Short-Term TSLA Price Movements - 2015

[Crowded Mind]

TM only quoted 2014 exit backlog # 10K in Q4 ER as an indicator for strong demand. There is nothing similar mentioned in Q1/Q2 ER, so I'm positive the backlog in 2015 is <= 10K. This thing might be changed a little bit in Q3 ER because of referral program and low Q3 delivery (essentially push some orders into Q4 to compensate model X).

My view on the backlog disclosure was that it was a one-time move to counteract the miss in deliveries in Q4 '14. I did not expect it to continue to be disclosed -- what would be the purpose? They have yet to miss quarterly guidance IIRC. They did it specifically in Q4 to stop speculation that lack of demand was why they missed annual delivery targets, likely a wise move.

 

[Perfectlogic]

TM only quoted 2014 exit backlog # 10K in Q4 ER as an indicator for strong demand. There is nothing similar mentioned in Q1/Q2 ER, so I'm positive the backlog in 2015 is <= 10K. This thing might be changed a little bit in Q3 ER because of referral program and low Q3 delivery (essentially push some orders into Q4 to compensate model X).

I believe the waiting time for an S have floated around the 10 week mark this whole year, so I would assume that the backlog is around 10k. It's also important to keep in mind that there will always be a "waiting time" or delivery time as the car needs to be produced and then shipped after it's ordered, not sure how long this production + delivery time is though.

 

[30seconds]

I find it hard to believe that the S is demand constrained as the company has done no traditional advertising. Granted I think the recognition in the sub 50yr old tech and finance crowds is probably pretty high, but that leaves a tremendous amount of market to penetrate. As a guidepost, penetration in California is massive compared to most other markets - and remember most auto companies have design teams in California for good reason (automotive trend setting). The only worry about the S is that the design will start to get tired, but then again Audi has been making the same car for about 10 years.

I agree that there is a more limited market with a starting price of $70k vs. $50k, but in terms of progress a $70,000 "base" 70 is a lot more car than $70,000 spent in 2012.

 

[FredTMC]

I find it hard to believe that the S is demand constrained as the company has done no traditional advertising. Granted I think the recognition in the sub 50yr old tech and finance crowds is probably pretty high, but that leaves a tremendous amount of market to penetrate. As a guidepost, penetration in California is massive compared to most other markets - and remember most auto companies have design teams in California for good reason (automotive trend setting). The only worry about the S is that the design will start to get tired, but then again Audi has been making the same car for about 10 years.

I agree that there is a more limited market with a starting price of $70k vs. $50k, but in terms of progress a $70,000 "base" 70 is a lot more car than $70,000 spent in 2012.

yep. Totally agree. Tesla sales penetration in middle America is nowhere near saturation

 

[Papafox]

The Dec 2015's and Jan 2016's are going down faster by percentage, but much less in the actual amounts. So maybe (if prices stay flat or keep going down) waiting for Jun 2016's will work out ok. But I think I'm going to roll to Mar 2016's on Monday.

Oct 9 Closing prices TSLA was at  220.68 -6.04 (-2.67%) 
Strike    Price     Change Bid    Ask   Volume Open-Int  
Dec 2015's
250.00    7.20    -1.85     6.70    7.20    214    1587 

Jan 2016's
230.00    17.10   -0.90    16.00    16.30    209        4107
240.00    12.60  -1.69    12.15    12.60    97        2487 
250.00    9.30    -1.45    9.10     9.65    882        4763 
260.00    7.15    -0.82    6.65     7.10    100        2567 
280.00    3.65    -0.55    3.50     3.70    1261            2982

Mar 2016's 
200.00    38.32    -2.08    36.45    39.05    308        559
210.00    32.31    -6.64    30.65    33.85    1        50
220.00    26.80    -3.60    25.45    27.15    11        96
230.00    21.85    -0.85    20.90    22.45    12        66
240.00    17.77    -2.03    17.50    19.40    30        227
250.00    14.55    -2.90    14.00    14.65     27        386
260.00    11.10    -2.15    10.50    11.95    31        260

