Short-Term TSLA Price Movements - 2015

[Phil Seastrand]

I don't agree demand is an issue, but here is why the laser focus on demand from the majority who have not drunk the koolaid: The grand, master plan of TM requires selling $100k cars for 2015, 2016, and at least a good chunk of 2017. At that point, model 3 is online and if demand for the high end cars softened they could switch production to more model 3's. If you are a skeptic, you think there is only so much market for $100k cars (or $80k, you know what i mean).

I think there's a lot more market for a $100k car that people historically believe, especially when we're talking about a Tesla. I'm waiting for my Model X and I expect it to be right around $100k, maybe slightly more (I'm not planning on a P and skipping several options). I'm retired and I've bought my "expensive" car in the past and never thought I'd spend this kind of money on a car again. But, with Tesla, there are lots of reasons to spend this kind of money: 1) the car is THAT GOOD, 2) the long term cost of the car is much less due to gas/service savings, so I'm effectively spending a lot less, 3) I want to do my part to help the global community where I can, etc. I suspect a lot of Tesla buyers are people like me that never expected to spend this kind of money on a CAR, but will do so for a Tesla! And if Tesla ever starts to really advertise, watch out!

So, I don't see any demand issues for the foreseeable future.

 

[Matias]

I have really tough time following logic of some questioning the official guidance from the company, but not really showing conclusively, why it is not to be trusted. I do that sort of questioning of the information coming from the company all the time. And every time I do, I always readily find information to disprove my own skepticism.

Take the discussion about whether there is or there is not a 50% growth in orders (i.e. reservations) YoY.

So lets dig a little to bring clarity on this question.

The latest update on the wait time that changed deliveries for S85 was on 02/27/2015. The wait time was from 02/27/2015 to May. Assuming first week of May yields a minimum wait time of 11 weeks. Based on the production rate of about 1000 cars/week the total backlog was approximately 11,000 cars.

Going back 1 year, based on several posts in Model S delivery thread (#6352, 6357, 6368), the wait time was about 7 weeks. According to Q1 2014 shareholder letter the production rate at the end of Q1 was 700 cars. So assuming no further increase of the production rate within the wait time, the total backlog was 700 x 7 = 4,900 cars.

So production grew approximately 43% Feb 2014 to Feb 2015. At the same time the backlog also grew, by a whopping 124%. So not only demand is well ahead of the 43% ramp in production rate, it is in fact outpaced ramp in production by huge margin.

There is no question that Company's claim that demand outpaces increasing production is true.

Thank you. This is good hard data.

 

[Auzie]

In Q4 2014 shareholders letter, Tesla stated that they plan to deliver 9,500 cars in Q1 2015 and to lease the same % of cars as in Q4.

Tesla needs to deliver total of 9,500 cars in Q1.

We can assume that the delivery approximates the production as cars in transit may be equal or slightly growing from quarter to quarter.

Such delivery commitment requires a weekly production rate of at least 792 cars over 12 weeks.

Loaners fleet may act as a small buffer, to absorb small production surplus or to make up for a shortfall.

 

[30seconds]

In Q4 2014 shareholders letter, Tesla stated that they plan to deliver 9,500 cars in Q1 2015 and to lease the same % of cars as in Q4.

View attachment 75593

View attachment 75594

Tesla needs to deliver total of 9,500 cars in Q1.

We can assume that the delivery approximates the production as cars in transit may be equal or slightly growing from quarter to quarter.

Such delivery commitment requires a weekly production rate of at least 792 cars over 12 weeks.

Loaners fleet may act as a small buffer, to absorb small production surplus or to make up for a shortfall.

From the bear perspective this is one of the issues with tesla's valuation. - that Q over Q growth has stalled. This is driven by production/ delivery issues but the company isn't very transparent on the specifics.

 

[vgrinshpun]

Such delivery commitment requires a weekly production rate of at least 792 cars over 12 weeks.

As a quick clarification, As Elon mentioned during the ER, Q1 is shorter than usual quarters. Assuming one week shutdown after the New Year holiday, I am coming up with 11 working weeks.

 

[MartinAustin]

TSLA is showing strength now that more time has allowed the deeper thinkers to digest Thursday's press call.

