Short-Term TSLA Price Movements - 2013

[vgrinshpun]

What are the chances that they pre-announce that deliveries were better than 4500 as soon as the quarter is over? That's what they did last quarter.

Based on my theory about the correlation between assigned/delivered VINs linked below and VINs reported on this Forum, I think that Tesla will deliver about 5200 cars in Q2, beating the guidance of 4500. If that will come to pass and they had a good quarter with ZEV/GHG credits, they may make slight profit, even accounting for the financing/leasing according to GAAP, mainly because profit from the production of cars will contribute to bottom line significantly less than ZEV and GHG credits.

Even if all of the above is true, I still think that Elon will think twice whether to pre-announce good news. I think he would be carefull not to create a precedent that good news are always pre-announced, because the market then would be automatically reading bad news if next time there is no pre-announcement.

http://www.teslamotorsclub.com/show...ntial-Surprise?p=360556&viewfull=1#post360556

Of-course all of the above is speculative as there is no reliable data on deliveries (all estimates are heavily reliant on assumptions). I, nevertheless, bought some stock on margin today, as a possible play on the pre-announcement scenario.

 

[DonPedro]

I am a Tesla fan, but at $11 billion market cap, this does feel like it is a bit ahead of itself.
Current revenue run rate is $2 billion and the 2014 EPS estimate is only about $1.00 per share. So we are trading already at 100 P/E for 2014.
Tesla is priced for perfection.

Knowing about P/E is like having a hammer - everything looks like a nail. If I started a company today with nothing other than a proven technology for fusion power that could provide virtually free energy for all eternity, the P/E would be infinite at any non-zero share price. Nevertheless, it would probably be the most valuable company on the planet.

 

[Citizen-T]

Right, P/E only works when you can adequately project future earnings. The high P/E is telling us that the market thinks the forward estimates are very very wrong. I'm inclined to agree.

 

[Bubba]

Even on a revenue per share basis, I think most would agree that this is a fairly expensive stock. With 20,000 cars per year, that is projected to produce about $2 billion in annual revenue.

When the Model X starts production in 2015 then that is expected to be about 15,000 more per year. So we are talking about perhaps $4 billion annual revenue in 2015-2016 time frame.
That is nosebleed territory for most companies. I am not saying TSLA is going to crater. I just think that this stock is priced for perfection already. Now they need to execute perfectly. If there are any hiccups or quarters with sales below the previous quarter, then the stock will adjust and no longer be priced for perfection.

- - - Updated - - -

Right, P/E only works when you can adequately project future earnings. The high P/E is telling us that the market thinks the forward estimates are very very wrong. I'm inclined to agree.

I hear you. This time is different ?

 

[Citizen-T]

Yes, but again you are using the today's projections. What if they actually deliver 25,000 cars this year? What if next year they ship 30,000 Model S? What if in 2015 they deliver 40,000 Model S and 20,000 Model X? What if that same year there is a true large volume Tesla powered model from Merc and Toyota? What if GM is actually interested in Tesla power trains?

See what I mean? If you change the projections the P/E gets reasonable real fast.

Besides, with companies like this you aren't paying for next year's earnings, you are paying for next decade's earnings.

 

[deonb]

See what I mean? If you change the projections the P/E gets reasonable real fast.

I don't understand the obsession with P/E for a stock that doesn't pay dividends. Whether Tesla makes $1 in profit, or $1billion, I'm not seeing a dime of that.

Until Tesla actually pays dividends, I want it to spent every single extra penny it earns in hiring the best engineers in the world to design the best technology in the world so that they can keep growing at an exponential rate.

Actual profit until then just means now they have to use up cash to pay taxes.

It's very valuable being cash flow positive (it means they won't come and hit me up for more money), as well as growing revenue and gross margins, but I don't see any point of having net profit / earnings.

 

[JRP3]

TSLA is priced for the future.

 

[kenliles]

Yes, but again you are using the today's projections. What if they actually deliver 25,000 cars this year? What if next year they ship 30,000 Model S?

I think it's currently priced at those levels. They'll need to significantly beat projections every Q to continue appreciably higher- meeting current projections will be insufficient to hold this valuation imo.
Regardless of how it's done (ZEV or not) Q2 will have to beat earnings of Q1 to move higher- not just beat the guidance. my 2c

 

[rolosrevenge]

TSLA is priced for the future.

I know, but that assumes that the future will come without hiccups. Though I love Tesla, I doubt Model X will be delivered on schedule without hiccups, to say nothing about the orders of magnitude increase for Gen III. I imagine any major delay or hiccup will drop the stock down significantly though I expect in 5 years for it to be much higher than it is now.

