For everyone who has been visiting TMC (bulls/bears), tomorrow will be a very telling day as Tesla is scheduled to release numbers after market closes. It’s not a secret that Tesla will not meet the projected 2,500/ week M3 production number for Q1, hence the current stock price....so the short-term question remains “has it all been priced in?”
This has been on my mind for the last two weeks as I am contemplating deploying some dry powder to pick up more TSLA. I think that if Tesla produces between 1,800-2,000/ week M3 (7 days) then we will have a very good chance of a nice pop to reclaim 260s/ maybe 270s if it’s above 2,000/ week (for the last 7 days). If numbers fall between 1,500-1,800, then it would explain why Elon is back to sleeping at the factory and the stock price might decrease a bit (being that it’s so low, I don’t know if it’ll move much anymore). For bears who are spelling gloom and doom, this is not the first time Elon has decided to take matters into his own hands (he is fully capable of it, let’s not get it twisted and forget his engineering/physics background, he is also a rocket scientist..) during Model S and Model X ramp, Elon tweeted about doing just that to get Tesla to where we are at now. If he stays at the factory, then I am optimistic that he and Tesla’s engineers will figure it out (sometimes you need the head honcho present to give you that extra jolt of motivation).
The question I have been asking myself today after hearing that Elon will be sleeping at the factory again is “why wait till now, why couldn’t he do this months ago?” Well, aside from being a very busy person, the best answer I came up with is that although there were numerous bottlenecks, Tesla was able to resolve them incrementally, and as Elon stated during the 4th Q 2017 CC,the ramp so far has been “exponential,” (although not as exponential as we TMC investors would like), it’s still moving much faster than the S/X lines (which took 5 years to get us to 2,000/ week). Hence, if M3 ramp is already at 2,000/ week in just 9 months of entering production, then I think we are at a very nice place. Previously when Elon was sleeping at the GF, I think he somewhat sized up the battery module situation and thought “we can do this, no problem.” His engineers likely thought the same, hence, the 8K was issued. So if they are in fact at 2,000/ week, then Tesla theoretically will only miss by 500/ week (that’s if you believe in the leaked email...), But this still pins Elon and his team is in a very precarious situation, how does he explain the 8k? So, to show that he is NOT taking this miss lightly (even if it’s only 500 M3/ week), Elon will be sleeping at the factory.... Now, if numbers fall between 1,200-1,400 (last 7 days burst rate) then that will not be a good thing as it shows we are much slower than anticipated and there’s another level of hell we’ll be experiencing and a capital raise is necessary so we don’t cut it too close to the edge. Might as well raise the capital this Q.
I’ll be sitting back, and watching it unfold tomorrow. At this point in time, I would still avoid options, they don’t call it a suckers bet for nothing.
Right now, the overall bearish market is weighing pretty heavily on TSLA. I think we likely may have bottomed several days ago otherwise. Of course, there is no way to predict where this market will go day to day, so that's just a huge uncertain and very substantial factor. Sentiment continues to be incredibly negative. I'm shocked at how negative it has gotten so quickly, and how just when it seems like it can't go lower, it does. Going into this past weekend, we had a nice reversal day Friday, and things were looking a bit better. Sentiment seemed to go down even further with the recall announcement and then more info about the Model X accident. We were headed down today most likely anyway, but then the market dipped hard.
Regarding the production numbers, what will it take to move sentiment? The Bloomberg tracker is indicating 1,190 per week currently, projecting an increase to a little over 2,000 per week over the next few weeks. The leaked email from Doug indicated 200+, anticipating 300+. The supposed leaked email from Elon indicated 2,000+ per week. I think the market is probably most focused on the Bloomberg numbers. Perhaps that's the most trusted source at this point. Prior to the leaked emails, I think the market was expecting about 1,200/week. Now with the release of the emails, I don't know. We got a really nice bounce with some volume today after the email was leaked, but then the market crashed and took TSLA with it. I personally feel like that was a nice gift for shorts today. Otherwise, we very well could have been green today, essentially confirming a reversal. I think with the leaked emails, there is a broader range now that the market is seeing as possible. My guess is that the market is thinking somewhere in the range of 1,200 - 2,000. I don't think anything in the middle of this range will change sentiment much. 1,200 might drop the stock a little more. 2,000 might give it some support but probably not a dramatic change in sentiment. I think for a dramatic shift, it needs to be solidly 2,000+, the closer to 2,500 the better. I think guidance for Q2 will also be a factor. If guidance continues to be targeting 5,000/week, I don't think that will do much to reverse the negative sentiment right now. If guidance is increased, even by a few weeks, I think that would be helpful. I don't expect that at all, since I don't think 5,000/week in Q2 appears likely. Any additional guidance delay to 5,000 will almost certainly add to the negative sentiment.
The market also wants to hear that this latest burst rate is going to stick. Since it's a 7 day burst, it's much better than a few days, but I think the market will still discount it somewhat, if the emphasis is only on the past week, especially if Tesla doesn't indicate that this will be the base rate moving forward.
Musk camping out at Fremont to me is somewhat of a good sign, suggesting that the GF is now reliably ramping, and Fremont will be the next bottleneck. That should be a line optimization issue rather than a major re-design problem like what happened at the GF. Hopefully, this is forward looking towards getting to 5,000/week. Given all of the issues with the ramp, it's a good idea for Elon to spend some time there now.
All in all, I think downward risk going into the announcement is fairly low at this point with much more potential to start the process of restoring positive sentiment. I think there is a good chance Tesla will do that tomorrow, not with home run numbers, but solid numbers that demonstrate there has been substantial progress on the ramp. That's what 2000/week should do for us, shifting the focus away from missed guidance and instead on good progress with a more optimistic outlook moving forward.
