Now with only a week to go to the Q2 call I think it would be cool if we on the TMC board could come up with a kind of ”concesus” on what expectations are priced in. By this I mean that whatever price TSLA closes at Aug 7th reflects a lot of expectations when it comes to key metrics. If what is reported during the earnings call is spot on with all those metrics then in theory the stock would trade sideways for days after the call, while if Tesla dissappoint in those metrics price will fall and if they outperform on these metrics price will rise (with possible squeeze 2.0 scenario).*
Looking around I spotted a perfect example of absurdity from Zacks Research that I can paraphrase as: "Q2 expect a surprise". No really, I think that is very funny. Zacks has gone ultra-bull of late and behind this inherently illogical statement signifies an observation that analysts generally are beginning to concede a battle that in reality was lost before it was ever fought: Namely you cannot produce an genuinely predictive financial valuation model of TSLA on a single data point (Q1) in the absence of meaningful analogies - and there are none. To be clear, nothing in the established auto industry provides such an analogy because the reversed-CCC financial structure of Tesla is completely different to anything out there in the world of mass production. The only possible and never-cited exceptions are the sold-out reservation lists for supercars, and only then if the customers pay 100% cash up front before any part of the vehicle is even built.
The more general absurdity is the irrational determination by a significant minority to tie the price to short term fundamentals when it seems pretty clear that the main bulk of the float is owned on the story. In that context there is only one fundamental that matters: Musk is contracted to deliver a $43.2bn market cap by 2022. So long as the execution seems ahead of schedule then pretty much any price under around the $400 mark is a safe enough bet.
In the mean time the stock appears to have an inherent trajectory. It goes up a bit on good news and it goes down a bit on semi-credible F/UD, but generally in relation to the previous nominal support level and never so far in relation to a fundamentals-based valuation. It is possible to analyze and in many cases anticipate both inbound good news and F/UD. (F/UD - FUD being a deliberate assault on sentiment, UD being ambiguity of what something means - for example Battery Swap).
I will have a bash at what is not in the price at present:
A truly shocking revelation that this company is
not burning through its cash*
A larger than anticipated ZEV, GHG income
A larger than anticipated Gross Margin
A possible warrant write of income (again)
A clarification of a minimal impact due to Lease Accounting
A confirmation of Non GAAP profit
A possible GAAP profit (that would be a real doozie for the shorts)
A possible first operating profit (that would be a game changer)
A dramatic guidance shock for China
A solid reassurance of Model S demand generally
A dramatic confirmation of Model X reservations
A possible acceleration of the Model X launch date
A resolute guidance to profits from Q3 onwards.
*(Keep in mind that $760M cash at bank from the last shareholder's meeting and prepare to laugh out loud Aug 7 assuming you are long)
What is in the price already:
I think an encouraging production number beat, a meaningful improvement in gross margings, reassurance of demand and an expectation of attractive Q3 and onward guidance is in the price.