Short-Term TSLA Price Movements - 2015

[mejojo]

I have a question for 8 Ball.

New car delivery's excluding the P85D's have been pushed back into May

May is only 2-3 months from now. I wouldn't call that being "pushed back". That seems to me like a normal wait time?

 

[aznt1217]

I think it's the focus on high GM vehicles + time. It's only a one month push back if you think about it. I think we all want this because focusing on P85D's will make GM look good for Q1. That and part of the reason may be the re-tooling the factory will be going through with the paint shop and what not.

The demand for the D has peaked? Highly doubtful. I think people are going to be ordering the P85D's even more now that CR has republished its best car reports and as more are getting on the road. I've seen more and more video reaction videos online too which should help with the free publicity.

 

[breser]

Article on John Lovallo's predictions on Business Insider:
Bank of America is predicting a massive Tesla collapse - Business Insider

Author of the article apparently was predicting Tesla's demise in 2008 and now admits he was wrong and thinks Lovallo is wrong.

 

[Lump]

That's outside the scope of 8 ball's capabilities.

I would say port strike issue as the supplies contracts are already negotiated in advance (suppliers need time to ramp up too) and production is constant followed by bouts of ramp up. So the rate at which supply/production is coming in should be stable. The other reason for delivery date delay is if there is a pick up in demand.

I would guess that demand should have peaked around the D announcement. So if the shift in delivery date happened before the port strike (I don't follow that thread so I don't know) then it most definitely is caused by increase in demand.

These two together made me conclude it is the port strikes.

The weird thing is that inbound supply deliveries doesn't seem to be affected. I am guessing this strike would mean the Canadian port in BC will become more prosperous.

That said... it is still the production that counts and not deliveries since there's 1 quarter worth of ModelS to deliver. Until cash burn makes it absolutely necessary to seek cash. If the port strike does not end by June. Then we have a problem as that is when we transition from relying on S to relying on X.

Thanks, really appreciate the reply.

Many felt 9500 1qtr delivery guidance was easily going to be beat & Tesla was "sandbagging" I never shared that view to begin with so I am looking for early peaces of the puzzle.

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May is only 2-3 months from now. I wouldn't call that being "pushed back". That seems to me like a normal wait time?

Last summer with the factory closing for retooling delivery dates kept getting pushed back, in Nov. thru Dec. the P85D delivery kept getting pushed back & delivery's came in under guidence, a one rime push back might be normal but I am not waiting around to hear excuses during the CC.

 

[Causalien]

It can be beat at a cost. But I suspect it is an estimate using the current workaround method for the port strike. Until the strike is resolved, I would not change that projection to the one based on no strike.

If my memory serves. Rail to Chicago and then shipping to Europe by sea cost double from if you ship from west coast. Shipping from either side of the continent to Asia and vice versa cost the same and is equal to rail from west coast to east coast. Rail to BC Maybe cost 1/3 of railing to east coast. So if I want to beat projections, I'd stop shipments to EUROPE,Asia and focus on USA.

Another concern is whether or not TSLA have an assembly plant in Europe (seems to remember they do). If so, it'll mitigate the cost of shipping. If not, I recommend Spain to build one as there's a large surplus of labour.

The port strike is eye opening for me. I didn't think anybody in their right mind would go on strike with a salary of 130k and above. It'll just hasten automation and create alternative ports. Anyway, my 2 cents and the most I'll delve into politics.

 

[chickensevil]

May is only 2-3 months from now. I wouldn't call that being "pushed back". That seems to me like a normal wait time?

Yeah, I think it is actually a good sign that wait times seem to finally be stabilizing out again. When the normal cars have an average US wait time of less than 2 months I anticipate that we will see some demand levers utilized to ensure we stay strong. Keep in mind that we are at all-time-high run rates, so it is normal for things to pull back some until something paves the way forward with more demand from somewhere. If you disregard the NA P85D deliveries everything else is pushed back globably to around 3 months or more and Elon has said previously that the average wait time sweet spot should be around 2 months. He stated that it should be measured in weeks not months in an ideal situation, and I take that to mean less than 2 months (which is most people's breaking point to where they switch into talking about multiple months wait, instead of multiple weeks).

