Short-Term TSLA Price Movements - 2015

[Bobbyducati]

Ah, didn't know that. I guess the interior color would have to be picked as well so there goes that theory.

not the only one that thought this, I definitely thought they were all that signature red.

 

[electracity]

Well didn't one of the analysts who toured the factory say they were training workers for the new Model X line a couple weeks ago? If the recently completed paint shop, BiW line with 3x the robots can produce a small fleet of signatures you could in theory deliver those and unveil the design studio for the public at the same time...

But that doesn't explain the "why". Usually companies like to show their new products

Does not showing it until the first customer units are produced increase interest and therefore sale? Not in my opinion. I can't come up with an alternate theory, except the one I stated before.

 

[eloder]

I think a thousand people would be willing. They would know that Tesla would be sure to please.

But it would be weird. So why the "no show until ship"? I think because of S sales.

No pictures, no features list, no cost known before it's in the customer's driveway would IMO be a disaster. The Model X configurator has to show at a minimum the information known in the Model S configurator.

I think what Musk meant by "Some features are not known until it arrives" is that there will (most likely) be extra software features not found on the Model S, or there will be "hidden" hardware like autopilot on Model S before announcement. I don't think that means we won't know price, range, acceleration, interior/exterior option pictures, and so on until customer delivery.

 

[doggusfluffy]

But that doesn't explain the "why". Usually companies like to show their new products

Does not showing it until the first customer units are produced increase interest and therefore sale? Not in my opinion. I can't come up with an alternate theory, except the one I stated before.

I think you have the "why" backwards here. I'm suggesting I think they will hold a big unveiling event, delivers the sigs and at the very same time as they happily reveal their car to the world...then they will allow you the consumer to customize and order one. Why would any other sequence of events make more sense?

 

[sub]

To me it's obvious, they want to hold back showing the X as long as possible so that when it is shown and if people jump from Model S to Model X, they will have the ability to produce the Model X at a high enough rate to not crush overall sales numbers for 2015 and miss the 50k+ guidance. They are in a tough spot, but I'm fairly confident they have enough smart people working at Tesla to have taken in all the facts and come up with the "best" solution to the problem. That doesn't mean it will be a perfect solution.

I think if they give the Model S a slight refresh (lose the ugly nose cone) and get the Model X upgrades into the Model S as quickly as possible, the Model S will continue to sell well. If they did this I would be equally if not more interested in an AWD S over the X based on the recent mule photo's i've seen.

 

[jhm]

But that doesn't explain the "why". Usually companies like to show their new products

Does not showing it until the first customer units are produced increase interest and therefore sale? Not in my opinion. I can't come up with an alternate theory, except the one I stated before.

I think Tesla is just trying to intensify the drama around Model X. Because they are sitting on over 20k reservation, they do not need to reveal well in advance of shipping. But the PR they generate is more about raising brand awareness. So they can make a bigger splash if in the moment they reveal it, there are already Model X in the stores ready for test drives and quickly rolling into neighborhood driveways. The publicity they will generate will be worth tens of millions of advertising dollars. Tesla is very good at pulling these stunts in lieu of advertising.

So when Musk says no reveal until they ship, I think the intention is ship test drive vehicles to stores before the reveal. They did this with the 70D. The first ones arrived at stores without the "70D" badge on it. I remember puzzling over these vehicles with no badge on it, prior to the unveiling of the 70D. Very sneaky. So watch out for covered vehicles hidden in stores.

 

[electracity]

No pictures, no features list, no cost known before it's in the customer's driveway would IMO be a disaster. The Model X configurator has to show at a minimum the information known in the Model S configurator.

I think what Musk meant by "Some features are not known until it arrives" is that there will (most likely) be extra software features not found on the Model S, or there will be "hidden" hardware like autopilot on Model S before announcement. I don't think that means we won't know price, range, acceleration, interior/exterior option pictures, and so on until customer delivery.

That makes sense, but I think it includes significant interior changes, as well as a new chassis. There are going to be some disappointed people with a brand new Model S. But that can't be avoided without killing sales. This is a disadvantage of Tesla not having traditional model years. With model years, the expectation of change is built in. If this is model S 2.0, they are essentially lying to new customers by omission.

