +0.81

 

[Xorbit]

I've mentioned this elsewhere, but:
-- Exxon is borrowing money to pay the dividend
-- Chevron is borrowing money to pay the dividend
-- BP and Shell are now asking their shareholders to accept their dividends in "scrip" (company stock) rather than cash; while this is optional, it's being offered because neither has enough cash to pay their dividends

Oil stocks have become sucker bets. There's still a lot of money in them for some reason. When the dumb money starts fleeing, there will be a visible market collapse, because these companies are such a large component of the market, and the bank stocks which are an even larger component are invested in them too. Shouldn't hurt Tesla though.

I think you may have also mentioned in an earlier post that you only (mainly?) invest in companies with high fixed costs/barriers to entry.

I was intrigued as to why the computing industry created the most amount of money in the shortest period of time and my conclusion was because of the price performance dynamics of the CPU, otherwise known as Moore's Law. Massive price compression combined with high price elasticity of demand. So, I mainly look for investments in industries with similar characteristics: bandwidth, gene sequencing, PV solar energy and energy storage.

And I think you're absolutely right, solar energy is going to do to the oil industry what the internet did to telephone companies.

 

[neroden]

I think you may have also mentioned in an earlier post that you only (mainly?) invest in companies with high fixed costs/barriers to entry.

This is basically due to being worried about management -- if they don't have high capital costs or high fixed costs, *why are they going to the capital markets*? Why not stay private? I become suspicious of a management which goes public when the company doesn't need the cash... specifically, suspicious that management is cashing out.

Conversely, I've made merger arb money on go-*private* deals once or twice, where the company had been public for a long time and management decided they *didn't* need the outside money.

I was intrigued as to why the computing industry created the most amount of money in the shortest period of time and my conclusion was because of the price performance dynamics of the CPU, otherwise known as Moore's Law. Massive price compression combined with high price elasticity of demand. So, I mainly look for investments in industries with similar characteristics: bandwidth, gene sequencing, PV solar energy and energy storage.

The thing which is frustrating about all of these industries is that I know for sure that the industry will do great but I don't usually know *which companies* will do great, and it might be companies which are still private, so even an index doesn't help. The solar industry is going great and yet companies are dropping like flies. The trick is to find one which won't be outcompeted by the next company. Remember Fairchild Semicondutor? Did great until startups outcompeted it.

Tesla was an unusual exception to this rule due to the extreme and bullheaded refusal of other car companies to produce electric cars -- and the high barriers to entry, which mean that even though some of the other car companies are going into the market seriously now, they've still got multi-year lag times on their production capacity. Though BYD is running neck and neck with Tesla on production capacity and BAIC and CATL are trying to catch up.

 

[Xorbit]

When the dumb money starts fleeing, there will be a visible market collapse, because these companies are such a large component of the market,

And just to add a couple of thoughts: we've seen a massive rise in index ETF buying over the past few years. Makes sense right? It's difficult/impossible to consistently beat the index. Well, if you're right, buying the index is not going to be the best investment choice, so once again the masses will get screwed as stock picking becomes more important and more lucrative.

I also think oil stocks and ICE car makers are going to become 'value traps' and a lot more value investors holding these stocks are going to be pointing fingers at TSLA and screaming 'Bubble!'

 

[Xorbit]

The thing which is frustrating about all of these industries is that I know for sure that the industry will do great but I don't usually know *which companies* will do great,

Yes, great point! No easy answer. I tend to wait until a company gets a sufficiently large lead (though that can always disappear with a new technology and it means I pay more) and when its technology becomes standardized across its industry and if there are network effects. With 90% of the gene sequencing market, for example, I'm hoping Illumina is in this position.

 

[hobbes]

What about solid 1Q17 delivery numbers in ~10 days?

Our usual single good data point: Norway picking up, 33 Teslas yesterday, 48 today. This Q has 912 cars so far, assuming 40 per working day for the left over 7 working days of March (conservative as deliveries usually pick up significantly) would yield 1192 cars. For comparison: 705/543/1252/981 in Q1-4 2016. Good chance to even beat Q3 2016.

Disclaimer: Cars for Europe were produced before retooling-for-3 shutdown which might affect US numbers more.

Tesla Registration Stats
Tesla Europe Registration Stats

 

[geneclean55]

Our usual single good data point: Norway picking up, 33 Teslas yesterday, 48 today. This Q has 912 cars so far, assuming 40 per working day for the left over 7 working days of March (conservative as deliveries usually pick up significantly) would yield 1192 cars. For comparison: 705/543/1252/981 in Q1-4 2016. Good chance to even beat Q3 2016.

Disclaimer: Cars for Europe were produced before retooling-for-3 shutdown which might affect US numbers more.

Tesla Registration Stats
Tesla Europe Registration Stats

I noticed the ramp in Norway deliveries. Boat must have docked over the weekend
I do seem to remember from past quarters that there is a surge right around this window, and then it cools off for the last couple days of the quarter.