Whether or not that is from delays, other issues, or increased demand (or a combination) will never really know until they say something on the conference call, but best guess would be that as long as we come out with our 9k+ delivery number it wasn't spurred on by out-of-band issues so the increase would merely be a product of continued demand. Keep in mind that the port issues were resolved *after* the CC, and were well known at the point of guidance being given. This should have been taken into account on their estimation (if not then shame on them... I was willing to give them mostly a pass on the shipping issues at the point of guidance given in Nov... but at this point, it would be terrible of them not to have anticipated and worked around a continuing of those issues, so resolving the port issues should actually BOOST things and helps establish that the 9k number is not just achievable, but possibly getting a beat.)

Anyway, just my two cents on wait times. We have continued to try to estimate wait times vs demand vs issues since around July of last year when the website started to provide us that data point and it has been a mixture of demand causes and factory issues... so it is really tough to say the root cause of the wait time increase.

 

[vgrinshpun]

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Last summer with the factory closing for retooling delivery dates kept getting pushed back, in Nov. thru Dec. the P85D delivery kept getting pushed back & delivery's came in under guidence, a one rime push back might be normal but I am not waiting around to hear excuses during the CC.

You might be confusing the wait time for *new* orders with delivery estimates for *existing* orders.

Saying that wait time for new orders was "pushed back" is wrong, the *date* was changed, but wait time, i.e. time between placing the order and the delivery of the car was more or less constant for the past couple months.

If production rate is approximately equal to the rate of incoming orders, the estimated delivery for the *new* orders will always move in time.

 

[v12 to 12v]

It can be beat at a cost. But I suspect it is an estimate using the current workaround method for the port strike. Until the strike is resolved, I would not change that projection to the one based on no strike.

If my memory serves. Rail to Chicago and then shipping to Europe by sea cost double from if you ship from west coast. Shipping from either side of the continent to Asia and vice versa cost the same and is equal to rail from west coast to east coast. Rail to BC Maybe cost 1/3 of railing to east coast. So if I want to beat projections, I'd stop shipments to EUROPE,Asia and focus on USA.

Another concern is whether or not TSLA have an assembly plant in Europe (seems to remember they do). If so, it'll mitigate the cost of shipping. If not, I recommend Spain to build one as there's a large surplus of labour.

The port strike is eye opening for me. I didn't think anybody in their right mind would go on strike with a salary of 130k and above. It'll just hasten automation and create alternative ports. Anyway, my 2 cents and the most I'll delve into politics.

The beginning of the unofficial "slowdowns" started about the time of the "D" announcement. I recall this because farmers were trying to ship their crops and they were in crisis mode. Losses were devastating. "Officially" there was no "slowdown", but it was very evident to the shippers that fewer shipments were going out every week. Then they started having truck and container shortages.

Due to container shortages and unreliable truck schedules, Tesla started shipping by rail to the East Coast over a month ago. Even US deliveries have a rail hub on the East Coast now.

The strike was due to issues other than pay. Don't forget that these port cities are some of the most expensive places to live in the country.

This is impacting imports. Other automakers are hurting too.

Automakers pinched by West Coast port delays
Video: Ports see worst congestion since 2004 because of work stoppage | 89.3 KPCC
A big labor strike at West Coast ports is costing Japanese automakers millions - Worldnews.com

 

[Lump]

You might be confusing the wait time for *new* orders with delivery estimates for *existing* orders.

Saying that wait time for new orders was "pushed back" is wrong, the *date* was changed, but wait time, i.e. time between placing the order and the delivery of the car was more or less constant for the past couple months.

If production rate is approximately equal to the rate of incoming orders, the estimated delivery for the *new* orders will always move in time.

I didn't use the correct words but understand the differences & possible implications.

 

[vgrinshpun]

I didn't use the correct words but understand the differences & possible implications.