Jan 2017's
200.00    52.50    -3.00         51.45    55.25    182        3221
210.00    48.05    -1.95         46.10    50.20    6        1377
220.00    43.50    -2.30         41.20    43.30    34        2063
230.00    39.15    -2.75         37.50    39.70    18        1336
240.00    35.45    -2.55         33.65    35.30    66        1473
250.00    31.15    -2.29      29.70    32.55    45        3381

A rollover to March calls gives more time to get the Model X production ramping up, and that might give TSLA the boost you seek, but the reason I didn't roll over to March calls is because there's so much that is expected to happen in April-May that could boost the stock. We have the planned opening of the gigafactory and the planned reveal of Model 3 in April, and the Q1ER may show positive cash flow. Also, Tesla Energy will be gearing up the farther into 2016 we go. Food for thought.

 

[doggusfluffy]

Tesla Exec Announces Internship For Nevada Gigafactory | KUNR

Tesla's co-founder and Chief Technical Officer J.B. Straubel says the first employees will begin work at its gigafactory outside of Reno in just a few weeks.

"Construction here has moved extremely fast; it's part of why we wanted to be in Nevada in the first place," he says.

 

[Johan]

Tesla stopped mentioning backlog, because it's such a sensitive number; we're talking about it here as if if we knew it we could settle the debate about demand- or production constrained for Model S.

The problem for me is that Tesla have more control over this than some of you more bearish posters believe. They can do a lot of things to modulate an throttle demand. For example add lower priced setups to their lineup, advertise or do a PR offensive, etc. Another is is that perhaps it's not the size of the backlog that matters but keeping wait time optimal. Too long of a wait will cool demand somewhat, there really isn't much point in creating wait times that are too long. Look how little they talked about MX and the fact they waited until the last minute to show it; no need to create more demand... Yet.

 

[mrdoubleb]

Ok, so my 2 cents on the whole S demand situation: I don't think it has reached peak yet, but if it had, that would not be a bad thing at all.

Consider this: in 2014 Audi sold just under 40k of it's A8/S8 and BMW sold 46k of the 7 series. Mercedes is the leader, but it is hard to tell by how much (intentional?) as from 2014 they started to wash the whole S Class "platform" (S-/CL-/SL-Class/SLS/Maybach) together. In 2013, the S Class was 71k, in 2014 the S "platform" was 125k - make what you want of it. In any case, there is reason to believe the Model S will become the No.2 large luxury sedan globally this year - and even if BMW or Audi beats it slightly, that's still frikkin' unbelievable. If you predicted something like that 2-3 years ago, you would be waving at us from the looney bin right now. And at the end of the day, even if the Model S takes away more market share from the rest of the club, the market for this class of vehicle is finite, of course.

I also tried to do a quick back of the napkin calculation on S backlog changes this morning, but the fluctuation is too big for my taste and the number seems too high. I calculated with 2k X sigs as in 1200 US, 400 Europe, 600 rest of the world @ $40k, plus the rest being production @ $5k a piece. I took the rest as Model S deposits @ $2.5k a piece, but the backlog is around 30k like that which seems a bit too high. Maybe some Tesla Energy money is part of the deposit figures, maybe my X calculation is off, I don't know, need to go to work now, feel free to do better numbers...

