It's not minor changes in expectations for nearby quarters that account for much of TSLA's share price. The methodology learned in college for evaluating established companies in stable industries should not apply to an innovative growth company that is disrupting major incumbents. It's the growing acceptance of the prospect of rolling out millions of Model 3's in the coming years while eliminating internal combustion engines that supports the share price.
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It's not minor changes in expectations for nearby quarters that account for much of TSLA's share price. The methodology learned in college for evaluating established companies in stable industries should not apply to an innovative growth company that is disrupting major incumbents. It's the growing acceptance of the prospect of rolling out millions of Model 3's in the coming years while eliminating internal combustion engines that supports the share price.
If TM can't execute on its own guidance quarter by quarter, how would people trust the "grand" plan laid down for 5 years and beyond? As an investor, we fully appreciate the vision of EM and very promising future of TM. But we do need TM to fullfill it's guidance step by step like production project, model X timeline and future gigafactory/mode 3 timelines etc.
FredTMC
Model S VIN #4925
Yep. My view is tesla needs to continue to hit their quarterly guidance. Especially for a high growth company with rich valuations. As Curt mentions, tesla has a very promising future and that's the reason I remain a long term investor. I think hitting their quarterly guidance is an important component to the stocks continued rise.
The expectations being expressed are just short of insane, particularly for anyone claiming to be in it for the long term. What's next, complaining if they miss a monthly number? A weekly number? A daily number? An hourly?
Plus, Elon said 32-33,000 deliveries. He said nothing about missing production guidance. It matters very little if several hundred cars on a boat arrive a few days late and end up delivering the first week of January.
It's like some people want to see Tesla fritter away their efforts micromanaging end of quarter shipping schedules rather than producing cars.
Plus, Elon said 32-33,000 deliveries. He said nothing about missing production guidance. It matters very little if several hundred cars on a boat arrive a few days late and end up delivering the first week of January.
It's like some people want to see Tesla fritter away their efforts micromanaging end of quarter shipping schedules rather than producing cars.
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+1. Hiting guidance if not beating is the minimum requirement for high growth company like Tesla, we already see Q1/Q2 hit but Q3 actually miss in 2014. With inevitable Model X delay, Q4 hit or beat would be critical for TSLA stock price in next 6 months. Remember what TM promised in January Detroit Auto Show:
http://www.forbes.com/sites/danbigm...-show-tesla-promises-reckless-growth-in-2014/
http://www.forbes.com/sites/danbigm...-show-tesla-promises-reckless-growth-in-2014/
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JRP3
Hyperactive Member
MartinAustin
Active Member
However, if they introduce a new product, they can't predict exactly what customers are going to order. If they now have to make a lot of some new product that takes a little longer to build & get right, then they may end up making less cars, BUT hopefully investors will be happy since the profit is so much higher. One hopes that Q4 profits will look really nice with this 70% dual-motor manufacturing.
At first, I thought 32k vs. 33k would make no difference since the product mix with P85D will deliver higher profits. But on reflection, I think making sales volume guidance is crucial. Do institutional investors (who drive trading volume and volatility) adjust positions more on the basis of current and projected sales volumes or profits? Obviously they are interrelated, but growth companies are usually valuated more on sales than current profits. Probably especially true for Tesla which is in the mode of making grand promises and showing spotty delivery, at least as to timing.
chickensevil
Active Member
In fairness, one thing that doesn't get mentioned often that they have been really doing a fantastic job on (even if the day to day updating seems a little slow) is the supercharger expansion. Looking at that comment, 80 additional charging sites was hit quite a while ago! We had just crossed the 100 mark around the time of that comment if I am not mistaken and now here we are getting ever closer to the 300 mark which I believe they are still on track to hit before the end of the year.
And sales/service staff expansion is likely already beyond their comments of merely "doubling". I wish there was a way to keep better track of that data.
They had some BIG changes at the factory this year to accommodate demand that they NEVER expected in their wildest dreams. So if there is a production (or delivery) hiccup now, as long as it ISN'T caused by a lack of demand/sales and was in the effort of *increasing* said future production levels I think I would happily give them a healthy level of forgiveness here. Ramping production (which extends into releasing a product on some semblance of a set schedule) is the company's only real weakness that I see. As we all know "Manufacturing is hard"... coming from the guy who makes rockets and frequently docks with the space station
In fairness, one thing that doesn't get mentioned often that they have been really doing a fantastic job on (even if the day to day updating seems a little slow) is the supercharger expansion. Looking at that comment, 80 additional charging sites was hit quite a while ago! We had just crossed the 100 mark around the time of that comment if I am not mistaken and now here we are getting ever closer to the 300 mark which I believe they are still on track to hit before the end of the year.
And sales/service staff expansion is likely already beyond their comments of merely "doubling". I wish there was a way to keep better track of that data.
They had some BIG changes at the factory this year to accommodate demand that they NEVER expected in their wildest dreams. So if there is a production (or delivery) hiccup now, as long as it ISN'T caused by a lack of demand/sales and was in the effort of *increasing* said future production levels I think I would happily give them a healthy level of forgiveness here. Ramping production (which extends into releasing a product on some semblance of a set schedule) is the company's only real weakness that I see. As we all know "Manufacturing is hard"... coming from the guy who makes rockets and frequently docks with the space station
I totally understand and so will many others here on TMC. Q4 ER is setting up to be just as interesting as Q3. I am still astounded by the market reaction to Q3 so I have no idea how the market will receive a below guidance delivery number for Q4.
Zzzz...
