2017 Investor Roundtable: TSLA Market Action

[Causalien]

I don't think that's the cause.
The real cause is that the level of automation is incredibly high, and for any other cars when there was an automation issue they could send people to replace the machines, the time it get " re programmed ".
With the M3 they can't do that, because it's too automated. They can't just send people to replace non working machines. The only way to really advance is to get the machines working again. So as long as the machine isn't working, the M3 production doesn't really advance, period.

As for the supplier issue, well, they have so many things to do they can't do everything so they delegated, unfortunately the suppliers didn't deliver right.
But Elon takes full on responsibility (see earning call), he's the one who chose this supplier, his fault.

We all knew this was going to happen right? Had my hopes up for a bit when they delivered early.

 

[geneclean55]

We are out of positive events now until Q4 deliveries are released in the beginning of January. It seems like yesterday we were over 350 and I was not seeing any possibility of dropping below it. I have a lot of options expiring in the middle of December that I will probably have to roll. It is hard to argue now that the SP isn't all about Model 3 ramp. (Semi reveal was incredible and the SP went nowhere). Unfortunately, I don't think anything short of a tweet from Elon saying that production issues are fixed can get the SP back over 320 before January.

P.S. - I saw Model 3s on a transport truck heading up 80 toward Park City, UT on Sunday.

Configurator going live and non-employee deliveries.

 

[Skryll]

Configurator going live and non-employee deliveries.

that would be great, but also more analysis and understanding of the impact of tesla semi like Further thoughts on Tesla's EV Truck announcement...from a former fleet owner could get investor interest and bring in some buying pressure.

 

[CyberDutchie]

New Morgan Stanley note just out, price target unchanged. Hmm, questionable title surely will generate some headlines:

Tesla 2018: $400 then $200?

In this note, Adam Jonas explains that he expects a rise to $400 level in first half of 2018 from Model 3 production ramp and resulting incoming cash flow. Then in the second half of the year, he predicts serious headwinds to come to the forefront (negative catalysts) that push the stock back to $200 levels.

It is not entirely clear what he thinks those headwinds are, other than reiterating two key drivers he listed in May this year when they downgraded the stock:

(1) our view that the global addressable market may not be as accessible as the market expects, and (2) increasing encroachment from consumer electrics and mega-tech firms who are planning comprehensive strategies focused on shared, electric and autonomous transport systems in direct competition with Tesla.

 

[TradingInvest]

New Morgan Stanley note just out, price target unchanged. Hmm, questionable title surely will generate some headlines:

Tesla 2018: $400 then $200?

In this note, Adam Jonas explains that he expects a rise to $400 level in first half of 2018 from Model 3 production ramp and resulting incoming cash flow. Then in the second half of the year, he predicts serious headwinds to come to the forefront (negative catalysts) that push the stock back to $200 levels.

It is not entirely clear what he thinks those headwinds are, other than reiterating two key drivers he listed in May this year when they downgraded the stock:

(1) our view that the global addressable market may not be as accessible as the market expects, and (2) increasing encroachment from consumer electrics and mega-tech firms who are planning comprehensive strategies focused on shared, electric and autonomous transport systems in direct competition with Tesla.

Jonas is making a guess. If he really is certain that $400 and $200 will happen as he described, he can quit his analyst job and become a multi billionaire within a year. I am not saying $400 and $200 can't happen, under certain events, those could happen. I am saying he is guessing. Short term is always a guessing game.

Jonas thinks he is super smart. He indeed has some valid concerns. What he doesn't know is that Elon always sees 12 steps ahead.

 

[erthquake]

New Morgan Stanley note just out, price target unchanged. Hmm, questionable title surely will generate some headlines:

Tesla 2018: $400 then $200?

In this note, Adam Jonas explains that he expects a rise to $400 level in first half of 2018 from Model 3 production ramp and resulting incoming cash flow. Then in the second half of the year, he predicts serious headwinds to come to the forefront (negative catalysts) that push the stock back to $200 levels.

It is not entirely clear what he thinks those headwinds are, other than reiterating two key drivers he listed in May this year when they downgraded the stock:

(1) our view that the global addressable market may not be as accessible as the market expects, and (2) increasing encroachment from consumer electrics and mega-tech firms who are planning comprehensive strategies focused on shared, electric and autonomous transport systems in direct competition with Tesla.

