2017 Investor Roundtable: TSLA Market Action

[doctoxics]

Been thinking about deliveries guidance for Q2. We know Tesla added a third shift at Fremont for S and X. Apparently, the third shift allowed them to make up for the lost week and surprise us with 25,000 deliveries in Q1. We know of no lost time yet in Q2. Assuming that the third shift is still in place, wouldn't we expect that the guidance for Q2 will be 27,000-28,000 deliveries?

 

[Yuri_G]

Been thinking about deliveries guidance for Q2. We know Tesla added a third shift at Fremont for S and X. Apparently, the third shift allowed them to make up for the lost week and surprise us with 25,000 deliveries in Q1. We know of no lost time yet in Q2. Assuming that the third shift is still in place, wouldn't we expect that the guidance for Q2 will be 27,000-28,000 deliveries?

Why would they increase guidance when they could deliver a beat?

 

[racer26]

Delicious.................

Maybe I'm stupid - but $10b in short sells vs. 53bn market cap = 19% short position. Am I a dumb dumb?

That is approximately correct.

19% short interest, compared to Elon holding about 23%, institutions holding about 65% and some non-trivial fraction of the remainder being held by "never-sell" type of retail investors equals a very full boat.

 

[jbcarioca]

Regarding the statement I bolded in your message:

They are not generating any free cash flow (i.e. net income + depreciation - capex - stock buybacks - dividends). And the outlook will worsen for them once the Model 3 and the Model Y and Tesla's pick-up truck comes out.

In fact both of these companies have been issuing debt to sustain buybacks/dividends, which is financial mismanagement, instead of investing this cash to building Gigafactories.

This is now catching up to them, as they are not able to keep up with Tesla's accelerating pace of innovation.

I do not argue with your facts, just the conclusions. Reducing capex (as FCA has done) defers crisis, as does stopping stock buybackks. There are lots of tactics between today and BK.

 

[jbcarioca]

And that FCA short evaluation is taking into consideration the following key advantages in the legacy industry?
- they have the only plugin hybrid minivan, beating honda, toyota and others to market with an 8 seater that can go 30 miles before the gas engine even kicks in, Chrysler Pacifica 2017. Think GM Volt as a soccermom minivan.
- they have been partering with google now alphabet+waymo on a fully autonomous driving version using said minivan with lidar etc in an ongoing effort for years now
- waymo added 500 of these minivans to a self driving fleet

I don't know enough about the other FCA fundamentals in terms of legacy gas car inventory, but I do see the potential on the plugin hybrid minivan with an edge in autonomous driving and as a platform for an autonomous ride share service with ample seat and luggage space.

I am super long tesla but intent to also be long FCA and Alphabet for that reason after learning more about the fundamentals of the legacy business FCA carries.

Chrysler Pacifica plug-in hybrid is finally being delivered, free charger is offered for delays
Waymo deploys 500 self-driving Pacifica hybrid minivans in Phoenix for rides open to public

The only disadvantages I know about for the Pacifica are that steering is not great, that $40k is the higher end of minivan pricing, and that it does not have an all wheel drive option like Honda Odyssey Touring does.

The fact that they throw in an electric home charger now to make up for the delay to market for the general public (had to satisfy the 500 waymo vehicles production first I guess) is also telling about a leadership that gets it.

FCA manages only 2.4% of sales in R&D the industry lowest. They are losing market share in their largest markets, US, Brazil and Italy, in order. The Pacifica is the Chrysler version of the LG Chem components that power GM and Ford also. It probably performs well, but it is not really FCA. Similarly the Waymo deal is an outsource to Google. These are probably good decisions because the have no expertise nor capital to do it on their own. The good Mr. Marchionne is a realist so he's trying as hard as he can to merge with anybody. He's been quite public about their difficult road by going it alone.

 

[ValueAnalyst]

I do not argue with your facts, just the conclusions. Reducing capex (as FCA has done) defers crisis, as does stopping stock buybackks. There are lots of tactics between today and BK.

