Near-future quarterly financial projections

[luvb2b]

i believe they allocate vins as they have firm configurations. vins are allocated out into the 50k range and the highest vin i have seen has been 35k or so. i think at the moment they have a lot of configurations they didn't build yet so the invites have slowed modestly.

there's also a sampling bias, a lot of people that have reported to various tracking sites are heavily skewed towards first couple days of invites. the sampling is much thinner beyond the first week (you see this on troy's spreadsheet for example).

https://www.bloomberg.com/graphics/2018-tesla-tracker/#

can i ask what is your allocation to short tesla as a % of capital? is it 2%? 5%? 10%?

@luvb2b what do you make of the lack of invites reported on TMC? I am honestly not sure what to make of it. I don't see how it could be a positive thing. Burst invite any day now and bring in a bunch of deposits?

 

[Reality]

can i ask what is your allocation to short tesla as a % of capital? is it 2%? 5%? 10%?

more than 10%, prob won't answer more than that

 

[neroden]

there's also a sampling bias, a lot of people that have reported to various tracking sites are heavily skewed towards first couple days of invites. the sampling is much thinner beyond the first week (you see this on troy's spreadsheet for example).

Makes sense -- first day reservationists are committed fans, therefore more likely to self-report.

 

[bhzmark]

the 900m due in q1 is all convertible, so the share price advance could solve that.

Thanks good reminder on that. I was curious to know the details.
If I read this 424B5
correctly, the share price needs to be above $359 on December 1, 2018 and then note holders will be better off converting to shares. Or perhaps a little higher to account for the accrued interest? And technically the note holder has to think that it will be above that at the time that they can convert and sell.

There is also an interesting discussion of a note hedge transaction to prevent dilution -- does anyone have any insight into that part? It appears that Tesla spent $186 million to hedge against the dilution that would otherwise be caused by the conversion of the notes. If I understand that, Telsa will settle the notes, not by issuing new shares, which would be dilutive, but by using shares acquired through this hedge transaction. One way to do that would be to have bought calls that settle at the time of note conversion. There are likely more complicated ways to get that same exposure.

Is Tesla itself on the other side of a lot of shorts? Are shorts selling naked calls? Is the tsunami going to come via the hedge transaction settling along with the notes?

 

[ValueAnalyst]

Is Tesla itself on the other side of a lot of shorts? Are shorts selling naked calls? Is the tsunami going to come via the hedge transaction settling along with the notes?

I don't know, but it would explain why $360 has been such a pain in my a...ccount.

 

[ValueAnalyst]

Man Claiming the FSD revenue in Q3 makes total sense now. It explains the "releasing FSD features" tweet when everyone knows Tesla self driving tech is garbage (source: lots of dead people and navigant research). Try and claim delivery of at least part of "FSD" and pour more one-time revenue into that quarter at 100% margin.

You are definitely right that they are doing that.

Does it not scare you that they have to play so many games just to be able to show 1 Q of profitability? I guess you think its just what it takes to get over the hump then after that it's smooth sailing, other than the 900m due in Q1'19 of course.

I command you for trying to seem so calm when your short position has gotten 25% deeper underwater in just ten days, with the very real possibility of blowing up your firm in the coming days. The fact that you haven't figured out FSD revenue recognition until a non-accountant Tesla bull "convinced" you speaks volumes. You should consider that massive red flag in front of your eyes.