Does not seem that way, otherwise you would not be asking the question??

The periodic moving out of the delivery estimate for new incoming orders is absolutely normal course of events, it has to move out if rate of incoming orders is approximately equal to the production.

 

[pGo]

I don't get the shipping issues. If Tesla cannot ship enough cars overseas, it can certainly lower wait time in US where it does not have to use the same shipping route. That has not happened. I would not like to hear shipping issues as an excuse as if there was a blockage, the US deliveries should be expedited but I have seen no clues showing that.

 

[maoing]

The port strick not only affects the delivery but also the sourcing.
http://my.teslamotors.com/forum/forums/next-gen-seats-now-end-may-2015-delay-blamed-port-situation

Today I received this email from Jerome @ TeslaMotors ...
Dear Ken,
I want to provide you with an update on the next generation seats we are yet to install in your Model S. I apologize for the delay in providing the seats. I trust you are enjoying your P85D in the meantime.
In short, it is taking much longer than expected and we plan on installing the seats in your car by the end of May at the latest, although hopefully earlier than this.
We were overwhelmed by the high demand for P85D in general, and specifically for the next gen seats. As a result, we’ve had to ramp up our production capacity dramatically. Unfortunately, due to an ongoing labor conflict at the west coast ports, we have disruptions in getting inbound critical material to build the next gen seats. The lead times from many of our suppliers have doubled due to the port situation and that have prevented us from both giving you an accurate lead time to change, and allowing us to start building your new seat. We now have line of sight and we are planning to have built and replaced your seat by end of May at the latest (unless we have a complete shutdown of the ports which remains, unfortunately, a possibility).
Thank you for your continued support and your patience.
Best regards,

This is certainly a risk of Q1 execution. Wondering why there is no mention in ER and CC at all?

 

[v12 to 12v]

I don't get the shipping issues. If Tesla cannot ship enough cars overseas, it can certainly lower wait time in US where it does not have to use the same shipping route. That has not happened. I would not like to hear shipping issues as an excuse as if there was a blockage, the US deliveries should be expedited but I have seen no clues showing that.

It is impacting imports, not just exports. Parts are imported from Asia via West Coast ports. Sorry if I wasn't more clear.

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The port strick not only affects the delivery but also the sourcing.
http://my.teslamotors.com/forum/forums/next-gen-seats-now-end-may-2015-delay-blamed-port-situation



This is certainly a risk of Q1 execution. Wondering why there is no mention in ER and CC at all?

It was mentioned in the shareholder letter.

 

[maoing]

It was mentioned in the shareholder letter.

I searched "strike", "port", "west coast" etc. keywords, but nothing found in Q4 shareholder letter.

 

[jhm]

Article on John Lovallo's predictions on Business Insider:
Bank of America is predicting a massive Tesla collapse - Business Insider

Author of the article apparently was predicting Tesla's demise in 2008 and now admits he was wrong and thinks Lovallo is wrong.

I get the impression that Apple will not require Mr Lovallo's services to structure a buyout offer.

As much as Apple rumors annoy me, it is important to value a stock, especially an innovative tech stock, with regard what it would be worth as an acquisition target.

 

[Ingenieur]

Are we being prepared for delivery miss in Q1/Q2?

Also see this chart of battery deliveries ( i am not 100% sure its true/correct)

https://pbs.twimg.com/media/B-twOVzXIAAp8qQ.jpg:large

There could be some supply chain issues, real or "fig leaf"

 

[chickensevil]

The strike was due to issues other than pay. Don't forget that these port cities are some of the most expensive places to live in the country.

According to this news source: "For the last four months, the International Longshoreman and Warehouse Union has been involved in a “work slow-down” to shake-down employers for higher wages."

Longshoreman’s Union to Strike 29 West Coast Ports - Breitbart

Either way, they have crazy benefits packages along with relatively high compensation, and I happen to live in one of the most expensive places you can live in the country do not make a combined salary (including benefits) of over 200k (as apparently these people do) and I manage to get by just swimmingly. In fact I would move away from my cozy desk job to work a port if I got paid that amount because that would be a rather significant pay bump for me. There isn't too much cost of living difference between DC and San Francisco or LA (which are the two most expensive places in CA... so if they aren't anywhere near there then they can really stop complaining about the pay...)

