2017 Investor Roundtable: TSLA Market Action

[Papafox]

In my view Musk needs to learn to be more conservative with his public projections and to push his employees through internal projections that are much tougher to achieve (through bonuses, PSUs, etc.). This stock will likely get unnecessarily beaten down in the coming days and weeks (and months if the ER is not good) after what was a good delivery/production report (save for the M3 numbers, which if projected more conservatively to the markets would have been just fine) for Tesla simply because Musk once again set unrealistic expectations.

I also agree on getting short-term investors out being a good thing. However, at the end of the day what will drive this stock for now will be what comes next week (and, or course, in November with earnings). I am hopeful that the recent significant downward movement is mere speculation. But, there is a part of me that worries that next week’s numbers have leaked. If the numbers are bad next week, the shorts might finally have their big victory.

Those negative headlines are, unfortunately, factually accurate. The reality is this was a big miss on % basis, and more importantly, Musk once again did not come through. I also do not know why some folks on this board are assuming this is just a minor delay that will be fixed with major production ramping in a couple of weeks. I do not see anything in the release that sets forth a timeframe or shows that they have a fix (seems they identified the problem and “are confident of addressing the manufacturing bottleneck issues in the near-term” - I have no idea what “near-term” means to Musk). I know that I am disappointed as an investor and a supporter of Tesla. I do hope that this is a short-term issue, but I fear that the impact on the SP could be dramatic in a negative way over the coming days and maybe months if there is no real catalyst to move the SP in a positive direction. I hope that my fears are unwarranted and the markets do focus on this being a short-term hiccup for a car that seems to be in very high demand.

In my view Musk needs to learn to be more conservative with his public projections and to push his employees through internal projections that are much tougher to achieve (through bonuses, PSUs, etc.). This stock will likely get unnecessarily beaten down in the coming days and weeks (and months if the ER is not good) after what was a good delivery/production report (save for the M3 numbers, which if projected more conservatively to the markets would have been just fine) for Tesla simply because Musk once again set unrealistic expectations.

Notsosure, you certainly cannot be criticized for being inconsistent. All 4 of your 4 posts so far suggests the stock price is likely going to fall. Three of the four suggest that Musk is screwing up. My question is this: are you a long, and, if so, why do you remain long with such negative expectations?

 

[racer26]

If that picture really is of semi, it's pretty apparent it's aiming to be one of the lowest Cd semis ever, not that we didn't expect that. To me it doesn't quite look like the silhouette we've seen teased.

 

[notsosure]

Notsosure, you certainly cannot be criticized for being inconsistent. All 4 of your 4 posts so far suggests the stock price is likely going to fall. Three of the four suggest that Musk is screwing up. My question is this: are you a long, and, if so, why do you remain long with such negative expectations?

I am long. But, as evidenced by my posts, not sure if I will remain long. I like Tesla and its products, but I have grown weary of Musk’s approach and what I feel is his lack of focus on Tesla.

 

[RABaby]

I am long. But, as evidenced by my posts, not sure if I will remain long. I like Tesla and its products, but I have grown weary of Musk’s approach and what I feel is his lack of focus on Tesla.

Then you might as well sell because Musk is not going to change.
We mortals may get distracted.
Musk focuses on a target and he hits it sooner or later
Those with patience will be rewarded
Shorts will pay a price
You may be long,
but I think not much longer

 

[schonelucht]

I bet the MS/MX Gross Margins are sequentially higher.

That's not guaranteed. Remember they lowered the price of some models and rolled a few options in the base package. On the other hand they removed the low margin 60 from the line up and likely increased efficiency at the factory. And then there is an impact from same-quarter discounted delivery. If priced in cost of goods instead of SG&A it may cost us a few tenth of a point as well. Could go either way in my opinion.

 

[MartinAustin]

Wow. Wonder if this will move the needle tomorrow https://i.redd.it/avqa9aur9jpz.jpg

Not if it was deleted less than an hour later!

Was it a picture of a semi? What was it?

 

[larmor]

I am long. But, as evidenced by my posts, not sure if I will remain long. I like Tesla and its products, but I have grown weary of Musk’s approach and what I feel is his lack of focus on Tesla.

If your CEO has an average and achievable goal, then when your organization or company has reached said goal it is just average.

 

[everman]

Not if it was deleted less than an hour later!

Was it a picture of a semi? What was it?

It was a Semi indeed!

 

[notsosure]

Then you might as well sell because Musk is not going to change.
We mortals may get distracted.
Musk focuses on a target and he hits it sooner or later
Those with patience will be rewarded
Shorts will pay a price
You may be long,
but I think not much longer

If your CEO has an average and achievable goal, then when your organization or company has reached said goal it is just average.