 

[luvb2b]

more than 20%? you couldn't be managing opm this way? if it's your own capital you are probably down more than a few teslas already.

i had mentioned before, you should get a tesla so you can see some things firsthand. it is the cheapest thing you can do.

in our discussions you have had misperceptions about service goodwill, gross margin possibilities, performance of recent autopilot updates, misunderstanding of dramatic service center overcapacity, and you've probably never even been to any of the factories.

i have been to both factories once already this year. fremont factory tours are a perk of ownership. you will learn more in that one hour than a week of studying the financials. i have gone 3 times over the years so i have a sense of how things are evolving. when you go you can drive around the factory and climb up on the bart platform to see what's going on as far as vehicles moving off the lot.

after a few months of ownership you'll be able to sell your car. the trips to fremont and depreciation on your car will cost a measly 30-40k which is probably an order or two of magnitude less than you're going to lose or have lost already.

sloppy joes on tues. join us.

more than 10%, prob won't answer more than that

 

[bhzmark]

Thanks good reminder on that. I was curious to know the details.
If I read this 424B5
correctly, the share price needs to be above $359 on December 1, 2018 and then note holders will be better off converting to shares. Or perhaps a little higher to account for the accrued interest? And technically the note holder has to think that it will be above that at the time that they can convert and sell.

There is also an interesting discussion of a note hedge transaction to prevent dilution -- does anyone have any insight into that part? It appears that Tesla spent $186 million to hedge against the dilution that would otherwise be caused by the conversion of the notes. If I understand that, Telsa will settle the notes, not by issuing new shares, which would be dilutive, but by using shares acquired through this hedge transaction. One way to do that would be to have bought calls that settle at the time of note conversion. There are likely more complicated ways to get that same exposure.

Is Tesla itself on the other side of a lot of shorts? Are shorts selling naked calls? Is the tsunami going to come via the hedge transaction settling along with the notes?

In looking into this further, it seems that the fact of the convertible note issuance itself will generate short interest by bond investors who lower their cost of investing in the bonds by also selling short the equivalent number of shares, thus giving up the equity upside, but capturing more net yield because of the lower cost of the net investment. That is, they might have bought $1000 of bonds and only gotten a pathetic $2.50 or 0.25% annual yield, but if they also sold short the equivalent 2.7788 shares at $350 each and received $972 (ignoring borrowing and other transaction costs), then their cost was only $27.42 and their $2.50 in interest is now a more respectable 9.1% yield.

I’m not sure what all this means except that a good portion of the short interest is simply an artifact of the convertible notes allowing Tesla to get very low interest debt at a price of hedge costs so as to be nondilutive.

Since off-topic but interesting, I suggest Moving note discussion here https://teslamotorsclub.com/tmc/posts/2809464/

 

[Reality]

I command you for trying to seem so calm when your short position has gotten 25% deeper underwater in just ten days, with the very real possibility of blowing up your firm in the coming days. The fact that you haven't figured out FSD revenue recognition until a non-accountant Tesla bull "convinced" you speaks volumes. You should consider that massive red flag in front of your eyes.

1) commend

2) you have no idea my entry, altho i admit i am now in the red

3) The only 'news' to me would be if they were deferring EAP revenue of any significant volume or that they can partially recognize FSD revenue early. I am not totally convinced that they can do this, but i am definitely convinced they will try.

4) I post during the runups and downturns, and when this blows up i will probably feel bad for a lot of people here, i wont mock their financial loss

 

[Reality]

if it's your own capital you are probably down more than a few teslas already.

I think I outlined here my history and my entries with some outlines on weight. If you look at the movements on Puts this year, you would probably be surprised how much some are in the black. So while down im certainly not down a 'few Teslas', I dont see any situation in which I cover before Q1'19.

I feel like you avoid the questions you dont want the answers to. The simplest one of why they havent raised capital yet. I feel like the possible answer to that question (with a likelihood consideration) makes a short position so EV+ just by itself. Let alone the mountain of other issues they are facing.

Will be fun to watch playout.

 

[ggr]

I feel like you avoid the questions you dont want the answers to.

I feel like you avoid the answers you've already been given. No capital raise will be necessary before mid 2019. If the stock keeps going up, you never know, maybe Elon will do one anyway, to accelerate one or more new projects (Y, Semi, R2020, Chicago Shuttles)... but if so you will be totally cactus.