 

[AlMc]

I think Tesla is just trying to intensify the drama around Model X. Because they are sitting on over 20k reservation, they do not need to reveal well in advance of shipping. But the PR they generate is more about raising brand awareness. So they can make a bigger splash if in the moment they reveal it, there are already Model X in the stores ready for test drives and quickly rolling into neighborhood driveways. The publicity they will generate will be worth tens of millions of advertising dollars. Tesla is very good at pulling these stunts in lieu of advertising.

So when Musk says no reveal until they ship, I think the intention is ship test drive vehicles to stores before the reveal. They did this with the 70D. The first ones arrived at stores without the "70D" badge on it. I remember puzzling over these vehicles with no badge on it, prior to the unveiling of the 70D. Very sneaky. So watch out for covered vehicles hidden in stores.

It was a lot easier to bring in the 70D, unbadged, then a brand new model with a significantly different shape. I know the people at the galleries and service centers many times know less than our collective knowledge on TMC but they have indicated to me that they do not expect to see an X until the first delivery at their store at KOP/Devon locations. I agree with Eloder, that the design studio will show you a picture of the actual X and allow you to pick options BUT the 'not revealed until first deliveries' will be some very unique software/even hardware that all the Xs will have that will be novel/give the 'wow' effect.

As to an S refresh. I don't see that happening until early 2016. My scenario has the current S derivatives being built on Line #1 with line #2 initially only producing Xs since the rerservation list is great and will only grow once the X is revealed. Once the ramp up on line #2 has gone smoothly and they are starting to deliver Xs at volume then close line #1, refresh S and produce both on the second high speed line. obviously all speculation

 

[CALGARYARSENAL]

This is my take on things. Everyone loves the American dream. Everyone loves technology. It is important to be invested in Silicon Valley companies. Apple has officially started to break down. Their iPhone growth will be hampered by China. Their iWatch sucks. Millennial of love Tesla. Money will move out of Apple and into Tesla. Short Apple go long TSLA who doesn't have a large footprint in China at the moment anyhow.

 

[ggies07]

This is my take on things. Everyone loves the American dream. Everyone loves technology. It is important to be invested in Silicon Valley companies. Apple has officially started to break down. Their iPhone growth will be hampered by China. Their iWatch sucks. Millennial of love Tesla. Money will move out of Apple and into Tesla. Short Apple go long TSLA who doesn't have a large footprint in China at the moment anyhow.

I agree. I just saw that the sales of the iwatch are down 70% and Android has the most market share for phones in the U.S and world.

 

[Gerasimental]

Been very busy this last week so I've been unable to follow TSLA or this thread closely, and looking back now I can't see a huge amount of talk about this short term movement in the last few pages. Could somebody give a quick roundup of recent important events and sentiment? Were the two huge red days just because of the Deutsche downgrade? That would seem like a dramatic overreaction, wiping nearly 10% off the value of the company based on an increased price target and analysis from one analyst that current value accounts for growth potential. If sentiment hasn't drastically changed on the street, this ought to be a good buying opportunity, but I'm unsure after such a big and seemingly irrational move.

 

[austinEV]

Been very busy this last week so I've been unable to follow TSLA or this thread closely, and looking back now I can't see a huge amount of talk about this short term movement in the last few pages. Could somebody give a quick roundup of recent important events and sentiment? Were the two huge red days just because of the Deutsche downgrade? That would seem like a dramatic overreaction, wiping nearly 10% off the value of the company based on an increased price target and analysis from one analyst that current value accounts for growth potential. If sentiment hasn't drastically changed on the street, this ought to be a good buying opportunity, but I'm unsure after such a big and seemingly irrational move.

Chatter here has been just chatter, because there hasn't been anything big happen (other than shipment numbers announced, of course). The bull thesis for TSLA in the medium and long term is doing just fine. Model X is on track. 55k is on track. Stock price is not particularly high based on valuation models we track here. Market has macro headwinds suddenly (china drop, greece jitters). Also the stock has only retraced to where it was trading June 29! Stock has gone up $70 since April of this year. A correction of 10% wouldn't be unreasonable even without macro concerns. Maybe last week was a local top and it drifts for a while, or maybe it resumes upward trend on the back of Model X interest. But the last 2 days certainly are not a disaster. Unexpected yes, but not a disaster itself. If it started a trend, that would be worrisome but at least today there seams some support.

Also, I think that nervous china and Europe investors might well be drawn to US markets. We are the least stinky market at the moment.