Quarter	Q1 2014	Q2 2014	Q3 2014	Q4 2014	Q1 2015	Q2 2015	Q3 2015
S Deliveries	6 457	7 579	7 785	9 834	10 045	11 532	11 580
Customer Deposits	$198 006 000	$228 017 000	$227 056 000	$257 587 000	$249 476 000	$272 848 000
X Reservations (Paul's estimates)	11 000	14 400	17 600	19 500	21 600	24 000	27 500
X Deposits (assuming 2k global sigs)	$125 000 000	$142 000 000	$158 000 000	$167 500 000	$180 000 000	$190 000 000	$207 500 000
S Deposits (estimate)	$73 006 000	$86 017 000	$69 056 000	$90 087 000	$69 476 000	$82 848 000
S Backlog (estimate assuming $2k deposits)	29 202	34 407	27 622	36 035	27 790	33 139

 

[maoing]

Some people confused about the model S peak demand and current demand limit. Peak demand not saturated yet because there are still many untapped markets. But when we talked about the current demand limit in existing markets, let's do simplest calculation based on most conservative production rate. Tesla claimed reached 1K/week production rate last November. Let's assume no production increase for entire 2015 and no model X production either. Then what should be the model S delivery # Tesla should reach in 2015. It's as simple as 1K/week * 50 weeks = 50K.
In the past 3 quarters, it accounts for approximately 39-2 = 37 production weeks. So smart money already sense the reason for the supposed 37K delivery vs. 33k actual delivery.
For the investors who want to get answer from Elon Musk himself, then you can wait until Q3 ER. If Tesla can maintain >= 50K guidance regardless model X production hiccups, then there is no model S demand issue. If not, it really can't believe any other explanations other than reaching the demand limit. Don't shoot for me and it's my last post wrt. demand constrained view for a while.

Edits: the worst case from Q3 ER will be combined model X production hiccups and less than 50K model S delivery guidance which I think it's >70% likelihood. This will force analysts to think negatives for both model X production and model S demand.

 

[Perfectlogic]

Tesla stopped mentioning backlog, because it's such a sensitive number; we're talking about it here as if if we knew it we could settle the debate about demand- or production constrained for Model S.

The problem for me is that Tesla have more control over this than some of you more bearish posters believe. They can do a lot of things to modulate an throttle demand. For example add lower priced setups to their lineup, advertise or do a PR offensive, etc. Another is is that perhaps it's not the size of the backlog that matters but keeping wait time optimal. Too long of a wait will cool demand somewhat, there really isn't much point in creating wait times that are too long. Look how little they talked about MX and the fact they waited until the last minute to show it; no need to create more demand... Yet.

Tesla has already pulled some of the levers they have to increase demand. They travelled around with that mobile shop thingy. They have had the refer a friend promo. They also put a lot of work into their reveal events. Last option is TV adds, which although expensive probably would be worth it for Tesla even though they aren't rolling in dough as they are relatively unknown still. I'm sure we will see some advertising next year if Tesla decides the extra sales is worth the price as the claimed soon to come 1800/week production capacity is far away from the current 1k/week S demand.

 

[mmd]

Ok, so my 2 cents on the whole S demand situation: I don't think it has reached peak yet, but if it had, that would not be a bad thing at all.
...

Quarter	Q1 2014	Q2 2014	Q3 2014	Q4 2014	Q1 2015	Q2 2015	Q3 2015
S Deliveries	6 457	7 579	7 785	9 834	10 045	11 532	11 580
Customer Deposits	$198 006 000	$228 017 000	$227 056 000	$257 587 000	$249 476 000	$272 848 000
X Reservations (Paul's estimates)	11 000	14 400	17 600	19 500	21 600	24 000	27 500
X Deposits (assuming 2k global sigs)	$125 000 000	$142 000 000	$158 000 000	$167 500 000	$180 000 000	$190 000 000	$207 500 000
S Deposits (estimate)	$73 006 000	$86 017 000	$69 056 000	$90 087 000	$69 476 000	$82 848 000
S Backlog (estimate assuming $2k deposits)	29 202	34 407	27 622	36 035	27 790	33 139

There must be something very wrong in this, since in Q4'14 letter, Tesla mentioned 10K Model S orders, and this table shows 36K. But I don't know what is wrong. I think, we are over complicating a simple thing. If the time-to-production didn't change significantly (or decreased) over a year while production rate remained at ~1000/week, then the incoming demand (even after pulling several demand levers) must be close to the production rate. There really is no other explanation. Whether at times there is a demand spike or lull is irrelevant. The average demand is what matters here. Could it be increased? Certainly. Will it be zero-cost to do so? I doubt very much.
(Edit: In fact, if we tabulate the production numbers and delivery numbers for each quarter, we will see a few thousand excess cars produced so far. If Tesla decides to clear those in Q4, then at least the production side is not an issue for meeting 50K guidance in 2015.)