 

[Reality]

I feel like you avoid the answers you've already been given. No capital raise will be necessary before mid 2019. If the stock keeps going up, you never know, maybe Elon will do one anyway, to accelerate one or more new projects (Y, Semi, R2020, Chicago Shuttles)... but if so you will be totally cactus.

Right, most (all) educated investors know that the timelines given for JUST the Model Y alone (not even counting the R2, Semi, china factory, <insert lie>) are not possible without cash being deployed now (realistically more like 2 years ago min). It is very likely the Model 3 ~ramp will NOT be complete with current cash on hand (mostly due to incompetence at building cars).


So the answer of "it's not necessary" is only true if you admit everything else is a total fabrication and there is no intent on meeting those expectations.


What is really mind-blowing is that it seems pretty much accepted that Model Y by 2019 (stated by EM at Q2 2017 EC, changed to 2020 by EM in Q1 EC) is impossible and it is likely that 2020 is impossible as well (at least true production and not a 30 unit handover party/joke).

The Semi in 2019 is definitely not happening given there is nowhere to build it. The R2 is probably not happening in 2020 since it likely wont be profitable enough to produce (makes for great tweets tho).


So without raising capital EM has more or less admitted those timelines are not achievable/going to happen, without actually acknowledging them as completely fabricated and not based on reality (no relation, well some relation). That, by definition, is fraud, especially when regularly used to try and pump the stock price.


So yes, im not someone who just says "well i was told this so it must be true". I look at it in conjunction with all known facts and ask questions. I do the same with my own assumptions as well.

 

[ValueAnalyst]

The only 'news' to me would be if they were deferring EAP revenue of any significant volume or that they can partially recognize FSD revenue early. I am not totally convinced that they can do this, but i am definitely convinced they will try

You are missing the key point on this topic, and you’ll have to find another bull to tell you, because I’ve had it with you and FUDsters.

 

[Unpilot]

(mostly due to incompetence at building cars).

Yep you know what your talking about with that one.

 

[Reality]

in our discussions you have had misperceptions about service goodwill

How do you figure this? There is documentation that supports Tesla allocates lots of repairs to "Goodwilll" and i would bet anything that it helps keep the warranty expense (that is extrapolated to COGS/Sales) down. How have I been shown to be incorrect about this?

gross margin possibilities

Huh? You dont agree that they treat them differently than other automakers? Ford has ZERO RD because its all in COGS. I am not even sure what you are asserting here?

performance of recent autopilot updates,

probably guilty of confirmation bias here, since i dont personally check all the updates

misunderstanding of dramatic service center overcapacity, and you've probably never even been to any of the factories.

I dont know that I have ever commented on 1, but it seems pretty logical given all the threads on TMC about not getting parts for their cars.


visiting the factory is irrelevant, if anything i think it would lend itself to a forrest::trees situation, some things are better analyzed from a distance and I think this might be one of them.

 

[Reality]

Have you considered what would happen to the financials if Tesla really does release V9 software in August with some basic FSD features? They would then be able to claim that revenue, as well as many upgrades occurring for new buyers and existing owners.

it's impossible to tell exactly but it is definitely something I have thought more about because of this thread that I did not think about previously.

It doesnt really change my thesis at all, but it does make me more concerned about a squeeze after Q3. Havent really decided how to play it. Possibly a partial cover of naked share shorts after the Q2 carnage, then re enter after the Q3 pop? idk, fwiw i think its good analysis and its one of the reasons i came here in the first place.


edit: for some reason i thought this was a recent post responding to me

 

[gluu]

it's impossible to tell exactly but it is definitely something I have thought more about because of this thread that I did not think about previously.

It doesnt really change my thesis at all, but it does make me more concerned about a squeeze after Q3. Havent really decided how to play it. Possibly a partial cover of naked share shorts after the Q2 carnage, then re enter after the Q3 pop? idk, fwiw i think its good analysis and its one of the reasons i came here in the first place.


edit: for some reason i thought this was a recent post responding to me

There would be a short term pop, but also it will raise ASP in future quarters along with margin because I think most EAP buyers would definitely do FSD in its incomplete form.

