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This is the fun part: Nearly everyone thinks revenue is bound to be shrinking in Q2 due to lease accounting, lesser ZEV credits and a higher mix of 40kWh and 60 kWh models. While we will certainly see an effect of lease accounting and a higher mix of 40/60 kWh models, i dont think there will be a significant decrease in ZEV credits sold and we will see cars delivered well above guidance and a no small part of it being loaners (high margin cars) sold (no leasing).
Revenue might be shrinking a bit, but not that much.
Rifleman
Now owns 2 Model S's!!!
Also, the Performance+ package became available in Q2, and had a higher than anticipated purchase rate. This is likely a high margin upgrade, and should reflect nicely on the bottom line. I would be willing to venture that the Performance+ package cancels out any margin loss from giving 40 kWh owners a 60 kWh battery.
Add to that the overall price increase and certain price increases for options like air suspension and revenue starts looking a lot better.
deonb
Active Member
Wall street didn't understand that raising a PT from 60 to 84 is an upgrade...
That wasn't really an upgrade. That is the way Wall Street analysts work (I know because I used to be one myself). If you think a stock is a sell (or not a buy) then you put a price target 10% - 40% below the current spot price. If the stock continues going down and you still think it is overvalued than you issue a new report and raise you price target a little. Goldman raised its target price, because its previous $60 just looked foolish. They are still not fond of the valuation, so they set a new $84 price target that represented about 30% - 40% downside from TSLA's price. This is not an upgrade per se.
Great write-up Julian. I agree with everything you said, but:
1. How are you calculating 44% short interest? I assume you are subtracting Elon's shares from the public float since he is not selling?
2. Why aren't you long TSLA?
3. I hope you are right that the shorts will have their last hoorah before Q2, so that I can buy some more TSLA for cheap. But IMO this stock is only going up until Q2 earnings and most likely in a straight line up. Meaning that the sooner you buy the better off you will be.
1. How are you calculating 44% short interest? I assume you are subtracting Elon's shares from the public float since he is not selling?
2. Why aren't you long TSLA?
3. I hope you are right that the shorts will have their last hoorah before Q2, so that I can buy some more TSLA for cheap. But IMO this stock is only going up until Q2 earnings and most likely in a straight line up. Meaning that the sooner you buy the better off you will be.
callmesam
Member
Goldman is trying to get it's clients out of short positions, so it uses the maneuver you describe above.
However this is by definition an upgrade PER SE. They have increased their price target upward.
That they have a ludicrous and ulterior motive which succeeded in manipulating the market and got the price below $110 shows that it works. Temporarily.
And of course every trading desk that announces these things MUST unwind positions as the price increases. When they are dead wrong.
JRP3
Hyperactive Member
Small point, A123 is actually now A123 Systems http://www.a123systems.com/
The B456 designation was simply the change made for the now essentially worthless shares of the former A123. Or something like that.
If the earnings go the way I see them going, then I can envision a $200 stock price very shortly.
Acmykguy
Member
Can someone possibly who has a "lease" clarify the program. From my understanding it is technically not a lease but Tesla financed by Wells fargo with a GUARANTEED Buy back if YOU WANT TO. You can keep the car paying the same monthly and you actually own it. Tesla merely guarantees they will buy it back at a high residual value. So when I go and buy my next one this week and have them finance it, I will own it and the accounting at Tesla should reflect a sale on the Income statement. They get the downpayment collected from Wells Fargo via the tax rebates which is why there is no deposit required. I think this is correct.
I don't think you are correct with your conclusion. This will be considered a lease for accounting purposes since you are able to give your car back to Tesla after a 3 year period. This is considered an operating lease for accounting purposes.
Jonathan Hewitt
Active Member
Have the best of both worlds, I bought 2 $150 JAN15 calls 2 weeks ago. If it goes to $200 short term I win, if it goes to $200 sometime in the next year I still win. I won't win as much as with short term calls but the risk is less, too.
Johan
Ex got M3 in the divorce, waiting for EU Model Y!
But is it really Tesla inc. who are givning the buy-back guarantee, or is it in fact Elon Musk the individual? Someow he is personally involved in this deal, right? Could that affect the accounting, and hence revenue recognition, aspect of it all? It seems Elon is often two steps ahead of the rest of us. When the "leasing" was annoumced I thought it strange of him to involve him self personally, but maybe this is the reason?
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It is Tesla. Tesla will buy back the car at 50% of what you paid after 3 years, no questions asked. Musk personally guaranteed that he will buy it back if Tesla can't do it, i.e. goes bankrupt.
I have often wondered about this myself. It is obviously a liability from Tesla's perspective, but I am not sure that it really does qualify as a lease which would affect the P&L. If the title is in the name of the owner, as opposed to Wells Fargo, or a leasing company of your choice, I would maintain that it is just a creative financing option with a guarantee. Surely there is an accountant active on the forum. All of the leases I have seen require some action at the end of the period to transfer title into your name. I suspect that this was thought through and reviewed very carefully before being announced. I also wonder if the lack of definitive clarification may indeed be just a tool to add controversy and lure in shorts. Elon did a masterful job in creating a squeeze to finance his payoff of the government loans and could use another one now to convert the bonds issued very inexpensively. I truly believe they used every tool they had (selling loaner cars, delaying Europe shipments etc.) to create another profitable quarter and would not have been so clumsy with a half baked sales tool that would negatively impact the bottom line.
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