 

[mmccord]

Been very busy this last week so I've been unable to follow TSLA or this thread closely, and looking back now I can't see a huge amount of talk about this short term movement in the last few pages. Could somebody give a quick roundup of recent important events and sentiment? Were the two huge red days just because of the Deutsche downgrade? That would seem like a dramatic overreaction, wiping nearly 10% off the value of the company based on an increased price target and analysis from one analyst that current value accounts for growth potential. If sentiment hasn't drastically changed on the street, this ought to be a good buying opportunity, but I'm unsure after such a big and seemingly irrational move.

I think a few things lined up perfectly:

1) TSLA was overbought and due for a correction
2) Macro market reaction to Greece
3) Macro market reaction to China
4) Two analyst downgrades

To keep things in perspective:
The nasdaq is up <5% on the year. TSLA is +16%
4/1-Current the Nasdaq is up 0.60%, while TSLA is up 36.7%

I posted earlier that I lost a lot of money on TSLA Tuesday & Wednesday, which I did, but I made a lot of money x 3 over the last few months too.

 

[Gerasimental]

Thank you both, this is what I was looking for. I think being brave on Greece where others are scared can certainly pay off, but the addition of the downgrades and China makes it very difficult.

 

[chickensevil]

Have you looked at the trade in price of higher mileage cars? Have you estimated the cost of battery replacement? These are not inexpensive to own cars. Free charging is nice, but on the whole, a rather trivial savings. Reports here is that Tesla is subtracting a dollar per mile for high mileage trade-ins.

The 70D is a good relative value in the lineup. But all these cars are expensive per mile. Perhaps very expensive, especially for heavy supercharger users.

The overall resale value of the Tesla's are holding higher than all other Electric vehicles and higher than the comparable Luxury cars... Not sure what more you want there. And if you totally ignore the 7,500$ tax credit, and any state incentives (as in, assume if a car is reselling in CA that the MSRP on the car was 10k cheaper than what was posted), it increases the retained value percentage even better than it already is. Currently a high mileage Tesla has almost no negatives to it given that you still get the 8 year unlimited mile warranty to carry over which covers the two most critical parts of the car... the battery and the drive unit.

So in a worst case, 8 years from 2012 (which would be 2020) your battery fails and what would the cost of a new battery be? Given the price of the battery last quoted around the beginnings of the Model S was something like 20k (a bit much sure... but that was like 2012 prices), when you discount 7% every year you come out to under 15k by 2020, and then lop off the 30% savings from the gigafactory (which was in addition to any normal battery price reductions if I am understanding that one correctly) and now you have a battery that cost 10k to replace in 2020. Which while still expensive is essentially like having a total engine failure on a car and having to do a replacement. It shouldn't happen very often. So what is more realistic? Well Tesla has stated at some point or another that the batteries were built for an anticipated 15 year lifecycle. If we look at it another way, these cells if I am not mistaken are rated for 2,000 cycles (that is full cycles, partial cycles are easier on the battery making full cycles the absolute worst case). 2,000 cycles on a 265 mile pack (and lets just average out the mileage to 90% of the life, since it degrades to 80% over time which is when you would anticipate wanting it replaced... which means 238 miles...) you would come out to: 2,000 X 238 = 476,000 miles! If you actually wanted to *still* keep the car after that many miles, and you are running the average mileage of 12,500 per year, this battery would last you 38 years!!! So, yeah, if you wanted to get a new battery for your now classic 2012 Model S, in the year 2050, how much you want to bet that at that point price didn't matter because the reason for retaining the car at that point is well beyond cost value and would be for historical reasons.

So I'm sorry, what was that tripe about high battery costs? Worst case 8 years, medium case 15 years... and best case 38 years! Most cars go to the junkyard after 15 years since the average car age is currently 11.4 years. You will replace the battery when you replace the car.

This car is the definition of inexpensive to own cars. Once you own the car it has very little costs to operate. I don't get what you are talking about at all here. To the point where the value proposition when taking resale value into account after a projected 5 years of ownership make the base 75,000$ car putting average mileage on it the equivalent of a 50,000 premium sedan. There have been multiple TCO calculations made on this car and as the real world data keeps coming in, it is actually blowing away the projections. I'll give you a hint, don't sell your car to Tesla... it's like getting a trade in at the dealer you are buying a new car from, typically you get the lowest offer there (although not always). And what does using the Superchargers have to do with making the car more expensive? If anything that lowers the cost of ownership even more because now you go from paying like 15-30$ a month to nothing to power the vehicle... I have had my car for 1.5 years now, and all I have paid to drive the car has been very cheap electricity and insurance (which is also on par or slightly lower than a comparable luxury vehicle).