 

[racer26]

Our usual single good data point: Norway picking up, 33 Teslas yesterday, 48 today. This Q has 912 cars so far, assuming 40 per working day for the left over 7 working days of March (conservative as deliveries usually pick up significantly) would yield 1192 cars. For comparison: 705/543/1252/981 in Q1-4 2016. Good chance to even beat Q3 2016.

Disclaimer: Cars for Europe were produced before retooling-for-3 shutdown which might affect US numbers more.

Tesla Registration Stats
Tesla Europe Registration Stats

As posted in the other thread, my estimation based on the VINs produced by the factory is
around 12-14k S (VINs 177xxx-191xxx)
around 11-12k X (VINs 33xxx-44xxx)
plus the 2750 cars mentioned in the 4Q16 delivery report as cars that should have been in 4Q rather than the overhang)

~27,250 deliveries, or roughly a 10% overdelivery on the 47-50k 1H17 guidance.

 

[dw4ngg]

I've mentioned this elsewhere, but:
-- Exxon is borrowing money to pay the dividend
-- Chevron is borrowing money to pay the dividend
-- BP and Shell are now asking their shareholders to accept their dividends in "scrip" (company stock) rather than cash; while this is optional, it's being offered because neither has enough cash to pay their dividends

Oil stocks have become sucker bets. There's still a lot of money in them for some reason. When the dumb money starts fleeing, there will be a visible market collapse, because these companies are such a large component of the market, and the bank stocks which are an even larger component are invested in them too. Shouldn't hurt Tesla though.

Big oil is done in my books.

 

[Tslynk67]

Big oil is done in my books.

Seems most of the planet may have come to the same conclusion about coal, except the Trump regime...

Plans for coal-fired power plants drop by almost half in 2016 - BBC News

 

[techmaven]

I am very much afraid of a further freak out tomorrow. Either with the AHCA not passing, or the threat of it not passing and some weird market reaction. And just.. well, a resumption of the freak out for no particular reason. Plenty of people write/talked about a 5-10% correction... as some point, the market can talk itself into it.

 

[Mich]

Does anybody knows what time we expect the result of the Obamacare repeal vote tomorrow? I have read a rejection of the repeal could impact the market strongly.

 

[TrendTrader007]

007 - when you speak in absolutes like this - you lose credibility and make people frustrated with your postings - nothing is guaranteed.

Really! Sorry to disappoint you. Let me try again: in first week of April Tsla will be higher, lower, same as current price
How's that for objectivity? Am I doing better? Please let me know thanks!

 

[GoTslaGo]

Oh fun, a prediction from you that's actually testable. Let's see how this goes.

Personally my money is (literally) bet on a lower price first week of April than today, so it seems we are on opposite sides of the bet.

FWIW, Hirsch in his Stock Almanac points out that historically the last two weeks of March are typically weak/losing weeks. April usually starts out strong.

 

[geneclean55]

Does anybody knows what time we expect the result of the Obamacare repeal vote tomorrow? I have read a rejection of the repeal could impact the market strongly.

Could be anytime tomorrow depending on how negotiations progress.

 

[larmor]

I am very much afraid of a further freak out tomorrow. Either with the AHCA not passing, or the threat of it not passing and some weird market reaction. And just.. well, a resumption of the freak out for no particular reason. Plenty of people write/talked about a 5-10% correction... as some point, the market can talk itself into it.

Or the counter happens, and if it is not passed or voted on, then that is a reflection that not all of the people's will are being reflected in the legislation. After all it is a complicated topic. (just sayin')

The market responds weirdly, a company's share does better during times when they cut their payroll...

 

[kenliles]

The late word I'm hearing is the vote will be late tomorrow (maybe as late as 7pm);
And they are cutting the deal to get it passed with conservative block votes by eliminating 'essential health benefit' from plan requirements:

[My guess, by looking at several indicators from group leaders, is they will get this passed- even if it jeapordizes the Senate vote - I think it's just too important politically (GOP wise) right now to let it fail]- probably won't know for sure until after market close tomorrow- but the market will make a guess all day long !

"Politico’s Josh Dawsey and Jennifer Haberkorn report that the White House is in negotiations with the House Freedom Caucus about getting the caucus's hard-line conservative members to support the American Health Care Act, the Obamacare repeal package put forward by House Speaker Paul Ryan and backed by President Trump.
Key to the deal, they report, are changes to the law that would eliminate the Affordable Care Act’s “essential health benefits,” a list of 10 categories of procedure that all insurance plans offered to individuals or small businesses must cover. The 10 are, in the words of Healthcare.gov:
Outpatient care without a hospital admission, known as ambulatory patient services
Emergency services
Hospitalization
Pregnancy, maternity, and newborn care
Mental health and substance use disorder services, including counseling and psychotherapy
Prescription drugs
Rehabilitative and habilitative services and devices, which help people with injuries and disabilities to recover
Laboratory services
Preventive care, wellness services, and chronic disease management
Pediatric services, including oral and vision care for children
These provisions set a baseline, mandating that all offered plans meet a certain threshold."

The latest health care cut Republicans are weighing, explained - Vox
The latest health care cut Republicans are weighing, explained