Member
Well, looking long run, Elon predicted ~20k sales for 2013, Tesla delivered 22k. Elon predicted 35k units sales for 2014, 20k MS and 15k MX. Well, Tesla about to deliver 33k MS. So there was no need for an X this year. Next year, 2015 Elon's predictions were around 50k-60k. Tesla most likely would be able to meet that number producing MS alone.
I'm sure if Elon would see that in year 2016 it would be possible to outsell MB S class with Model S alone (selling over 100k MS worldwide) - the X will be postponed again. And mr. market would not mind it again.
I'm sure if Elon would see that in year 2016 it would be possible to outsell MB S class with Model S alone (selling over 100k MS worldwide) - the X will be postponed again. And mr. market would not mind it again.
Perfectlogic
Member
Generally I would say 50% growth is hard to complain about at a company that after all is only valued at 4,5 next years revenue, with an expectation of 100% growth next year and a very high growth for many years to come. Twitter as an example of a different high growth company growing revenue around 100% per year with an expected slowdown to 65% next year is valued at 11 times next years revenue. Workday (cloud based company) will grow around 65% this year and a bit less than 50% next year and is valued at 15.4 times next years revenue. FB growing at 57% this year with expected 37% next year is valued at 12 times next years revenue. I challenge you to find a company growing as fast as Tesla with many years of expected growth ahead at the same multiple, I would argue Tesla is relatively cheap. Now some of the mentioned stocks I used as examples are expected to achieve better margins than Tesla but their growth is also slowing much faster, a company like FB already has the entire western developed world using their service, while Tesla will sell less than .1% of the total cars to be sold next year.
I would also like to add that Tesla was battery constrained for the first half of 2014, they could probably have ramped up earlier and maybe even hit 40k cars sold if Panasonic wasn't such a slacker. Batteries probably won't be the bottleneck the next many years.
I would also like to add that Tesla was battery constrained for the first half of 2014, they could probably have ramped up earlier and maybe even hit 40k cars sold if Panasonic wasn't such a slacker. Batteries probably won't be the bottleneck the next many years.
Sumitomo Chemical to increase production of battery materials for Tesla Motors
I think we heard about their initial production increase in Q2 this year. Now it seems that they are going to increase their capacity even more. Certainly this company does not produce for TM only.
Sumitomo specializes in the so called heat-resistant separators which are found in Li-Ion batteries.
I think we heard about their initial production increase in Q2 this year. Now it seems that they are going to increase their capacity even more. Certainly this company does not produce for TM only.
Sumitomo specializes in the so called heat-resistant separators which are found in Li-Ion batteries.
Exactly. People are fretting over background noise in the numbers. But, that is what bean counters do. Bean counters miss the boat when the most important factors are the continual progress in developing and building a highly desirable superior car (that just happens to be electric), while executing expansion and growth plans when the timing is right. How many deliveries they can cram into the last hours of the month does not reflect that. There isn't even wiggle room for minor weather events impacting deliveries if you are counting beans and clock watching.
What happens when there is a leap year or a quarter with an extra week in it? Will the stock price skyrocket?
Some cannot see the forest through the trees. The Model S is far more successful than even Tesla anticipated and Tesla is being very agile and nimble while keeping their eye on the long term goals. They are thinking a decade ahead of us.
One of the worst mistakes of my life was accepting seed capital in my business where the condition was that 'the kid brother' had a position of authority. He was a 'stock analyst' and didn't have the slightest idea of how a small company worked, cash flow etc. He even went down the route of 'let's stop marketing and advertising until sales pick up and we can afford it' - that was when the whole thing fell apart :cursing:
I totally agree that this is just noise long term and long term holding stock/buying LEAPS will yield some nice returns. However, this is a short term thread and short term missing guidance may cause TSLA to decline. This will lead to forum members like you and I being able to add to our positions :biggrin:
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am I missing something? Thanks for your tragic story but what does it have to do with what V12 said or TSLA?
jhm
Well-Known Member
Makes sense to me. Bean counters are narrowly focused on costs and can overlook bigger issues. Cutting spending on marketing until sales pick up is a classic misunderstanding of what sort of spending is critical for success and what sort of spending is wasteful.
We run into this kind of stupidity with Tesla bears that harp on how unprofitable Tesla has been, even suggesting that Tesla loses money on every car sold. Firstly, Tesla makes about $25k marginally per car delivered. So 50 to 60 incremental cars adds about $0.01 to EPS. This is the difference between 33k and 32k cars is significant. However, spending money and incurring production down time to upgrade production lines is critical for continued success. So if Tesla misses 35k because they needed to upgrade production lines to push out more cars and ramp up Model X in 2015, then that is money and opportunity well spent. If Tesla is unprofitable because they are expanding charging, sales and service network at a fast pace and investing in R&D dollars in cutting edge products and technologies, I am all for it. Bean counters who fret over Tesla being unprofitable in the near term have no clue what it takes to be able to double your business every 16 to 24 months for the next 15 years. Negative EPS is but an investment in outrageous growth. Those extra 1000 deliveries matter because because $25M in incremental net cash flow can help Tesla realize its growth objectives, which is much more important than posted EPS.
I agree. There is the knee jerk response to numbers by bean counters and press release bots just looking for certain numbers or special buzz words that tend to cause some pull backs. Ultimately the entire story, plan and possibilities trump the beans in a matter of days. There have been some great short term opportunities due to the err of their ways. ;-)
Chickenlittle
Banned
That's silly. Long term leaps can be traded in the short term and should be included in the short term thread.
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