That makes sense, but I think it includes significant interior changes, as well as a new chassis. There are going to be some disappointed people with a brand new Model S. But that can't be avoided without killing sales. This is a disadvantage of Tesla not having traditional model years. With model years, the expectation of change is built in. If this is model S 2.0, they are essentially lying to new customers by omission.

Woah, lying is an awfully strong implication. Was Apple lying by omission when they didn't tell people right after the release of the iPhone 5 that they were also working on the iPhone 6? New iterations of products are not just typical, but expected... nay, demanded by customers. As with anything you buy, as soon as you put your money down you have determined that this is an acceptable product for your money and are willing to accept that getting a product today means forgoing a better product at some point in the future for that same money. The expectation for change is built in to the Model S, it is just a much more rapid timeline with less clear markings.

 

[jhm]

This is my take on things. Everyone loves the American dream. Everyone loves technology. It is important to be invested in Silicon Valley companies. Apple has officially started to break down. Their iPhone growth will be hampered by China. Their iWatch sucks. Millennial of love Tesla. Money will move out of Apple and into Tesla. Short Apple go long TSLA who doesn't have a large footprint in China at the moment anyhow.

Thanks for the heads up. I sold some AAPL and now have a little dry powder.

 

[Johan]

Thanks for the heads up. I sold some AAPL and now have a little dry powder.

We should all sell a bit of AAPL if possible. As AustinEV posted above Apple Watch sales are weak. Not really catastrophic to Apple's bottom line but an early sign they're loosing their edge and growth potential and that should lead us to put a lower multiple on the stock which affects value a lot, even with their huge bank holdings (which are of course priced in already).

 

[MitchJi]

Hi Gerasimental,

If sentiment hasn't drastically changed on the street, this ought to be a good buying opportunity, but I'm unsure after such a big and seemingly irrational move.

I use the iphone "Stocks" app to keep an eye on Tesla. It shows GOOG, AAPL, DOW J, S&P 500, NASDAQ, and TSLA each with a Red (down) or Green (plus) box. For the previous two days (when I checked) I think that all of the boxes were red. For most of today all of the boxes were green (except that a few hours before the AAPL switched to red). So you could make the argument (about 70-80 percent correct IMO) that this downturn had nothing to do with Tesla. I think that Tesla is poised for huge gains. The questions are how deep and long lasting do you think this economic malaise will be and based partly on that do you think Tesla is strong enough to handle it? You might want to keep in mind that the economic meltdown in 2008 is what caused GM and Chrysler to require bailouts.

Full Disclosure:
I have no idea what the economic conditions are going to be, but very uneasily I decided that this is a buying opportunity, and replaced about 60% of our Tesla stock with Jan16 and Jan17 slightly ITM (240 and 250) calls.

 

[mmccord]

I have no idea what the economic conditions are going to be, but very uneasily I decided that this is a buying opportunity, and replaced about 60% of our Tesla stock with Jan16 and Jan17 slightly ITM calls.

Yeah, I'm on the fence here as far as macro conditions. I think this earnings season will have a lot to do with where we go from here. Looking at the charts, the indexes are all at very precarious levels with little support left. Either they turn around soon, or we're in for a serious bear market period.

TSLA may outperform the indexes (like it did today), but that doesn't mean it'll go up.

Fundamentals and share price rarely go hand in hand, and the market can stay irrational for very long periods of time.

That said, Tesla has a GREAT brand, is selling excellent products at a healthy gross margin, and is light-years ahead of their competition. In the long-term, having a fundamentally strong company will trump all the market BS. The biggest risk I see at this point is if the model X is poorly received. Elon has set up huge production capabilities and they need good sales #s to keep cash flowing in in 2016-2017. Expectations are high. Let's hope it doesn't disappoint.

 

[Krugerrand]

I don't think people will be configuring to add "Mystery Feature X!" along with a blank authorization to charge anything Tesla wants for a loan, only to be revealed when the car is in your driveway.

You're assuming the 'mystery feature/s' are 'optional'. There is going to be no 'reveal' prior to the first deliveries. Not sure how much clearer Tesla can make that.