It has gone pretty much went 100% as expected. TSLA fell because the contents of the press call weren't exactly what the rampant (and in many cases, dumb) speculation called for. Then once folks are able to see the long-term, slow growth in the software platform, and the growing advantages Tesla is providing, sellers are replaced by buyers.

 

[sub]

Ok, it isn't that extreme. I don't agree demand is an issue, but here is why the laser focus on demand from the majority who have not drunk the koolaid: The grand, master plan of TM requires selling $100k cars for 2015, 2016, and at least a good chunk of 2017. At that point, model 3 is online and if demand for the high end cars softened they could switch production to more model 3's. If you are a skeptic, you think there is only so much market for $100k cars (or $80k, you know what i mean). If, hypothetically, in the end of 2015, CA and norway were saturated, demand never picked up in china, middle america, germany, sales would stop growing or worse decrease. That would mean the grand, master plan was in jeopardy since TM would have outgrown their income and cash burn would become a serious concern.

In that hypothetical case, I doubt they would have guided for stagnating sales. TM doesn't REALLY know what the demand is in 12 months, they have backwards looking data too. So if they missed 55k in 2015 it would come out as a Q4 earnings call woopsy-daisy. By then the stock would take a 25% overnight hit. THAT is why people are so interested in reading the tea leaves.

If you are a skeptic, you don't think sales will bridge to the model 3. If you are a skeptic, you don't think TM will give the bad news in small manageable chunks that preserves share value.

I think that's it. You can debate the merits of this argument, but it is a point of view. And Elon doesn't have to be a liar for this to play out. Their sales can fall short of projections, just like every other business in the world.

Having said that, Tesla products are great and create their own markets. Just like pre-iPhone no one in their right mind would spend over $100 for a cell phone, Apple taught us its worth paying hundreds for an excellent new product category. People stretch to get Model S/X.

Plus, the inasmuch as the Model S has sold well for 2 years, the Model X will unlock a similar sized new market, making the "bridge" not so risky. In fact, I argue, this is the whole POINT of the model X. To de-risk the scenario where they saturate their markets.

I mean, if they had zero plans on making an SUV, wouldn't EVERYONE be much more nervous about demand?

I wasn't just referring to sales/production numbers with my bear thesis summation. I agree that no company can guarantee their forward guidance and i'm not one to sit here with my head in the sand either. I believe worst case there could be some periodic hiccups on TSLA's path but I have zero concern for the long term. I have a constant internal battle between my fiscally responsible side and the side that wants a Tesla now! So far the responsible side has prevailed, hoping it can continue to do so until Model 3 arrives but I make no promises when the X is released.

 

[jhm]

I wasn't just referring to sales/production numbers with my bear thesis summation. I agree that no company can guarantee their forward guidance and i'm not one to sit here with my head in the sand either. I believe worst case there could be some periodic hiccups on TSLA's path but I have zero concern for the long term. I have a constant internal battle between my fiscally responsible side and the side that wants a Tesla now! So far the responsible side has prevailed, hoping it can continue to do so until Model 3 arrives but I make no promises when the X is released.

It will be interesting to see what pushes you past your tipping point. For me the promise of autopilot moved me to place my order. Other people were waiting on AWD. The recent range assurance software has made 2/3 of people more likely to buy a Tesla. Version 7 and Model X will do it for alot more consumers. Tesla just keeps driving up the customer value proposition, opening up a little more demand with each step. So let us know when you see enough value to pull the trigger. Good luck holding out to Model 3.

 

[sub]

It will be interesting to see what pushes you past your tipping point. For me the promise of autopilot moved me to place my order. Other people were waiting on AWD. The recent range assurance software has made 2/3 of people more likely to buy a Tesla. Version 7 and Model X will do it for alot more consumers. Tesla just keeps driving up the customer value proposition, opening up a little more demand with each step. So let us know when you see enough value to pull the trigger. Good luck holding out to Model 3.

I see the value already, I was literally 1 day away from buying a P85 loaner about a year ago. I've got solar on the roof with enough excess to drive for free. My issue is I have no car payments and don't want one, and writing a check for 100k and realizing the time value of that money, hard to do. I've got some things brewing on the business front however that may make the decision easier.

