Short-Term TSLA Price Movements - 2014

[chickensevil]

I don't know... Far be it from me to doubt what elon musk has up his sleeve, but IMHO, there are several reasons why electric powered commercial jets is not practical at this time.

1) In airplanes, weight is paramount. Every pound is scrutinized. And given the energy density of fossil fuels vs. electric, at this point, hauling a huge battery for long distances just doesn't make economic sense for flights. Whatever savings in cost of electricity vs. jet fuel would be swamped by the loss of freight / passenger capacity due to increased weight.

2) Jets have really short turnover time. I believe Southwest turns its flights within 15 minutes at the gate. I don't think you'll be able to re-charge a plane's battery within 15 minutes. Every extra minute spent at the gate is hugely expensive and would again swamp any savings in fuel efficiency. And battery swap would be a huge deal given the expected size of the battery, likely requiring a larger crew than current refueling crews, again washing out any savings.

3) The process of certifying a battery to meet the safety standards of international flight is long, expensive, and fraught with difficulty. Witness Boeing's troubles with a much smaller, less critical battery in its 787. Think those tesla fires were unfairly damaging to the company? In the 787, a few battery fires and the FAA grounded the entire fleet! I'm not sure why Tesla would want to tackle something like that when there are so many other low-hanging fruit it could pursue right now (grid storage, pickup trucks, delivery trucks, etc.)

4) Annual revenue for commercial jet manufacturing is dwarfed by annual revenue for automobiles. Why go after a much smaller, more difficult market when there's still plenty of automobile market to chase?

There is a lot of information out there detailing that the primary cost of your airfare is the jet fuel. They have to put a LOT in there, and it isn't cheap. It would be smart to start with airplanes that are smaller already and only make short regional jumps (say DC to New York in distance)

It was mentioned by someone else by the recharge time is going down, and since you can hit a 2C recharge rate a larger battery does not mean a longer recharge time. If you can get enough electricity going into the battery, you will have a recharge time of around 1 hour to 75 minutes. If you could then design a hot swap system, you would have the quick refuel time and not need a large stockpile of batteries. I assume though that they won't go that route until they can just straight get recharge time down to 10-15 minutes.

You know, if a fuel station was something that was brand new today it would NEVER get passed as "safe". We want you to take this nozzle from a tank full of explosive chemicals, and pour it into another tank, all the while being sure not to get too close and inhale these liquids and ensuring that you are extra careful not to cause electric shock or otherwise accidentally ignite the liquid/gas. You want to talk about safety?

that might be true, but boeing still seems to be getting by.

 

[anon]

Terrafugia is working on an electric convertible plane/car. I guess it's possible that they could have an agreement with Tesla. Terrafugia Plans Follow-On Flying Car | Things With Wings

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Goldman Sachs just raised PT to $210. I was hoping for more, so I'm disappointed!

 

[Bgarret]

GS ups price target to $210 and recommends hold. One of the "weaknesses" it lists is low profit margins??? What is Tesla supposed to do, have no R&D or Capex, build no superchargers or service centers. Bring on the reckless growth.

 

[chickensevil]

GS ups price target to $210 and recommends hold. One of the "weaknesses" it lists is low profit margins??? What is Tesla supposed to do, have no R&D or Capex, build no superchargers or service centers. Bring on the reckless growth.

Yeah, makes no sense... these people will never learn, although they are at least at a more reasonable value now so they must have seen some bright side. But I would focus the most on their gross margins which is really great. And as long as they don't spend themselves into the negatives, I don't see an issue with their net profits.

 

[Todd Burch]

Here we go...already shooting up through $230...make that $234...$235...

 

[ggr]

GS ups price target to $210 and recommends hold. One of the "weaknesses" it lists is low profit margins??? What is Tesla supposed to do, have no R&D or Capex, build no superchargers or service centers. Bring on the reckless growth.

I'm trying to remember what their previous target was? Wasn't it in the mid $100s? I'm pretty sure this is actually a huge leap!

 

[Todd Burch]

Anyone expecting any other price targets to come out today that might significantly affect the price? Are they common right after the earnings call or do they tend to be put out fairly randomly?

 

[chickensevil]

Seems like there is a lot of flat to downward pressure on the market today over the jobs report (which is weird because it seems like there was some pretty good news given we are now above pre-crash levels for total jobs... hrmmmm)

 

[eepic]

Anyone expecting any other price targets to come out today that might significantly affect the price? Are they common right after the earnings call or do they tend to be put out fairly randomly?