From first page of Q4'14 letter: "As a result of this progress, we entered 2015 with over 10,000 orders for Model S and almost 20,000 reservations for Model X."

From the highlights section from Q4'14 letter:
• Expecting over 70% growth in vehicle deliveries in 2015 (means, over 53K deliveries in 2015, with 31.6k deliveries in 2014)
• Model X to begin shipping in six months

Looking back, it seems to me that most Tesla projections are on the very optimistic side.

 

[jak]

Tesla has already pulled some of the levers they have to increase demand. They travelled around with that mobile shop thingy. They have had the refer a friend promo. They also put a lot of work into their reveal events. Last option is TV adds, which although expensive probably would be worth it for Tesla even though they aren't rolling in dough as they are relatively unknown still. I'm sure we will see some advertising next year if Tesla decides the extra sales is worth the price as the claimed soon to come 1800/week production capacity is far away from the current 1k/week S demand.

I think word-of-mouth, great reviews, etc is all Tesla can rely on at the moment to bring awareness to the brand. Pulling the lever for expensive TV ads would probably not be an efficient use of money at the moment. It would probably be best to use that tactic for the Model 3 as their current vehicles are way out of range for most folks' budgets.

 

[mrdoubleb]

There must be something very wrong in this, since in Q4'14 letter, Tesla mentioned 10K Model S orders, and this table shows 36K. But I don't know what is wrong. I think, we are over complicating a simple thing. If the time-to-production didn't change significantly (or decreased) over a year while production rate remained at ~1000/week, then the incoming demand (even after pulling several demand levers) must be close to the production rate. There really is no other explanation. Whether at times there is a demand spike or lull is irrelevant. The average demand is what matters here. Could it be increased? Certainly. Will it be zero-cost to do so? I doubt very much.
(Edit: In fact, if we tabulate the production numbers and delivery numbers for each quarter, we will see a few thousand excess cars produced so far. If Tesla decides to clear those in Q4, then at least the production side is not an issue for meeting 50K guidance in 2015.)

From first page of Q4'14 letter: "As a result of this progress, we entered 2015 with over 10,000 orders for Model S and almost 20,000 reservations for Model X."

From the highlights section from Q4'14 letter:
• Expecting over 70% growth in vehicle deliveries in 2015 (means, over 53K deliveries in 2015, with 31.6k deliveries in 2014)
• Model X to begin shipping in six months

Looking back, it seems to me that most Tesla projections are on the very optimistic side.

Once again, I agree my numbers are high, hence my disclaimer, but the only thing I can think of is deposits other than S and X. If They also include consumer and industrial deposits for Tesla Energy, that would be a logical explanation.

 

[Perfectlogic]

Ok, so my 2 cents on the whole S demand situation: I don't think it has reached peak yet, but if it had, that would not be a bad thing at all.

Consider this: in 2014 Audi sold just under 40k of it's A8/S8 and BMW sold 46k of the 7 series. Mercedes is the leader, but it is hard to tell by how much (intentional?) as from 2014 they started to wash the whole S Class "platform" (S-/CL-/SL-Class/SLS/Maybach) together. In 2013, the S Class was 71k, in 2014 the S "platform" was 125k - make what you want of it. In any case, there is reason to believe the Model S will become the No.2 large luxury sedan globally this year - and even if BMW or Audi beats it slightly, that's still frikkin' unbelievable. If you predicted something like that 2-3 years ago, you would be waving at us from the looney bin right now. And at the end of the day, even if the Model S takes away more market share from the rest of the club, the market for this class of vehicle is finite, of course.