 

[jhm]

I see the value already, I was literally 1 day away from buying a P85 loaner about a year ago. I've got solar on the roof with enough excess to drive for free. My issue is I have no car payments and don't want one, and writing a check for 100k and realizing the time value of that money, hard to do. I've got some things brewing on the business front however that may make the decision easier.

I see. So it comes down to financing. You could get a loan around 2.25% right now. That's a pretty cheap way to keep your cash available for better investments. All the best.

 

[Drax7]

Lots, if not most people don't know what the value proposition is, and who is to educate them?
The ny times?

the press is doing a lousy job of it.

 

[maoing]

9500 averaging over 11 working weeks, which comes out run rate @ 863/week
For Q2 guidance, 22000-9500 = 12500, averaging over 13 working weeks, which comes out run rate @ 961/week.

For the tesla factory upgrade blog published in mid-Nov.

The line is now running at about 1,000 cars a week with the potential for significantly more with minor adjustments.

I think many investors will cast doubt of the real reason behind why production rate will stay flat from mid-Nov. all the way through Q2. As Tesla claimed that "significantly more with minor adjustments, why can't that "minor adjustments" happen in near term to benefit production rate? There only could be two reasons. First, Tesla found new handicaps to prevent production ramp up but it's contradicted with Nov. blog prediction; Second, there is actually softer demand to catch up with the production ramp up. So the production ramp up really needs to wait for demand picking up especially from the big potential market like China and new demands stimulated from new SW update.

Above is just my speculation. Nobody is sure about the real answer.

As a quick clarification, As Elon mentioned during the ER, Q1 is shorter than usual quarters. Assuming one week shutdown after the New Year holiday, I am coming up with 11 working weeks.

 

[aznt1217]

I see. So it comes down to financing. You could get a loan around 2.25% right now. That's a pretty cheap way to keep your cash available for better investments. All the best.

he just doesn't want a car payment. No getting around that....

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9500 averaging over 11 working weeks, which comes out run rate @ 863/week
For Q2 guidance, 22000-9500 = 12500, averaging over 13 working weeks, which comes out run rate @ 961/week.

For the tesla factory upgrade blog published in mid-Nov.


I think many investors will cast doubt of the real reason behind why production rate will stay flat from mid-Nov. all the way through Q2. As Tesla claimed that "significantly more with minor adjustments, why can't that "minor adjustments" happen in near term to benefit production rate? There only could be two reasons. First, Tesla found new handicaps to prevent production ramp up but it's contradicted with Nov. blog prediction; Second, there is actually softer demand to catch up with the production ramp up. So the production ramp up really needs to wait for demand picking up especially from the big potential market like China and new demands stimulated from new SW update.

Above is just my speculation. Nobody is sure about the real answer.

Not sure where the staying flat came from. I know it usually averages out to 1,000 because we've seen reports where they'd gently stagger upwards. Like one week would be 1,200 then they'd slow it down to see how it went. Then keep trying again. Kind of the concept of sticky price inflation but to manufacturing units.

Also short interest is creeping up and so is sentiment on the bear side.

 

[maoing]

Q4 production 11,627 averaging over 12 weeks, so it comes out 968/week. How come it's not flat production rate from Q4 through Q2 at least from TM's guidance? But we might see surprise from Q1 ER though.

Not sure where the staying flat came from. I know it usually averages out to 1,000 because we've seen reports where they'd gently stagger upwards. Like one week would be 1,200 then they'd slow it down to see how it went. Then keep trying again. Kind of the concept of sticky price inflation but to manufacturing units.

Also short interest is creeping up and so is sentiment on the bear side.

 

[AlMc]

he just doesn't want a car payment. No getting around that....

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Not sure where the staying flat came from. I know it usually averages out to 1,000 because we've seen reports where they'd gently stagger upwards. Like one week would be 1,200 then they'd slow it down to see how it went. Then keep trying again. Kind of the concept of sticky price inflation but to manufacturing units.

Also short interest is creeping up and so is sentiment on the bear side.

http://www.nasdaq.com/symbol/tsla/short-interest Actually short interest may go up with the next report but has slowly been going down this year.

