Short-Term TSLA Price Movements - 2013

[sleepyhead]

Fine, you make good points. I think demand could be huge, it really just depends on whether the Gen III is priced reasonably and if Nissan/GM/etc has put together a viable alternative by 2016. I am just wary because I think shares could drop if Q3 falls short of expectations or other bad news comes out. And the percentage of publicly traded shares is low and if more shares go public, that could push the price down as well.

And disclaimer, I am not holding a short position. I imagine a real short would be more sophisticated than to just post an opinion on a forum with no backing evidence. I probably should have worded my initial post more carefully.

Q3 will not fall short of expectations. It will exceed expectations by a mile. We here on TMC are so far ahead of the markets on TSLA that it almost isn't fair.

Only Northland Capital Markets has so far been able to accurately predict Q3 numbers, and the market doesn't really listen to a small shop like this (at least for now). Even one of the most bullish analysts (on the street) from Deutsche Bank has way too conservative numbers for Q3.

TSLA rally will continue for a while, at least until the end of the year. Growth is accelerating and the story is getting better every day. It is an easy buy.

Obviously bad news will cause this stock to crash, but that is the case with every company.

 

[ckessel]

Margin for pre-Q3 trades

So, I thought about and discarded the idea of selling some deep ITM calls to generate cash for some small options trading (relative to my stock value). Some really bad tax consequences since my holdings are already at the long term tax point.

What about using margin for the trades? They'd be relatively short term Q3 report options. I don't like borrowing money as it eats into the profit (or aggravates the loss), but either it's short term and I can then use the profit for future trades without margin or I lose out and have to sell some stock to cover the loss. I'd like to get more TSLA over the next few months, but I can't throw more cash at it so my only option would be leveraging the stock I already own.

 

[Convert2013]

Seriously, I don't know if I'm getting too excited or too bored to see all these Model S's zipping around from this weekend! My brother in law today said he is getting bored for sure and it's no longer fun to see them.. In Southern California we're at a point where people are asking " Do I want to buy one, a lot of people already have them!".. Adoption has been quick and in volumes. This is only gonna get crazier with Model X next and fanatic levels when Model E arrives. We in California are "early observers" of what will happen next. The stock will continue to climb. I am still in accumulation mode of the stock, not waiting for a drop, playing options, etc etc.. End of 2014 we may touch $400.

 

[bonaire]

Question for sleepyhead or others. We note that people in the USA are finalizing and getting a Vin and then getting a delivery date as quick as three weeks later. Can you extrapolate that into the demand cycle for 2014. Just an objective view when watching Vins like DB's Dan did to give his upgrade. With winter coming to the east coast do you feel demand will wane until the spring for nonCalifornia customers? Not worried about Q3 numbers but rather Q4. I might wait for february after Q4 earnings before going long.

 

[sleepyhead]

Question for sleepyhead or others. We note that people in the USA are finalizing and getting a Vin and then getting a delivery date as quick as three weeks later. Can you extrapolate that into the demand cycle for 2014. Just an objective view when watching Vins like DB's Dan did to give his upgrade. With winter coming to the east coast do you feel demand will wane until the spring for nonCalifornia customers? Not worried about Q3 numbers but rather Q4. I might wait for february after Q4 earnings before going long.

bonaire - I don't think that you can extrapolate anything when it comes to Tesla. It is growing so quickly that it is impossible to tell what the future will bring.

As far as demand goes, I predict that Tesla will be production constrained for the next decade. I wouldn't worry too much about Q4, they already have enough (or close to enough) pre-orders to sell all of the cars they will be able to produce. Demand will pick up in Europe once these cars start hitting the streets. Q1 will be the beginning of Asian deliveries and I think that China will be buying tens of thousands of Model S per year.

