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Short-Term TSLA Price Movements - 2015
- Thread starter Robert.Boston
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jhm
Well-Known Member
I suspect that Kelty may be making a general critique of Japanese industry:
Has Japanese business culture become so measured and precise that fails to take entrepreneurial risk, that animal spirits are driven into hiding? It is interesting that Kelty worked 14 years at Panasonic, so he would know something of the culture there.
Has Japanese business culture become so measured and precise that fails to take entrepreneurial risk, that animal spirits are driven into hiding? It is interesting that Kelty worked 14 years at Panasonic, so he would know something of the culture there.
EldestOyster
Member
We've examined this in previous discussions. When we were waiting for the gigafactory to get started, and we were waiting for Panasonic to sign onto the project, there was speculation about Panasonic avoiding risk. It's good business sense to weigh the rewards against the risks, much as we do when investing in the future of Tesla.
What I get from Kelty's remarks is, Tesla is (in Krugerrand's words) "all in"; they are still production constrained; the major limitation is the battery supply; and anyone who can produce vast quantities of batteries that meet Tesla's requirements will be able to sell as many as they can make.
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I wonder if writing poetry might cause a reversal in the trend, rather than simply causing it to fall?
What I get from Kelty's remarks is, Tesla is (in Krugerrand's words) "all in"; they are still production constrained; the major limitation is the battery supply; and anyone who can produce vast quantities of batteries that meet Tesla's requirements will be able to sell as many as they can make.
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The only thing to apologize for is not warning us at the time.
I wonder if writing poetry might cause a reversal in the trend, rather than simply causing it to fall?
Another way to interpret that is Japanese suppliers see weaker than forcasted demand trajectory and thus reluctant to invest. SP decline already partially reflected some investors' anxiety. I'm not saying that's the truth at this point, but TM need to prove instead of just predicting "demand isn't an issue" in 2015. This is the bottomline for TSLA SP now, once that doesn't hold, then a lot of things will fall apart.
sundaymorning
Active Member
Take a step back and ask 'how conservative' the Japanese culture is. Is this a country that is known for spectacular risks? Let's not forget this is a nation that once closed its doors to all of the outside world until Commodore Mathew Perry showed up with a battleship. Does the Japanese education system encourage outside of the box thinking, or conformity to an existing system? Therein lies a hint as to why Kelty made his remarks..
Krugerrand
Meow
That makes no sense. There's absolutely no reason for Tesla to publically push a supplier/s in this way if there were demand issues. How many more times will you require the CEO to explicitly tell the world that Tesla has no demand issues, before you'll consider that Tesla has no demand issues? Six ER reports? 12? Never?
Tesla has nothing to prove to their suppliers as they've already on more than one occasion EXCEEDED their suppliers' shipments.
I am sure Panasonic monitors Tesla earnings more carefully than anyone else. They also have insights in new orders based on battery cell orders. Them being skeptical even now is obviously not a confidence boost.
Energy solution may be a thing to show them potential market along with EVs.
To make things easy, TM can start shattering Qs after Qs and Panasonic will move faster.
Energy solution may be a thing to show them potential market along with EVs.
To make things easy, TM can start shattering Qs after Qs and Panasonic will move faster.
Panasonic uneasiness has neither to do anything with whether TM beats or misses Q1, nor whether TM delivers 50K, 55K or 60K cars in 2015. TM deliveries this year will be defined by how successful TM in performing factory upgrades and scaling up production and has nothing to do with demand. The demand for MS and MX may come into play in 2016, once they are able to produce 100K - 200K vehicles per year.
They are fretting risk and uncertainty associated with plopping $1.5B to support 500K cars by 2020. And they will be at it no matter what happens in the medium term, short of TM showing incoming rate of reservations equal 500K per year, which of course, will never happen until the GF is built and in operation.
If that's the case, it will be TRUE love, in which case we can expect an epic short squeeze. :biggrin:
Krugerrand
Meow
Who from Panasonic said they are skeptical of Tesla?
BTW, there is a contract between the two companies for a specific number of batteries as we speak this very second, and because Panasonic can not provide enough batteries for Tesla moving forward, the GF is being built as a joint venture to solve that problem. Being cautious by nature and culture - let's also remember Panasonic was in real, big financial problems before the battery division pulled them out thanks to Tesla - is not equivalent to being skeptical.
You meant to say, to make it easy for YOU because common sense dictates that Tesla can only build as many cars as there are batteries from Panasonic coming in the door. Again, that would be why Tesla requested a new battery contract from Panasonic, why Tesla was also talking to Samsung about building batteries, and why ultimately Tesla went ahead with GF plans. I'd say quite strongly that you're barking up the wrong tree.
People sure have short memories. Panasonic CEO just three weeks ago: “We are too conservative. We are a 95-year-old company,” he says. “We have to change. We have to use some of Elon’s thinking.”
Panasonic president Kazuhiro Tsuga: On Elon Musk, crisis, and culture - Fortune
Panasonic president Kazuhiro Tsuga: On Elon Musk, crisis, and culture - Fortune
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To add to this, I find complaints about demand incomprehensible.