As CEO of a public company there is a responsibility to be realistic with public projections. This has nothing to do with setting internal goals that are very aggressive. They are two very different things. One subjects you to potential SEC scrutiny and sharholeder lawsuits, the other drives behavior from employees that we all desire as shareholders.

 

[everman]

What are those protrusions on the roof? Sensors, or connection points for the air baffle sitting off to the left in the pic?

 

[EarlyAdopter]

The juxtaposition with that traditional ICE semi is remarkable. Look at how much of the cab forward space is devoted to the engine on the ICE semi. Even cab-over-engine semi designs have to give up tons of cab space to accommodate a big engine underneath. The Tesla rig can, from the looks of it, devote tons more space to interior cabin room. Can't wait for the official reveal and specs!

 

[schonelucht]

I don't know how GM sinks 4-5% on more than $3 billion of revenue with $16m of extra depreciation plus some labor hours....

I think it is death by a thousand paper cuts. 60 became 75 for the same price. Options were rolled and not fully compensated by the price. Same quarter discounts priced into revenue instead of SG&A. Widening gross losses on Service&Maintenance. Bigger gap between low and high end model, making more people pick the low end. 'Horrible' negative margins for the 3, especially on labour, some higher COGS due to weaker dollar, no sales of ZEV credits etc. There are a lot of potential headwinds.

 

[schonelucht]

So, VIN scrambling is confirmed. No way they got from 220 to 420 between Saturday and today unless they're issuing VINs out of order to confound VIN-counters.

From 260 to 420. And it is possible. A car isn't produced if is didn't pass QC. It's quite imaginable they have 160 cars or more in various stages of quality control and 420 is the one that happened to be flawless from the get go while most must go back from some correction.

 

[erthquake]

It was a Semi indeed!

View attachment 251439

That doesn't look like a 200-300 mile short-mid hauler to me. Isn't there room behind the cab for a sleeper compartment? Wouldn't that suggest a long-haul semi?

 

[TMSE]

That doesn't look like a 200-300 mile short-mid hauler to me. Isn't there room behind the cab for a sleeper compartment? Wouldn't that suggest a long-haul semi?

Yes, it does look like a long haul semi with sleeper compartment.

 

[D-egg-O]

The juxtaposition with that traditional ICE semi is remarkable. Look at how much of the cab forward space is devoted to the engine on the ICE semi. Even cab-over-engine semi designs have to give up tons of cab space to accommodate a big engine underneath. The Tesla rig can, from the looks of it, devote tons more space to interior cabin room. Can't wait for the official reveal and specs!

As I mentioned in the semi thread, it looks like it might meet length requirements for European markets. But you are correct, it should be pretty roomy inside that cabin.

 

[larmor]

As CEO of a public company there is a responsibility to be realistic with public projections. This has nothing to do with setting internal goals that are very aggressive. They are two very different things. One subjects you to potential SEC scrutiny and sharholeder lawsuits, the other drives behavior from employees that we all desire as shareholders.

I think public projection is that the public (or lets not be coy here) the analysts pick and choose what they want to hear. The goal was hard to achieve, but it was tempered with a huge disclaimer from musk himself that this was a target and will be very difficult to gauge the initial production ramp.

 

[dennis]

That's not guaranteed. Remember they lowered the price of some models and rolled a few options in the base package. On the other hand they removed the low margin 60 from the line up and likely increased efficiency at the factory. And then there is an impact from same-quarter discounted delivery. If priced in cost of goods instead of SG&A it may cost us a few tenth of a point as well. Could go either way in my opinion.

In the 2Q17 Update Letter Tesla guided that "gross margin for Model S and Model X in Q3 will decline slightly from Q2, driven primarily by mix shift" and that overall GM would drop below 20% because of big Model 3 production expenses and small Model 3 volume.

 

[AnxietyRanger]

Hey wait a second, I thought Model X was a colossal failure, and still was even just a few months ago?
(based on many "wise" comments posted all over the intertubes suggesting that it should be canceled... still, even now, so that they can "focus on Model 3")

Given that Model X sits in a vastly bigger market (premium SUV) than Model S (premium sedan), obviously Model X is a failure compared to Model S.

I don't think it should be cancelled, but it hardly as successful as Model S in terms of what the potential is. The falcon wing doors are polarizing, no doubt (and have added to the cost of the vehicle too).

 

[GoTslaGo]

Here is my anxious thoughts going into delivery numbers:

View attachment 250376

The problem here is that only one quadrant is a strong reason to hold into next Monday/Tuesday. The wildcard is that ANY news could lead to a risk-off relief rally. I think a lot of people want to be in for the M3 ramp, but this news moment is a risk event that could be causing people to step aside. Once the news is out, people could rush in figuring that the ramp now has more or less 3 months to get going and look great for the Q4 numbers in Jan.

Bringing this to the present. So we're in the good S/X (>25k) and bad Model 3 (<800). Thanks for the chart!