I would not worry about demand at all; rather focus your efforts on supply, specifically how quickly can Tesla ramp up production. During the Q2 ER CC the BofA analyst started asking a question about demand tapering off after 7 quarters (based on his analysis of other luxury cars, such as BMW 7-series, etc.), and before he could finish asking the question Elon and Deepak? both cut him off, basically saying that demand will not taper off and is actually getting bigger.

Demand is not an issue. The only possible issue with demand would be if all of a sudden people started ordering a lot of 60 kWh cars, which are lower margin. Of course a major recession could slow demand considerably, but we are not there yet.

 

[bonaire]

There is a mild case of willful blindness currently. Forget demand and such. Based on GAAP numbers, there is a loss of over $5k per vehicle. There are a lot of people wanting to lease partly because they want the car and don't need it. Fiscal responsibility is out the window when want trumps need, loss is accepted and we look to capitalize on this aspect of the cycle. Toughts on the willful blindness to ignore the current loss per vehicle and partly irresponsible demand of customers stretching to quell their wants by buying a car two to three times what they would normally spend? I liken this to the high school kids who get $50/mo. Cell phones and need their parents to buy it for them because all their friends have them.

Are investors of Tesla actually investing in a drug addiction, of sorts?

 

[Cattledog]

Q3 will not fall short of expectations. It will exceed expectations by a mile. We here on TMC are so far ahead of the markets on TSLA that it almost isn't fair.

Haha. Really true. I usually feel everyone else has more meat on their research bone. But in this case, with owning the car, snooping the forums, going to Teslive, going to showrooms to observe, touring the factory, watching the numbers, 'getting' Elon, etc. I feel that I finally have a leg up. Very lucky and grateful that the 'leg up' is on 2013's most explosive stock.

 

[pfq1982]

Question for sleepyhead or others. We note that people in the USA are finalizing and getting a Vin and then getting a delivery date as quick as three weeks later. Can you extrapolate that into the demand cycle for 2014. Just an objective view when watching Vins like DB's Dan did to give his upgrade. With winter coming to the east coast do you feel demand will wane until the spring for nonCalifornia customers? Not worried about Q3 numbers but rather Q4. I might wait for february after Q4 earnings before going long.

Very curious about this issue as well. March - August is 'high tide' for auto sales. You can see this in the seasonal adjustment factors for SAAR auto sales in BEA data. All things equal, winter months can mean 20% lower sales than summer. And Elon quotes Model S demand in terms of current order rate, which has only happened during the summer (and during buzz peaks..). Of course, it's possible that Tesla N. American demand growth outpaces the seasonal factors, but I view this as far from certain.

As you note, N. American wait times have down quite a bit in the last month. Which means TSLA production allocated to N. American orders is more than the amount of orders coming in during 'high tide'. This might be a function of higher production rate + focusing entirely on N. American production to deliver in Q3. We don't really know how much, if any, has been allocated to Europe over the past month. My guess is Europe has been neglected a bit in order to rush orders here. Then they can deliver a lot of high priced sigs while production efficiencies are in place to boost profits in Q4, so they can boast about being profitable excluding ZEV revenue (which should be about zero in Q4). You know Elon is dying to make that headline.

This would also be consistent with Elon's remarks that N. American wait times would get longer as they built out Europe (Dutch interview). But so far, the exact opposite has happened.

Anyway, just some rambling thoughts.

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There is a mild case of willful blindness currently. Forget demand and such. Based on GAAP numbers, there is a loss of over $5k per vehicle. There are a lot of people wanting to lease partly because they want the car and don't need it. Fiscal responsibility is out the window when want trumps need, loss is accepted and we look to capitalize on this aspect of the cycle. Toughts on the willful blindness to ignore the current loss per vehicle and partly irresponsible demand of customers stretching to quell their wants by buying a car two to three times what they would normally spend? I liken this to the high school kids who get $50/mo. Cell phones and need their parents to buy it for them because all their friends have them.


Are investors of Tesla actually investing in a drug addiction, of sorts?

Yes, but not yet?

