Near-future quarterly financial projections

[Johan]

Sigh....another well written and yet completely wrong post about the supposed "falling demand" for Tesla's.
At least the troll's have moved on past Tesla can't make enough...or Tesla's are falling apart.

In the same way that you Christmas is coming when you see the lights go up early in December, and all around there's a hint of the smell of gingerbread cookies, you know the quarterly report is drawing neigh when shorts sellers and paid shills alike start reviving the "falling demand" ghost dressed in all sorts of different disguises, one more disingenious than the next... you have to give them credit though for their creativity. This one is focusing on leasing deals as the proof. No matter the path chosen they always return to their cornerstone argument: falling demand. And year after year (after year) they're proven wrong. You'd think they'd learn at some point?

 

[GeorgeSymonds]

Sigh....another well written and yet completely wrong post about the supposed "falling demand" for Tesla's.
At least the troll's have moved on past Tesla can't make enough...or Tesla's are falling apart.

I’ll read back for your evidence. I’ve not said demand has fallen overall, only that a not unrealistic assumption that some MS softening of demand in light of M3 may have occurred and some data points seem to support that. Good to see the fanboys ate equally active if you want a return insult on integrity.

 

[GeorgeSymonds]

In the same that you Christams is coming when you see the lights go up early in December, and all around there's a hint of the smell of gingerbread cookies, you know the quarterly report is drawing neigh when shorts sellers and paid shills alike start reviving the "falling demand" ghost dressed in all sorts of different disguises, one more disingenious than the next... you have to give them credit though for their creativity. This one is focusing on leasing deals as the proof. No matter the path chosen they always return to their cornerstone argument: falling demand. And year after year (after year) they're proven wrong. You'd think they'd learn at some point?

Poetic - I was bang on last quarter (go back and check) and I’ve listed several pieces of evidence for my belief.

Amazing how nobody wants a debate they just want others to support their assumptions

 

[winfield100]

Has anyone considered that an increase in M3 deliveries may be taking sales from MS (and to a lesser extent MX?) There seems to be a increasing inventory listed, US is now at over 1600 new cars on some sites which represents a sizeable increase. While you'd hope M3 sales were to net new customers, at the price point they're selling, they could well be the same customers who would have been in the market for a 75D (trading bigger car for smaller car and better performance - it's a swap I'd make)

@GeorgeSymonds you are both incorrect, and close to being a troll.
here are US sales

 

[Johan]

I’ll read back for your evidence. I’ve not said demand has fallen overall, only that a not unrealistic assumption that some MS softening of demand in light of M3 may have occurred and some data points seem to support that. Good to see the fanboys ate equally active if you want a return insult on integrity.

The logical interpretetation is the following: M3 demand is over the top, production is the only constraint here. Model S demand is strong but the focus is on ramping M3 production. If some sweetening of Model S leasing deals can give a small boost to Q3 numbers then that will be welcome, seeing as they've set the stakes high with a public goal of cash flow positivity from Q3 and going forward. Since they can't ramp Model 3 production any faster than what they are already doing they have to pull whatever levers are available. Is that a sign of weak demand? Or just adapting to the landscape of being a public company judged from quarter to quarter?

 

[winfield100]

I’ll read back for your evidence. I’ve not said demand has fallen overall, only that a not unrealistic assumption that some MS softening of demand in light of M3 may have occurred and some data points seem to support that. Good to see the fanboys ate equally active if you want a return insult on integrity.

calling folks "fanboys" typical troll, on to ignore

 

[GeorgeSymonds]

If you exclude Jan, taking a two month rolling average they’re the lowest MS sales all year. That supports my point

Correction, I think there was one other month when it was poor)

 

[Unpilot]

I’ll read back for your evidence. I’ve not said demand has fallen overall, only that a not unrealistic assumption that some MS softening of demand in light of M3 may have occurred and some data points seem to support that. Good to see the fanboys ate equally active if you want a return insult on integrity.

I think you were trying to insult me....but not a very well thought out attempt.

 

[Johan]

If you exclude Jan, taking a two month rolling average they’re the lowest MS sales all year. That supports my point

Correction, I think there was one other month when it was poor)

Also, if you just disregard reailty you can say anything you want and claim it makes sense.

 

[GeorgeSymonds]

Also, if you just disregard reailty you can say anything you want and claim it makes sense.

Spoken like an expert on the subject

 

[sunhelm]

The model is relatively simple and predates the M3 tracker based in vins, it’s a MS and MX tracker based on their highest seen VIN on quarter ends on a variety of inventory trackers, taking the highest. The difference gives a rough span over a quarter as an indicator of production. To convert to sales you need to look at imperial indicators of sales tactics and unsold stock. This is roughly the same model being used for M3, except the assumption is all M3 is custom order. It’s been clear for a while Ms and MX are being ordered and sold off the lot,

The indicators show that even relatively high vin numbers (so newish built cars) are being discounted, 20k off P100D as an example, the rising inventory on the tracker sites, the increase in incentives and releasing from lease agreements, all indicate pressure to sell. Sales could be strong, but that might be at a cost to make the transaction, or worst case sales are just down requiring aggressive promotion.