I also tried to do a quick back of the napkin calculation on S backlog changes this morning, but the fluctuation is too big for my taste and the number seems too high. I calculated with 2k X sigs as in 1200 US, 400 Europe, 600 rest of the world @ $40k, plus the rest being production @ $5k a piece. I took the rest as Model S deposits @ $2.5k a piece, but the backlog is around 30k like that which seems a bit too high. Maybe some Tesla Energy money is part of the deposit figures, maybe my X calculation is off, I don't know, need to go to work now, feel free to do better numbers...

Quarter	Q1 2014	Q2 2014	Q3 2014	Q4 2014	Q1 2015	Q2 2015	Q3 2015
S Deliveries	6 457	7 579	7 785	9 834	10 045	11 532	11 580
Customer Deposits	$198 006 000	$228 017 000	$227 056 000	$257 587 000	$249 476 000	$272 848 000
X Reservations (Paul's estimates)	11 000	14 400	17 600	19 500	21 600	24 000	27 500
X Deposits (assuming 2k global sigs)	$125 000 000	$142 000 000	$158 000 000	$167 500 000	$180 000 000	$190 000 000	$207 500 000
S Deposits (estimate)	$73 006 000	$86 017 000	$69 056 000	$90 087 000	$69 476 000	$82 848 000
S Backlog (estimate assuming $2k deposits)	29 202	34 407	27 622	36 035	27 790	33 139

Your point about the current S demand being great compared to its competitors is certainly reasonable, we just have to keep in mind the $30B mkt cap which is already half that of Ford and more than half that of GM so high expectations are built in already. With the S demand flattening around 50k, the X+S might not exceed 70k total yearly demand, this is way lower than I expected a year ago when Tesla was talking about exiting 2015 with 2k/week and I believe many other TSLA bulls had hoped for more too. If X+S does stabilize way below 100k I think it will be hard for TSLA to touch $40B before there is enough concrete data showing that the Model 3 will be a huge success which might take a while.

@jak

I agree that it isn't wise at the moment, they don't have any demand problems right now anyway with the X backlog, but when most of that is gone sometime next year I think it could be worth it to get the word out about Tesla which is probably the least known manufacturer of its size.

 

[ev-enthusiast]

Hi mao, thanks for your amazing post!

Edit: Wanted to write an answer to some of the statements in your post, but decided not to do so as it does only try to spread fear and misinformation on no new information.
Not worth writing an answer to such a post.
Having a background in mathematics, computer science and automotive industry your musings are just too great to read and your intentions are just too obvious!

Thank you!

BTW sold 50% of my protective puts some days ago for a 40% gain, sold an other 25% on friday for a 70% gain, still have 25% with an automatic order already in, so personally I do profit from your strategy to spread fear and misinformation. You could as well post a best case bull scenario here mentioning Tesla Motors will deliver 80000 vehicles this year for sure. Without facts these things are nothing but fiction. Please go on with your fiction and spread fears around here. Great to read! But please do not wonder people no longer listen to you in the future. Same with you being the first to share breaking negative news here for the benefit of others. Simply not true. Only multiplying fear to reinforce downtreds.

All the best and have a nice day!

Some people confused about the model S peak demand and current demand limit. Peak demand not saturated yet because there are still many untapped markets. But when we talked about the current demand limit in existing markets, let's do simplest calculation based on most conservative production rate. Tesla claimed reached 1K/week production rate last November. Let's assume no production increase for entire 2015 and no model X production either. Then what should be the model S delivery # Tesla should reach in 2015. It's as simple as 1K/week * 50 weeks = 50K.
In the past 3 quarters, it accounts for approximately 39-2 = 37 production weeks. So smart money already sense the reason for the supposed 37K delivery vs. 33k actual delivery.
For the investors who want to get answer from Elon Musk himself, then you can wait until Q3 ER. If Tesla can maintain >= 50K guidance regardless model X production hiccups, then there is no model S demand issue. If not, it really can't believe any other explanations other than reaching the demand limit. Don't shoot for me and it's my last post wrt. demand constrained view for a while.