 

[Chickenlittle]

There is a mild case of willful blindness currently. Forget demand and such. Based on GAAP numbers, there is a loss of over $5k per vehicle. There are a lot of people wanting to lease partly because they want the car and don't need it. Fiscal responsibility is out the window when want trumps need, loss is accepted and we look to capitalize on this aspect of the cycle. Toughts on the willful blindness to ignore the current loss per vehicle and partly irresponsible demand of customers stretching to quell their wants by buying a car two to three times what they would normally spend? I liken this to the high school kids who get $50/mo. Cell phones and need their parents to buy it for them because all their friends have them.

Are investors of Tesla actually investing in a drug addiction, of sorts?

Wow so we have gone from can't design them to can't build them to can't sell them to can't make a profit to. Drum roll feeding an unneeded addition of the public. Even if you except this premiss wasn't genius of jobs showing up what we needed? Would like to remind the author of the mission statement of electrifying cars

- - - Updated - - -

That is addiction this auto correct is killing me

 

[Causalien]

Haha. Really true. I usually feel everyone else has more meat on their research bone. But in this case, with owning the car, snooping the forums, going to Teslive, going to showrooms to observe, touring the factory, watching the numbers, 'getting' Elon, etc. I feel that I finally have a leg up. Very lucky and grateful that the 'leg up' is on 2013's most explosive stock.

Ahh, but this is exactly what value investors do in terms of research to get a leg up on the market. Think of all the time you've spent on all these activities and multiply that by your wage. Then it makes sense that you should at least get some return after spending so much on research.

~Just by reading the quarterly report, you are already further ahead than 99% of the value investors.

 

[sleepyhead]

There is a mild case of willful blindness currently. Forget demand and such. Based on GAAP numbers, there is a loss of over $5k per vehicle. There are a lot of people wanting to lease partly because they want the car and don't need it. Fiscal responsibility is out the window when want trumps need, loss is accepted and we look to capitalize on this aspect of the cycle. Toughts on the willful blindness to ignore the current loss per vehicle and partly irresponsible demand of customers stretching to quell their wants by buying a car two to three times what they would normally spend? I liken this to the high school kids who get $50/mo. Cell phones and need their parents to buy it for them because all their friends have them.

Are investors of Tesla actually investing in a drug addiction, of sorts?

GAAP numbers don't really mean that much; and I don't feel like debating this topic again.

All I can say is that whether a car is sold as a lease or an outright sale doesn't really matter to TSLA because Tesla gets the same cash flow either way. Their 50% guaranteed buyback will be a steal for the company if anyone returns the car (hint: they won't because it will be worth more on the open market). If they do return the car to Tesla then the company can easily sell it for a small profit.

That's why GAAP doesn't matter: if 50% of cars were sold as a "lease" then TSLA would have awful financials. But if only 10% were "leases" then TSLA would have great financials on GAAP. On a non-GAAP basis both cases have the same financials; and this is how it should be since both scenarios are financially indifferent to TSLA. Although you could argue that if 50% of people returned their cars to TSLA, the company would get a huge revenue boost starting 3 years from now going indefinitely. They could probably get 15% margins on resale too. Where shorts see a negative, I see reality which is going to be a positive. I can guarantee myself that the car will be worth more than 50% of original price in 3 years time.

The smart investor understands this concept and that is why I have been saying that GAAP doesn't really matter.

I will invest on non-GAAP numbers, while the shorts invest on GAAP numbers.

 

[BornToFly]

GAAP numbers don't really mean that much; and I don't feel like debating this topic again.

All I can say is that whether a car is sold as a lease or an outright sale doesn't really matter to TSLA because Tesla gets the same cash flow either way. Their 50% guaranteed buyback will be a steal for the company if anyone returns the car (hint: they won't because it will be worth more on the open market). If they do return the car to Tesla then the company can easily sell it for a small profit.