It’s a discussion forum, I’m sharing my perspective. You might not like it but I don’t see why pointing to a variety of alternative data points is wrong.

Ok, in the interest of healthy debate, increase in new inventory may be due to smoothing of delivery distribution for S/X so they avoid the mad end of quarter rush. One way to do this is by following the model 3 production playbook, meaning they produce based on likely or most popular option versus producing based on custom orders. This could result in what you see. I sampled some of the new inventory in tesla info and most of them were just newly uploaded. Would be great if you can parse the data and look for average days in inventory. That would be a great metric to supplement.

But having said that, the actual proof to debunk your falling sales is the actual sales data and the unwavering guidance by Tesla, the limiting factor is the cell production of 18650s.

 

[X Fan]

@GeorgeSymonds you are both incorrect, and <close to being> ARE a troll.
here are US sales
View attachment 332521

FIFY.....

 

[bdy0627]

Looks like yet another thread has been taken over by noise. The noise index here is off the charts these days. Wonder what that means???

 

[Zhelko Dimic]

current wall street estimates stand at -42c non-gaap with 6.1b in revenue.

that's a huge variance from my $1+ non-gaap and 6.58b revenue estimate. people were helpful in pointing out i was likely too optimistic on opex. am i missing something else here? besides the obvious wall st hate of tesla i mean.

Two thoughts:
- after checking ev-cpo, I can see that incentives for S/X are massive, similar to Q3/Q4 2016. It could be that TSLA needs to discount inventory significantly, in order to move the inventory, and this could decimate margin.
- however, most of the inventory is 100D and P100D, i.e. 75D is found in traces.
Those two facts combined? I have no clue which one prevails. 100D even heavily discounted will still do equal/better than 75D at MSRP. But what is the shift in the sales mix from previous months? I'd use Q3/Q4 of '16 as a guide.
We've seen margin deterioration then and my guess is we'll see some margin deterioration now on S/X. Impact will be much lesser than '16 as I assume it's cheaper to build S/X nowadays.
And @Johan, it's not 2015 anymore. We've seen demand for S/X soften occasionally, compared with Tesla ability to build them. After all, I got my MS with $15K discount (though honestly, that was the best deal I've ever seen in Ontario in over 8 months of daily tracking the inventory)

 

[SPadival]

Mods: can we please get this thread back to Q3 estimates. S/X demand should go elsewhere.

 

[Zhelko Dimic]

Mods: can we please get this thread back to Q3 estimates. S/X demand should go elsewhere.

Please don't be cute.
We're talking margins, which will affect financial modelling.
luv has asked where he could be wrong - that's the only place I can see him/her being overtly optimistic.

 

[neroden]

luvb2b... looking at your model, it seems like the big issue for GAAP profitability is actually the employee stock options (!). Which are kind of fake expenses but we're talking GAAP here.

Do you think it's possible to model those better?

How are they valuing the employee stock options? Are they using Black-Scholes? (Arguably they should use quotations from the listed options markets... but the employee options aren't listed options, having additional restrictions on trading and vesting.) If they're using Black-Scholes,... does rising volatility raise the published expense? Does a dropping stock price lower the published expense?

I'm wondering if these are going to run low or high; copying last quarter seems questionable.

 

[neroden]

Two thoughts:
- after checking ev-cpo, I can see that incentives for S/X are massive, similar to Q3/Q4 2016. It could be that TSLA needs to discount inventory significantly, in order to move the inventory, and this could decimate margin.
- however, most of the inventory is 100D and P100D, i.e. 75D is found in traces.

This has the super suspicious look of the flush of demo cars shortly before a significant design change, which we've seen twice. I wonder.

 

[bhzmark]

Longs: Don't be so afraid of Tesla pulling some moderate demand levers to ensure S sales (and to lesser extent X).

There is no doubt that many people who might otherwise buy an S will now buy a 3 now that it is available. That will be many of the people coming off the 2016 q3 2 year lease-o-rama. I know a few of them and that's what they are doing. It's what I would do if I didn't own S.

But that's ok -- the tax credit cut and likely inability for 3 supply to meet all the last-full-tax-credit demand will be a demand driver for s too. But the S has new competition in the 3. But I think they will just pull whatever low cost demand levers they need to sell every S they make still pretty easily and at a high margin.

 

[mrdoubleb]

If you exclude Jan, taking a two month rolling average they’re the lowest MS sales all year. That supports my point

Correction, I think there was one other month when it was poor)

The Model S/X line is optimized for 2000-2200 cars per week. Has been like that for a few years now. If they need to they can push like 10% higher but instead they chose to get rid of the 3rd shift and gradually make up for it by further optimizing production. We are now back to where we were with 3 shifts. Not a small feat and should do good for the margin on those cars.

As long as they can run the line at optimal levels I don't give a damn about S to X ratio. They could pull more demand levers still but don't want to invest in another line plus Fremont doesn't have more space anyway. Has been discussed ad nauseam.