Again with the autonomy thing. Jonas doesn't get it and is completely backwards on both the tech and auto sides. Tesla has a demonstrable, possibly massive, head start selling pure EVs. And mega-tech firms (Google) don't have autonomy products that are viable in privately owned vehicles.

 

[Krugerrand]

New Morgan Stanley note just out, price target unchanged. Hmm, questionable title surely will generate some headlines:

Tesla 2018: $400 then $200?

In this note, Adam Jonas explains that he expects a rise to $400 level in first half of 2018 from Model 3 production ramp and resulting incoming cash flow. Then in the second half of the year, he predicts serious headwinds to come to the forefront (negative catalysts) that push the stock back to $200 levels.

It is not entirely clear what he thinks those headwinds are, other than reiterating two key drivers he listed in May this year when they downgraded the stock:

(1) our view that the global addressable market may not be as accessible as the market expects, and (2) increasing encroachment from consumer electrics and mega-tech firms who are planning comprehensive strategies focused on shared, electric and autonomous transport systems in direct competition with Tesla.

It appears he’s been chatting with our resident next stop $270 chap.

 

[CyberDutchie]

Does anyone know AJ's latest predictions in terms of M3 deliveries/run-rates?

He just updated his forecast for Model 3 deliveries this evening in a new note:

Adjustments to our model following 3Q results: We now assume only 1,000 Model 3 deliveries in 4Q, down from 10,000 deliveries previously. We leave our 2018 forecast of 120,000 Model 3 deliveries unchanged. We took 2018 GAAP operating profit from ($688) to ($1,001). Our 2018 GAAP EPS (ex stock comp) estimates went from ($3.66) to ($6.17) and our US GAAP EPS estimate went from ($6.58) to ($9.00). From 2018 through 2020, our average GAAP OP forecast moved from positive $280mm to negative $70mm. From 2021 through 2025, our average GAAP OP forecast moved from $4,491 to $4,242…. A 5% cut. The cuts are even smaller in the out-years. Our Tesla Mobility forecasts remain unchanged. We roll forward our DCF start date to December 1st, and our price target remains unchanged at $379.

 

[schonelucht]

We all knew this was going to happen right? Had my hopes up for a bit when they delivered early.

No, we didn't. Not on this forum. Here, it was all about 'the Model 3 is designed for easy manufacturing, so we will hit the 1k/2k/3k and finally 5k/week targets set for this year'. We took that hook, line and sinker with the usual arrogant dismissal of the few voices that countered.

 

[schonelucht]

...and our price target remains unchanged at $379.

Analysts. I really don't know how that works. Here you have a guy cutting every single target, some by a significant margin. Not just those over the short term, but long term outlook as well is negatively adjusted. But for some curious reason price target stays exactly the same? I want to see that spreadsheet.

 

[CyberDutchie]

Analysts. I really don't know how that works. Here you have a guy cutting every single target, some by a significant margin. Not just those over the short term, but long term outlook as well is negatively adjusted. But for some curious reason price target stays exactly the same? I want to see that spreadsheet.

Yeah, and then of course there is also the following (bolded by me) disclaimer, still:

Our PT of $379 is comprised of 2 components: The first is a $273/share DCF value of the core Tesla Auto business on a 13% WACC, 10x exit EBITDA and exit EBIT margins of 14.6%. The second component is our valuation of Tesla Mobility at $106/share (what the company has announced as 'Tesla Network') based on a DCF to 2030 and a 13% WACC. Our price target applies zero value for Tesla Energy and zero value for SCTY.

 

[zdriver]

We now assume only 1,000 Model 3 deliveries in 4Q, down from 10,000 deliveries previously. We leave our 2018 forecast of 120,000 Model 3 deliveries unchanged.

Well, at least he's setting up for what'll probably be an easy beat of his expectations, both in Q4 and next year...

 

[Causalien]

No, we didn't. Not on this forum. Here, it was all about 'the Model 3 is designed for easy manufacturing, so we will hit the 1k/2k/3k and finally 5k/week targets set for this year'. We took that hook, line and sinker with the usual arrogant dismissal of the few voices that countered.

I see, getting away from this forum actually made me more objective.

 

[schonelucht]

Yeah, and then of course there is also the following (bolded by me) disclaimer, still:

Our PT of $379 is comprised of 2 components: The first is a $273/share DCF value of the core Tesla Auto business on a 13% WACC, 10x exit EBITDA and exit EBIT margins of 14.6%. The second component is our valuation of Tesla Mobility at $106/share (what the company has announced as 'Tesla Network') based on a DCF to 2030 and a 13% WACC. Our price target applies zero value for Tesla Energy and zero value for SCTY.