+100 Sleephead! Unless Tesla can't sell the used cars for a profit, because the people who were leasing didn't maintain the cars by changing the oil on time, didn't change the spark plugs and air filter..., oh wait..., never mind....

 

[redharel]

why talk about buy back that can take place in 3 years in a thread called "Short-Term TSLA Price Movements"?
it's irrelevant and annoying

 

[Citizen-T]

why talk about buy back that can take place in 3 years in a thread called "Short-Term TSLA Price Movements"?
it's irrelevant and annoying

Point taken. This belongs in the long term thread.

I'll just say that I don't care if they take a small loss. It'd be money well spent. They are getting the demand today when they need it, and they are paying for it tomorrow when they are a household name with GenIII around the corner. A risk, but a well calculated one.

 

[Cattledog]

redharel - I think what people are trying to discuss are issues affecting the current stock price. That list would number into the thousands. And while many of the issues that affect Monday's opening are issues of next week, many are issues of next year, or three years from now. I see this as valid discussion point in both the short-term and long term thread. When you get a forum with tens of thousands of users, not everyone is going to put everything in the location that you always think it ought to go in. Life.

 

[TSLAopt]

There is a mild case of willful blindness currently. Forget demand and such. Based on GAAP numbers, there is a loss of over $5k per vehicle. There are a lot of people wanting to lease partly because they want the car and don't need it. Fiscal responsibility is out the window when want trumps need, loss is accepted and we look to capitalize on this aspect of the cycle. Toughts on the willful blindness to ignore the current loss per vehicle and partly irresponsible demand of customers stretching to quell their wants by buying a car two to three times what they would normally spend? I liken this to the high school kids who get $50/mo. Cell phones and need their parents to buy it for them because all their friends have them.

Are investors of Tesla actually investing in a drug addiction, of sorts?

Bonaire, who are you? Are you long currently? Tell the truth

 

[clmason]

TMC member Renegade received a 60 this week. His signature shows TM took 2.5 months to turn around his order. There may be a substantial backog of 60's. Feels like they are purposely trickling the 60's to hit margin goals. Smart thing to do I suppose.

I saw other reports of P85+ that were turned around in 3 weeks.

What do you make of this?
Does anyone know product mix between 60/85/p85/p85+?

 

[ckessel]

Damn, the more I read about LEAPS the sadder I am I didn't know 2 years ago when I put my money into the stock . There was a pretty clear points at first deliveries and again at first profitable quarter that if hit would send things skyward. Now it's less clear, the stock is heavily valued on future things already.

 

[Citizen-T]

Damn, the more I read about LEAPS the sadder I am I didn't know 2 years ago when I put my money into the stock . There was a pretty clear points at first deliveries and again at first profitable quarter that if hit would send things skyward. Now it's less clear, the stock is heavily valued on future things already.

You and me both, brother. Hard to complain too much about the kind of gains we've seen though.

 

[pfq1982]

TMC member Renegade received a 60 this week. His signature shows TM took 2.5 months to turn around his order. There may be a substantial backog of 60's. Feels like they are purposely trickling the 60's to hit margin goals. Smart thing to do I suppose.

I saw other reports of P85+ that were turned around in 3 weeks.

What do you make of this?
Does anyone know product mix between 60/85/p85/p85+?

From finalize to delivery, his 60 took 43 days, not 2.5 months! Other 60s finalized a couple weeks after him took high 30's from finalize to delivery. Tesla has always promised slower delivery times for the 60 regardless of the quarter, and that's what we are seeing.

Although there might be some selection bias, I think 60's are running 25% of N. American orders, at most.

My shot in the dark from reading the forum is 25% 60, 40% 85, 20% P85, 15% P85+.

I will go off on a tangent on the delivery time and say Tesla's delivery times on the design page are wrong and have been misleading for some time now. They make it seem like an eager buyer needs to order higher tier cars to cut significant times off delivery, when the past few months have clearly shown somewhere between no and a few weeks difference. Not even 1 month, much less 2.