Once the earnings power disappear, the "lots of tactics" disappear as well. Model 3/Y/pickup will kill their earnings power.

So once earnings disappear, Interest coverage will be the limiting factor in how much further they can lever their balance sheets.

 

[jbcarioca]

Once the earnings power disappear, the "lots of tactics" disappear as well. Model 3/Y/pickup will kill their earnings power.

So once earnings disappear, Interest coverage will be the limiting factor in how much further they can lever their balance sheets.

I disagree about their survivability, but based on politics, not rational evolution. Rationally their should have been a mercy killing years ago, long before their bailed out management found out how to get 177 days on hand of Corvettes. From the political view I think FCA will go first but will spin of Jeep and whatever else might have value first. Just as with GM they'll continue in life support for some time before somebody pulls the plug. Any of these will be a wrenching loss when one considers all the dealers, the installed base and the support infrastructure. It's not easy to kill such beasts.

 

[Bgarret]

Personally, I would like a bull flag down to ~318-20 for a Wednesday ER set-up.

@geneclean55 did the close today fulfill your wish?

 

[geneclean55]

@geneclean55 did the close today fulfill your wish?

Lets see how tmrw goes...but I prefer this kind of action rather than ripping into the print.
Bought a few lottery ticket weeklies....
GLTA!

 

[T3slaTulips]

Been thinking about deliveries guidance for Q2. We know Tesla added a third shift at Fremont for S and X. Apparently, the third shift allowed them to make up for the lost week and surprise us with 25,000 deliveries in Q1. We know of no lost time yet in Q2. Assuming that the third shift is still in place, wouldn't we expect that the guidance for Q2 will be 27,000-28,000 deliveries?

Do the 2,000 units that were stuck on a ship in China until just after Q4 factor in there somehow?

 

[geneclean55]

Maybe a little volatility around Fed report tomorrow, that people might be able to take advantage of for last minute TSLA options/stock transactions before ER.

 

[madodel]

AAPL just missed but is down only $2.80 a share. If TSLA meets or exceeds it should hopefully do well. All we can do is hold on and wait.

 

[Wenche]

The shorts are not backing off. IB had more than 900k shares available to short at Fridays close. All my shares are lent out. IB posted the statement "image" today, documenting the short holding by Friday, when the stock was at all time high. Yesterday we saw a new all time high. Today a brief pulldown, but only the shorts that sold yesterday are in the green. Today at close IB has only 153k shares available to short.

 

[mutle]

AAPL just missed but is down only $2.80 a share.

That's not entirely correct. Missed in some metrics, but beat in others (like EPS) and revenue is only 1-2% below estimates.

 

[neroden]

Delicious.................

Maybe I'm stupid - but $10b in short sells vs. 53bn market cap = 19% short position. Am I a dumb dumb?

That's correct but usuallly it's calculated as a percentage of *float*, i.e. excluding the shares Musk holds outright and is never selling.

 

[D-egg-O]

I'm seeing a lot of bullish headlines in my Google finance and Yahoo finance feeds. This feels weird. Tomorrow is going to be very interesting.

 

[TrendTrader007]

AAPL just missed but is down only $2.80 a share. If TSLA meets or exceeds it should hopefully do well. All we can do is hold on and wait.

I'm suspecting some of the $ leaving AAPL will find its way into TSLA

 

[AlMc]

Tesla Started 2017 With a Sales Boom in China

I found this posted in another thread by @EinSV

 

[TrendTrader007]

Delicious.................

Maybe I'm stupid - but $10b in short sells vs. 53bn market cap = 19% short position. Am I a dumb dumb?

It's % of the available float of approximately $162 million shares and not the entire share count hence much higher than 19%

 

[dc_h]

That is approximately correct.

19% short interest, compared to Elon holding about 23%, institutions holding about 65% and some non-trivial fraction of the remainder being held by "never-sell" type of retail investors equals a very full boat.

The stage is set. Will Elon and Tesla burst through enemy lines and destroy the shorts, retreating in tatters, or will Tesla retreat to fight another quarter.
Really a classic quarter. Can't wait.