Since yesterday:

Barclays reaffirmed $220 equalweight
Wedbush reaffirmed $275 outperform
UBS reaffirmed neutral, PT $200 -> $230
Northland reaffirmed $253 outperform
Robert Baird reaffirmed $275 outperform
JPMorgan reaffirmed neutral, PT $163 -> $170
Goldman Sachs reaffirmed neutral, PT $200 -> $210
Deutsche Bank reaffirmed $220 hold

 

[chickensevil]

Where is our boy? AJ? Come on Morgan Stanley! Give us a new report saying 1million units by 2020 With a 500 1yr PT!

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In fairness, I can actually see that happening if Tesla throws a ton of cash into this... a simple doubling

35k this year -> 70k -> 140k -> 280k -> 560k -> 1.2M by end of 2019... That gives them an extra year of fooling around! Lets go! (No I don't actually see this happening... but a guy can dream!)

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and that would be 1million Model 3 and 100k model S and 100k model X... it is totally a reasonable split

 

[anon]

I'm trying to remember what their previous target was? Wasn't it in the mid $100s? I'm pretty sure this is actually a huge leap!

The previous one was actually $200.

 

[FluxCap]

Market gyrations today are due to an absolute torrent of economic data that traders are trying to process in relation to yesterday's movements. Market bears are hunting for a further "correction" story while bulls are looking for juicy buying opportunities after an overblown dip.

People aren't paying much attention to individual stock fundamentals today.

 

[twan]

Can someone clarify Elon's quote from last night:

“Yeah. I mean another thing, our CapEx and R&D numbers are better than they appear because there are things you don't know about.”

What does he mean by "better"? And what does he mean by "better than they appear"?

I understand the overall implication - they are investing in a big new product/business/feature. But I didn't understand this phrasing. Can someone clarify?

 

[aznt1217]

He's referring to the allocation of the R&D and Capex figures. Many are attributing it JUST to Model X development, but there's other things that are being worked on so the amount of capital spent on R&D and various other projects are much less than people think. "better than they appear"-- cheaper than you think and more awesome things in the pipeline than you think

Can someone clarify Elon's quote from last night:

“Yeah. I mean another thing, our CapEx and R&D numbers are better than they appear because there are things you don't know about.”

What does he mean by "better"? And what does he mean by "better than they appear"?

I understand the overall implication - they are investing in a big new product/business/feature. But I didn't understand this phrasing. Can someone clarify?

 

[eepic]

Can someone clarify Elon's quote from last night:

“Yeah. I mean another thing, our CapEx and R&D numbers are better than they appear because there are things you don't know about.”

What does he mean by "better"? And what does he mean by "better than they appear"?

I understand the overall implication - they are investing in a big new product/business/feature. But I didn't understand this phrasing. Can someone clarify?

Basically the R&D spending is disclosed, and assumed to be primarily Model S tweaking, Model X development, plus a bit of Model 3. So depending how you split it you'll assume it costs a certain amount for each of those.

Elon is saying there's some other significant R&D program included in the spending numbers that we know nothing about. Therefore MS/MX/M3 R&D costs are lower than we think. (autopilot? stationary storage? hyper-supercharging? another Gen2 model? iron man suit?)

A Jon Snow meme would be appropriate right about now.

 

[RobStark]

 

[c041v]

There's some additional brilliance in that coming from "RobStark"

 

[surfside]

my hope is that elon's "there are things you don't know" comment relates to the model x having all of the necessary hardware needed for autopilot driving capabilities. this would involve some major R&D spending on software development (beyond what people expect) and potentially also capex related to hardware (e.g. sensor technology). elon has said in the past that the first thing they are trying to tackle is getting the appropriate hardware figured out, that way you can have it installed and improve autopilot capabilities over time with OTA software updates.

the thing that makes me think this idea has a (remote) chance relates to elon's comments about anti-selling the model x (and pushing people to buy a model s now) -- where he said something along the lines of "i think they are right in wanting to wait for the x". also, i feel like when elon has hinted at things to come in the past, he has generally revealed what he is talking about in relatively short order, and the timing of the model x alpha release next week would definitely be a nice "see what you didn't know about" moment.

i'm sure i am wrong, but for the record that is my prediction.

surfside

 

[davecolene0606]

"There are things you don't know" is directly related to "All our patents are belong to you". This is variable pitch propellor manufacturer giving away their patents cuz they just perfected the High bypass turbo fan!

Go TSLA

 

[FluxCap]

Adam Jonas from Morgan Stanley appearing on CNBC in a minute.

Nice!