 

[Bubba]

I think it's currently priced at those levels. They'll need to significantly beat projections every Q to continue appreciably higher- meeting current projections will be insufficient to hold this valuation imo.
Regardless of how it's done (ZEV or not) Q2 will have to beat earnings of Q1 to move higher- not just beat the guidance. my 2c

Tesla needs to crush the estimates every quarter in order to maintain the hockey stick graph. If it even looks like growth is slowing, then the growth premium disappears.

 

[DaveT]

Tesla is different than a niche car market company like Porsche, Jaguar, Fiat, etc. Even if those car companies wanted to go more mass market, they don't have a competitive advantage over their competition (ie., Toyota, Honda, etc) to do so. They're basically stuck. Even BMW and Mercedes are basically stuck in the luxury car market. They don't have anything special where they can take on the Camry or Accord. Therefore, their stock prices are relatively stuck as well.

However, Tesla is different. They have falling battery prices and a tech/software advantage that gives them a competitive advantage over any other electric vehicle manufacturer. If battery prices keep falling like they've been the past 20 years, then EVs will go mass market and dominate the market in 15 or so years. Telsa's Gen III vehicle can really eat into the entry sports sedan market (BMW 3 series) in 2017-2020. By 2022, with falling battery prices it will start eating into the Camry and Accord market. By 2030 or sooner, it will make more financial sense to get a Gen III Tesla than even a Civic or Corolla (because Gen III prices will keep dropping because battery tech advances).

This is the potential of Tesla and this is why the stock seems like it's priced high. There's no other car company in the world that's got as bright of a looking future as Tesla.

So how do you price Tesla? Well, the price is probably always going to seem high to the normal person from here on out. That's what is going to keep them from buying the stock. A good example is Amazon. During it's rise the main complaint was that it's stock price was too high and it has a crazy P/E (since profit was so low).

Anyway, I'll stop here. But I think it's worth it to calculate in 5 years how many cars Tesla is likely to be selling with Gen III in full production. Calculate their gross margin and possible earnings. If you think it's likely Gen III will be a big success, then you'll likely come to the conclusion that Tesla's is a decent buy right now at $100/share (if holding for more than a year).

 

[Bubba]

DaveT, this time is different. I am sure you are right.
Tesla is immune to the rest of the business cycle or other traditional valuation metrics.

 

[ShortSlaver]

Tesla needs to crush the estimates every quarter in order to maintain the hockey stick graph. If it even looks like growth is slowing, then the growth premium disappears.

I find it extremely unlikely growth is to slow and this is why I'm holding TSLA. Will be stock of the century and is a bargain even now if you have a 5-year outlook. If you want to day trade it, you'll enjoy the volatility but this thing will be up-up-up for years.

Short at your own peril.

 

[Curt Renz]

2013 JUN 20

Ford Motor Co. (F -3.3%)
General Motors (GM -3.3%)
Tesla Motors (TSLA -3.8%)

The latter not far out of line with the other two, especially after ending a six-day winning streak in which the others did not participate.

 

[ShortSlaver]

Asian markets off to another ugly start. Could spell more trouble and a sub-100 TSLA tomorrow.

Puts might be in order for the day trader...

I should edit this to say Japan is the only active market (AUS too) and has taken a 2% dive. But then the Nikei is sort of an enigma anyhow right now. Stay tuned for China.

 

[kenliles]

I find it extremely unlikely growth is to slow and this is why I'm holding TSLA. Will be stock of the century and is a bargain even now if you have a 5-year outlook. If you want to day trade it, you'll enjoy the volatility but this thing will be up-up-up for years.

Short at your own peril.

I wouldn't short (other than some short term Put protection of long position); But growth will definitely slow as GM efficiency requires similar production to Q1 for the rest of the year.

 

[ShortSlaver]

I wouldn't short (other than some short term Put protection of long position); But growth will definitely slow as GM efficiency requires similar production to Q1 for the rest of the year.

Once again, long view. However, this is the short term thread so I suppose I should obey those semantics here.

I think we all agree that TSLA is priced at the high end of the premium spectrum right now. They need to continue to execute. I have no doubt they will.

 

[kenliles]

Once again, long view. However, this is the short term thread so I suppose I should obey those semantics here.

I think we all agree that TSLA is priced at the high end of the premium spectrum right now. They need to continue to execute. I have no doubt they will.

agreed

 

[Curt Renz]

Asian markets off to another ugly start. Could spell more trouble and a sub-100 TSLA tomorrow.

Puts might be in order for the day trader...

I should edit this to say Japan is the only active market (AUS too) and has taken a 2% dive. But then the Nikei is sort of an enigma anyhow right now. Stay tuned for China.

S&P 500 futures are holding firm right now: up 0.1%.

 

[TSLAopt]

S&P 500 futures are holding firm right now: up 0.1%.

Yes, the Asian markets opened up in a gap down based on the US markets tanking. The Asian futures were all down around 2% by the end of our trading day so they haven't really gone down...if they go down another 2% to be down 4% for the day then that would be bad