The simple fact that is being overlooked by those who genuinely concerned about demand is that TM has limited ability to produce cars because major portions of the production process still have capacity of 800 cars/80hr week. This is the reason they do not deliver as many cars as we would like. TM is scrambling to complete upgrading the manufacturing process to be able to handle 2500 cars/80hr week by the end of this year. All the while operating major portions of the manufacturing facilities at maximum capacity, **AND** introducing major improvements to the product.
The irony, of course, is that the very reason TM find themselves in this situation is that they grossly ***UNDERESTIMATED*** demand, by factor of up to ***THREE*** and are now playing catch up by changing the wheels as the bus moving at 75mph - upgrading manufacturing capacity from 800 to 2500 cars/week without shutting down the plant.
There is also a concerted effort by detractors to perpetuate this nonsense about demand to put the company down. This effort is quite successful because the market is not rational and is very susceptible to fear and uncertainty. The fact that SP is where it is right now is not an indication that the concern about the demand is rational and justified, it just an indication that merchants of fear and doubt are doing very good job.
Regardless whatever reasons behind, TM was supposed to reach 1k/week production rate in 14' Q3, while the 1k/week guidance stays flat through 15' Q2. If demand is really out of the chart, then TM should had all motivations to do whatever possible to increase production rate steadily instead of flatting for almost 4 quarters. I was a big fan of TM's production growth trajectory speculation, but the reality forced me to put reasonable doubt on this strange pattern until strong demand is proved (not by Elon's claim) by every angel we can observe (e.g. website wait time).
sundaymorning
Active Member
Sorry, you have pretty out-of-date information. TM production was not constrained by Panasonic battery supply since last Summer. The myth of slow production ramp for extended long period surely incurs a lot of negative speculations wrt. SP.
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Krugerrand
Meow
Nobody at Tesla ever said 'demand is really out of the chart'. What they have said is that they have enough demand to produce 55,000 vehicles this year without having to advertise. They have said that they want to exit 2015 at a production rate of 2000/wk. They have said that the second half of 2015 will see more vehicles produced than the first half. While deliveries were under guidance the last two quarters, Tesla hit their 2014 yearly production guidance. Tesla exited 2014 with 10,000 Model S reservations and 20,000 Model X reservations, that's your proof of demand. You'll get nothing else from Tesla as far as I can tell, and I think you'll be getting less in the future.
I think Panasonic's commitment to GF is surely a strong indicator of TM's demand. If some rumors or news come out that Panasonic decides to slow down the pace of Gigafactory investment, it's the time to sell a portion of core shares to evade short term risks. I'm not saying it'll happen but just in case. Similarly when you first heard Veronica Wu resigned, then you should sell your shares to mitigate the risk of China issues. Once sth. confirmed by Elon, then it'll be too late.
New FUD article on CNBC with the title: "Tesla's Model X could send its stock skidding: Pros".
"CLSA Americas Analyst Andrew Fung, downgraded the stock to an "underperform" rating from an "outperform," while slashing his price target down to $220 from $275. His biggest concern? The Model X.
The new car will be Tesla's first attempt at a sports utility vehicle. CEO Elon Musk has promised a car that will be able to seat seven adults, will have improved all-wheel drive and will be equipped with falcon–winged doors.
"Some of the misconception really is that while the Model X is a derivative of the Model S sedan, there are other complexities in the new design so initial margins may not be as strong as what investors are anticipating, " Fung told CNBC's "Fast Money" this week.
He added in his note that lower initial Model X margins are likely to hurt earnings in the short term, and limit upside potential in the stock."
Does anyone think this is sound reasoning; isn't all the R&D and CapEx (new line etc) already accounted for so that there will not be a big change in margins?
http://www.cnbc.com/id/102541240
"CLSA Americas Analyst Andrew Fung, downgraded the stock to an "underperform" rating from an "outperform," while slashing his price target down to $220 from $275. His biggest concern? The Model X.
The new car will be Tesla's first attempt at a sports utility vehicle. CEO Elon Musk has promised a car that will be able to seat seven adults, will have improved all-wheel drive and will be equipped with falcon–winged doors.
"Some of the misconception really is that while the Model X is a derivative of the Model S sedan, there are other complexities in the new design so initial margins may not be as strong as what investors are anticipating, " Fung told CNBC's "Fast Money" this week.
He added in his note that lower initial Model X margins are likely to hurt earnings in the short term, and limit upside potential in the stock."
Does anyone think this is sound reasoning; isn't all the R&D and CapEx (new line etc) already accounted for so that there will not be a big change in margins?
http://www.cnbc.com/id/102541240
Krugerrand
Meow
Nope, it's not out of date information. Go back and look it up. The second Panasonic contract still only allowed for so many Model S's and X's. There's zero chance of Tesla going all out in production, not even mentioning the fact that they have dozens and dozens of other suppliers who also have to be able to produce at the same rate. We aren't making one piece forks here. Methodical, quality, and improving efficiency always rank higher than just spitting out at a higher rate because you think that's what they should be doing.
There are no production myths. Tesla has time and again explained their production numbers. They hit 35,000 cars for 2014 as they said they would. You want to doubt the 55,000 production number for 2015, feel free.
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