Personally, I would have bolded the part where Mobility is valued at $106 which is at least equally questionable but in the other direction.

 

[NicoV]

No, we didn't. Not on this forum. Here, it was all about 'the Model 3 is designed for easy manufacturing, so we will hit the 1k/2k/3k and finally 5k/week targets set for this year'. We took that hook, line and sinker with the usual arrogant dismissal of the few voices that countered.

You make it sound that Tesla knew about this particular production issue all along and decided to mislead the public. I believe that Tesla genuinely planned to achieve those targets if nothing went wrong (a very unlikely case).
It is a typical engineering case of ‘you don’t know what you don’t know’, and as you discover what you don’t know, you fix it. Other companies would have added plenty of padding in their schedule, but that’s not Tesla’s thing.
Rest assured that Tesla will do everything in it’s power to get as close as possible to the original ramp.
AJ thinks Tesla will only build 120k model 3s next year, while company guidance (5000/week somewhere in Q1) ponts to at least 200K+ in 2018. So AJ thinks there’s plenty of stuff that Tesla doesn’t know yet.
EDIT: AJ seems to believe that the 5K/week point won’t be reached until aug/sept 2018.

 

[schonelucht]

You make it sound that Tesla knew about this particular production issue all along and decided to mislead the public. I believe that Tesla genuinely planned to achieve those targets if nothing went wrong (a very unlikely case).

With all due respect, I didn't make it sound that way. What I made it sound like is that all the caveats you mentioned below, were summarily dismissed on this forum back in the day with the rallying cry that 'the 3 is designed to be easy to manufacture'

It is a typical engineering case of ‘you don’t know what you don’t know’, and as you discover what you don’t know, you fix it. Other companies would have added plenty of padding in their schedule, but that’s not Tesla’s thing.

Now you are the one to make it sound like Tesla is the one that's wilfully ignoring typical engineering experience and making projections that they must know are based on denying the reality of the 'unknown unknowns'.

 

[CyberDutchie]

Personally, I would have bolded the part where Mobility is valued at $106 which is at least equally questionable but in the other direction.

I agree Mobility (Tesla Network) will become a cash cow for Tesla in the long run. I have not seen other attempts to value that business, so no idea how the price tag MS attributes compares to everyone else.

FYI, there is a new video out today by YouTuber Andy Slye about the future of driverless driving with the Model 3. I think it was based on an article from a TMC'er: The Model 3 Needed New AP Hardware, But Not For The Reason Everyone Thinks

 

[mmd]

From TMC, I learnt that Uber will buy up all the half million auto driving M3 Tesla will make in 2018. But now, AP is spreading FUD that Uber is buying from Volvo instead.
Someone please wake up Adam, so he can add $200 to Geely's share price.

Volvo to supply Uber with thousands of self-driving cars

HELSINKI (AP) — Volvo Cars said Monday it will sell tens of thousands of self-driving cars to Uber, which is expanding to become an operator and owner of its own car fleet.

Volvo said in a statement that it would provide the San Francisco-based ride-sharing company with its XC90 premium SUVs complete with autonomous driving technologies, from 2019 until 2021. The framework deal is non-exclusive.

The carmaker, owned by China's Geely Holding since 2010, didn't disclose the agreement's value or the precise number of vehicles. Media reports suggest Uber is buying up to 24,000 autonomous Volvo cars.

 

[Gerardf]

From TMC, I learnt that Uber will buy up all the half million auto driving M3 Tesla will make in 2018. But now, AP is spreading FUD that Uber is buying from Volvo instead.
Someone please wake up Adam, so he can add $200 to Geely's share price.
Volvo to supply Uber with thousands of self-driving cars

If you would have paid attention, you would have also seen that Elon turned down that offer.. (At least once, maybe multiple times).

.. and that the next rumor was Uber placed an order at Mercedes : Uber Has Apparently Ordered $10 Billion Worth of Mercedes S-Class Sedans

IMHO Volvo would be wise to request upfront payment (or at very least keep full ownership rights).
I would not even loan Uber Euro 25,-- personally.

 

[Todd Burch]

More Model 3 VINS registered with NHTSA:

Model 3 VINs on Twitter