 

[Buddyroe]

It will be interesting to see what pushes you past your tipping point. For me the promise of autopilot moved me to place my order. Other people were waiting on AWD. The recent range assurance software has made 2/3 of people more likely to buy a Tesla. Version 7 and Model X will do it for alot more consumers. Tesla just keeps driving up the customer value proposition, opening up a little more demand with each step. So let us know when you see enough value to pull the trigger. Good luck holding out to Model 3.

So, you REALLY believed that poll that Street.com did? You've GOT to realize that no poll like that is scientific. The actual way to interpret that poll is this: The recent range assurance software has made 2/3rds of the people who read the article, and were inclined to respond, more likely buy a Tesla. Now, who do you think was interested in reading that article and were inclined to vote? People who already know about Tesla (especially us fans). The people who don't know much about Tesla didn't even know there was an announcement, much less are they more inclined to buy a Tesla.

 

[jhm]

So, you REALLY believed that poll that Street.com did? You've GOT to realize that no poll like that is scientific. The actual way to interpret that poll is this: The recent range assurance software has made 2/3rds of the people who read the article, and were inclined to respond, more likely buy a Tesla. Now, who do you think was interested in reading that article and were inclined to vote? People who already know about Tesla (especially us fans). The people who don't know much about Tesla didn't even know there was an announcement, much less are they more inclined to buy a Tesla.

Of course, I believe it. The kind of people who read and responded to that poll are target prospects for Tesla. Besides the question is rather weak anyway. Of course, a feature like this would make just about everyone more likely to buy the car than without it. Would anyone actually prefer the car not to have these features? So basically 2/3 says these features have value to them and the other 1/3 are indifferent. A convenience sample like this can be very valuable when those who are most likely to respond represent the market you want to market to. So of those who are most likely to buy a Tesla, 2/3 indicate that the new features make them more interested in buying.

 

[aznt1217]

http://www.nasdaq.com/symbol/tsla/short-interest Actually short interest may go up with the next report but has slowly been going down this year.

Old data. I'm talking now.

Tesla Motors Inc (TSLA) – Persistent demand from both clients and the street has pushed borrow off GC for some time now. We are seeing new bank supply in the -1% range, approving moderate size with current averages around -.50%.

 

[Buddyroe]

Of course, I believe it. The kind of people who read and responded to that poll are target prospects for Tesla. Besides the question is rather weak anyway. Of course, a feature like this would make just about everyone more likely to buy the car than without it. Would anyone actually prefer the car not to have these features? So basically 2/3 says these features have value to them and the other 1/3 are indifferent. A convenience sample like this can be very valuable when those who are most likely to respond represent the market you want to market to. So of those who are most likely to buy a Tesla, 2/3 indicate that the new features make them more interested in buying.

So, basically, it is a worthless poll because it just implies that people who were planning to buy a Tesla are "more solid" in their desire to buy a Tesla, right?

If, through all of my reading in different Tesla forums (particularly the SC forums), I stop seeing tons of posts of people trying to figure out how to make their upcoming trip (and someone responding with an offer that the poster can use their personal charger in order to make it), then I'll believe that this software actually achieved something (other than a poll). But, for those who couldn't make it before and needed outside charging to make it, nothing will be changed by this software - you still can't get blood from a turnip. All this software does is maybe do the calculating that everyone has been doing manually. And even if the software proves to be reliable (people won't use it exclusively at first), it may still double your drive time because it has to take a route that has SuperChargers - and people will be right back to chasing down a charging point (personal, camp ground, etc) along a better route to save time.

The only thing that is going to alleviate range anxiety in America is about 200 more SCs. The ability to take almost ANY route, without thinking about it, and knowing there will be SCs on THAT route. I mean, if you believe this software alleviates range anxiety, then it was already alleviated a long time ago - don't drive where there aren't SC's in range. That is pretty simple and basically all the software does.

 

[FANGO]

Besides the question is rather weak anyway. Of course, a feature like this would make just about everyone more likely to buy the car than without it. Would anyone actually prefer the car not to have these features?

Not me, I don't need it at all, I'm already plenty assured. The trip calculator is mildly interesting but mostly I would just use it to show off to people.

So yeah, it's a bad question. Because I would say it doesn't make me more likely, but that would be interpreted as a negative response, when its not.