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I searched "strike", "port", "west coast" etc. keywords, but nothing found in Q4 shareholder letter.

While we were able torecover the lost production by end of thequarter, delivering those cars was physicallyimpossible due to a combination of customersbeing on vacation, severe winter weather andshipping problems (with actual ships).

Doesn't say port strike (mostly because there wasn't a full-on shutdown by that point... so technically it has just been a slow down) but shipping problems "with actual ships" could really only be referring to one thing. That's in the third paragraph on the first page.

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Are we being prepared for delivery miss in Q1/Q2?

Also see this chart of battery deliveries ( i am not 100% sure its true/correct)

https://pbs.twimg.com/media/B-twOVzXIAAp8qQ.jpg:large

There could be some supply chain issues, real or "fig leaf"

This was also brought up a couple pages back, and as was mentioned... Moving Averages skew out your numbers making you lose the some important bits of data and would be nice to see the real underlying numbers. Either way, no... as I said, I think in this thread, they were well informed about the shipping issues back when they gave us the Q4 shareholder letter and the ER. This should have been calculated in their estimates for deliveries and in their production abilities. Maybe this is part of the reason for lower than expected production numbers even sans 1 week off and it being a shorter quarter. So I really am not worried unless we suffer for extended periods a full strike/shutdown of the port. Last I heard and has been reported is that this issue has been largely resolved at this point so there is even less risk going forward.

 

[sundaymorning]

Multiple sources has reported that a tentative agreement has already been reached on the West Coast Port strike, here's an article published by Forbes:

A Matter of Time Before West Coast Port Labor Issues Recur - Forbes

My bet is that the lowered guidance on delivery for q1 was attributed somewhat to this strike and has been accounted for by Tesla management. After all, Gerome expected seats to be delivered to customers late.. and Elon lowered his guidance deliveries for 4th Q during December..

Here's another source that suggests the ports are now busy with a backlog after reaching tentative agreement:

US West Coast Ports Busy, Struggling With Backlog


With the extra 1k extra inventory of model s from q4, im pretty comfortable with Tesla's chances of meeting expectations.

Port Strike is over:

West Coast Port Strike Over Bunker

USA Today declares strike is over:

Deal reached in West Coast dockworkers dispute

 

[eepic]

The port strick not only affects the delivery but also the sourcing.
http://my.teslamotors.com/forum/forums/next-gen-seats-now-end-may-2015-delay-blamed-port-situation

This is certainly a risk of Q1 execution. Wondering why there is no mention in ER and CC at all?

Thank you for sharing this maoing. While we've been coming to similar conclusions here, I believe this was the first word from Tesla directly regarding the west coast port slowdowns/shutdowns ("shipping problems" could have meant other issues with ships as well, but this helps confirm it was port issues).

 

[chickensevil]

Multiple sources has reported that a tentative agreement has already been reached on the West Coast Port strike, here's an article published by Forbes:

A Matter of Time Before West Coast Port Labor Issues Recur - Forbes

My bet is that the lowered guidance on delivery for q1 was attributed somewhat to this strike and has been accounted for by Tesla management. After all, Gerome expected seats to be delivered to customers late.. and Elon lowered his guidance deliveries for 4th Q during December..

Here's another source that suggests the ports are now busy with a backlog after reaching tentative agreement:

US West Coast Ports Busy, Struggling With Backlog


With the extra 1k extra inventory of model s from q4, im pretty comfortable with Tesla's chances of meeting expectations.

Port Strike is over:

West Coast Port Strike Over Bunker

USA Today declares strike is over:

Deal reached in West Coast dockworkers dispute

Thanks for all the article posts. Yeah, if we are back to business as usual then rather than this being a "risk" as people have tried to show it, I look at the resolution as actually a win in that we could potentially see a beat on deliveries!