 

[Zhelko Dimic]

Right, most (all) educated investors know that the timelines given for JUST the Model Y alone (not even counting the R2, Semi, china factory, <insert lie>) are not possible without cash being deployed now (realistically more like 2 years ago min). It is very likely the Model 3 ~ramp will NOT be complete with current cash on hand (mostly due to incompetence at building cars).
...


What is really mind-blowing is that it seems pretty much accepted that Model Y by 2019 (stated by EM at Q2 2017 EC, changed to 2020 by EM in Q1 EC) is impossible and it is likely that 2020 is impossible as well (at least true production and not a 30 unit handover party/joke).

The Semi in 2019 is definitely not happening given there is nowhere to build it. The R2 is probably not happening in 2020 since it likely wont be profitable enough to produce (makes for great tweets tho).

Timelines are impossible if you use conventional thinking. Tesla is known for trying impossible. Sometimes they succeed, sometimes they fail, but list of their achievements is long, so for you to delcare it's impossible is naive. You can assign it some percentage of chance of failure though. There is a story of them buying a stamping press worth $50M for $5M early on. They got quotes from logistic companies and they were all 6 months or so, impossible to do anything quicker. Elon threw a team at it, and they devised a method to move the press in a month. These are the people you're fighting against. *I could be wrong about lengths of time, but it's that order of magnitude.

As for your outrage over moving dates for Model Y... We, investors, are comfortable with Tesla CEO talking about plans for model Y and are not outraged when plans change. They are fuzzy, approximate plans. I would not be surprised that Model Y is 2021. So what? Your outrage is completely misplaced, you are not the shareholder, so get off of your high horse... You are either being very close minded when interpreting Musk's words, or have not heard what he said, but instead read someone interpretation, or are being malicious in intentionally misinterpreting his words.

About Semi - sure, it will be late. Again, so what? I know what I bought into. if you expect me to get mad because of delays, you don't know who you're betting against (Tesla) and mindset of their shareholders(me). We don't get concerned with the same stuff that GE shareholder gets concerned. We, in the mindset resemble more of an angel investor than typical stockholder. And we'll lend Tesla more money if they need it.

Deal with differences to what you know and expect, or get burned...

 

[luvb2b]

I think I outlined here my history and my entries with some outlines on weight...
I feel like you avoid the questions you dont want the answers to. The simplest one of why they havent raised capital yet...
Will be fun to watch playout.

i didn't review your other posts, just followed thru these threads and pm's so not sure where you sit. if you haven't lost a few teslas yet, that means you had very nice entries or a smaller position than i had conceived. i will give you the benefit of nice entries as i know implied vol has exploded recently. i stand by my prediction that buying a tesla, owning for 6 months, and selling it will be cheaper for you than what is likely going to happen by 1-2 orders of magnitude.

on the capital raise question: quite the contrary, i started having deep reservations about doing a capital raise. that is why i invested all this time to get the cash and balance sheet modeling done. previously i had only focused on the income statement.

that is also why i started this thread, because i know many investors probably had the same concerns about cash and their ability to make it through this q2/q3 vortex. i feel through the modeling exercise i have a good handle of how they can make it without additional equity infusion. this is how i maintained the conviction to stay long through that nasty dip.

as far as a capital raise: the shorts just sold about 10-12m new shares over the last few months. so there was easily demand for several million shares around the 300 level. if they had to do a capital raise, i think they'd only need a billion or two and there is (for now) adequate demand to get that done near 300.

 

[Reality]

Deal with differences to what you know and expect, or get burned...

Im not really upset that Elon lies, but think aboutt his post combined with ggr's


ggr says "you were told this answer by Elon, you should LISTEN!!!!!'

you say

"Sure, Elon lies, so what, you need to learn to accept it"



Surely you can see the dichotomy there right?