After Cwin's multiple posts overnight I've better understood the short position. If people really discount anything happening in a couple of years, then indeed Tesla shouldn't be worth the price it's at. Probably should be around where it was a bit more than a year ago. However what this means is that those of us who do see the Tesla long term plan and the execution probability as high can make a lot of money based off of that.
To me the Q1 call was filled with positive news. I couldn't care less if Tesla delivered 6400 or 7000 cars. I would have been disturbed to see 6000 cars as that would have been below Teslas guidance and would indicate something happened. I don't also care too much if Q2 guidance was 8k or 9k cars, getting somewhere in that region was on track of current expected execution speed as per normal and optimal timelines that I have figured out in my head for the company. I do expect a guidance jump for Q3 though.
Now what does matter with Tesla is that they can increase their lead against the competition and how the G3 planning is going as that is where the massive disruption will come from and massive cash flows that will reflect in the stock price sooner or later (depending on the horizon of the investors with money who move the stock).
And the various possible future paths got constrained a lot more towards the optimal and very optimistic trajectories. I was seriously surprised to hear the GF ground breaking to happen already next month with the second site following in a month or two after that. This means that the probability of the GF producing batterypacks in 2017 is now far more realistic than it was 3 months ago (and it existed only as a risk 6 months ago when we only knew that there aren't enough cells in the world for Gen-III, but no plans of Tesla to alleviate it pre-Q3 ER). The fact that Tesla is on-target to build out the factory (and that they are planning to continue building multiple other ones) means that in three years time Tesla will have purchase agreements to about 70-75% of global lithium ion battery production (factory output of cells is 35GWh, which is more than total global production now, and Tesla expects to build 50GWh packs meaning full GF production + 15GWh from gloabal other sources meaning about three quarters of global production). Any competitor who wants to really sell EV's with bigger range and high volume needs to build a gigafactory themselves as there will not be enough supply beyond Tesla. Any month that passes now without another manufacturer planning to build a battery factory means the moat increases between Tesla and the competition.
The second important part is that Tesla did mention at some point in the spring that they would expand hard on superchargers and indicated ~100 in EU this year. The buildout didn't follow (even though they did mention that they will be using the early spring to build the necessary chargers in factory while the construction work is delayed due to weather), but now in the shareholder letter they clearly state 200 new superchargers this year. This is tripling the total count and far far more importantly it makes an exceptional coverage of territory. Now this would be mostly looked at by short term traders as huge cost and some advantage for new buyers, but what this really means is that the buildout is following a very aggressive path and if it keeps going at about 200 / year pace until G3 release, then we have a globally available network that is proprietary to Tesla. This is one of the two HUGE moats that Tesla is building against competition. Yes, BMW and others rely on CCS standard and regulations hoping that they will be built out in time, but I doubt seriously that this will happen. And even if it does, those are standards based and therefore usable by Teslas as well by a simple adapter if Tesla chooses to make on. The difference of supercharged driving vs not is something that someone who doesn't own a Model S just doesn't fully appreciate. I just did last weekend a 950km roadtrip. This region where I live has 0 superchargers. Going from home I drove 425km and did a 1h charge on 3x16A in Riga. On the return trip I had to do 480km straight and that required a 3h charge in Pärnu (using a public charger). Now if there had been a supercharger somewhere between Pärnu and Riga I would have had to stop for 4 minutes going there and 12 minutes coming back. THAT is a huge difference and makes an electric car equivalent to a gasoline car on long distance travel eliminating completely the main argument of EV opponents of large charge times.
I'm not at all worried about R&D and CapEx expansion as long as it goes towards securing the infrastructure for Gen-III and bringing the research earlier. If the costs balloon out of hand (i.e. per service center/supercharger costs start to go up, R&D is ballooning without any results or explanations given), then we might be worried that they might run into a state where they cannot meet the expansion from funds they gain from car sales and what they can get from the stock market. But this is not the case right now.
And there were tons of confirmations of what we already knew: there is no demand issue. The increase from $163M to $198M in reservations and the multiple statements from shareholder letter and Elon on the CC do tell me that it's highly likely that Tesla will get the cash flow they have planned for (i.e. they sell all cars that they can produce) for the next couple of years at least. And as they know how they plan to expand production they will know how much they can count on cash flow from car sales.
So for me the conference call was full of extremely promising news that certainly constrained the possible futures, mostly eliminating some of the gloom scenarios and making the probabilities of the optimistic paths more likely. So if I had any free cash I'd be buying more shares / LEAPs from here.
Now I've never really thought of this, but the words being long or being short do somehow tell me also the timeframe that people look at
If you only look at the short timeframe, then it's far more likely you could be short a stock. You have to have the vision and trust of future execution to be long. And in case of Tesla I cannot see too many risks remaining that would impact Tesla hard. Even a global recession isn't too hard at this point in time because Tesla is selling so few cars to a demography that keeps buying cars even during recessions that I think they could sell all their produced cars even if we hit a slump for a year or two. They may have to tune down the exponential expansion plans a bit, but that's about the total impact it will have. It may in turn give them excellent buying opportunities like they got the NUMMI plant for peanuts
Overall I think Q2 ER will make some short term traders happy as they'll see a substantial increase in cars delivered guidance for Q3 (unless they forget the 10 days shutdown of factory that will remove about 1500 cars from production). But the EPS charts will be badly off. The reason being that Tesla will highly expand cap-ex on gigafactory and second line and that will impact profitability so I'm not 100% sure how the stock will behave over the next year knowing how shortsighted the average Wall str investor is...