Edits: the worst case from Q3 ER will be combined model X production hiccups and less than 50K model S delivery guidance which I think it's >70% likelihood. This will force analysts to think negatives for both model X production and model S demand.

 

[schonelucht]

I took the rest as Model S deposits @ $2.5k a piece, but the backlog is around 30k like that which seems a bit too high.

There is absolutely something wrong with that calculation because we know for a fact that model S backlog at Jan 1 st 2015 stood at slightly under 10k which is way off from 36k. Two immediate tweaks I can see that your model need : 1) Tesla requires a 40k deposit for every single car in China to cover import duties and related taxes. So even with a modest backlog of 1000 regular model X/Model S destined for China, the S deposits estimate can be lowered by $40MM. 2) European deposits are 2k EUR which is about $2300 instead of $2000. Deposits on model X's from a few years ago have an even larger currency imbalance. Assuming 30% of the backlog is European with a conservative currency differential of 10% means we need to increase deposit estimates for X with 3% or 5MM. Our model S deposit divider then stands at $2060 instead of $2000.

With the above adjustments the estimate for S backlog then becomes 18k, but I feel there are too much uncertainties in the model to be indicative either way. Just a difference in 100 Chinese cars in the backlog makes for an estimate that is 2000 higher/lower.

 

[mrdoubleb]

There is absolutely something wrong with that calculation because we know for a fact that model S backlog at Jan 1 st 2015 stood at slightly under 10k which is way off from 36k. Two immediate tweaks I can see that your model need : 1) Tesla requires a 40k deposit for every single car in China to cover import duties and related taxes. So even with a modest backlog of 1000 regular model X/Model S destined for China, the S deposits estimate can be lowered by $40MM. 2) European deposits are 2k EUR which is about $2300 instead of $2000. Deposits on model X's from a few years ago have an even larger currency imbalance. Assuming 30% of the backlog is European with a conservative currency differential of 10% means we need to increase deposit estimates for X with 3% or 5MM. Our model S deposit divider then stands at $2060 instead of $2000.

With the above adjustments the estimate for S backlog then becomes 18k, but I feel there are too much uncertainties in the model to be indicative either way. Just a difference in 100 Chinese cars in the backlog makes for an estimate that is 2000 higher/lower.

Thanks for your comments. Just FYI I was calculating with a $2500 deposit per Model S, not 2000.

You are right, China (and other Asian countries?) may significantly impact this number if the deposits are indeed 40k even for production vehicles. I would think the same is true for Model X, so these alone may explain why my numbers were so high.

In any case, even if we cannot calculate the exact size of the S backlog, we can still use the deposit numbers to track demand changes. This has been the most important number for me as I was investing in Tesla - as long as tesla is increasing production and the deposit number increases, I assumed demand is growing even faster than the accelerating production. (Though, again, China deposits would impact this line of thinking). If deposits are still growing while production levels, that still means demand is increasing. If deposits start to go down as production grows, that just means production is catching up and Tesla tries to decrease the wait time.

The only scenario where I would start to worry is if deposits go sharply down while production stagnates or, God forbid, decreases. Having said that, once X Production ramps up, we should see a decrease in deposits as some of the pent up demand is fulfilled.

I know this is not a fool proof method, but I find it slightly more accurate then trying to read Tea leaves from Tesla marketing activity. I mean, even if they would start an ad campaign, all the other car companies spend hundreds of millions on ads, yet no one screams "oh my god there is no demand for Mercedes".

 

[jhm]

V7 software with Autopilot and Autoparking will be released worldwide next week from 10/15 - 10/19.

Probably unlikely to have much impact in the short term price movement, but figured I'd post anyway in case anyone missed it. Info per Elon's twitter. (@elonmusk) | Twitter

It also sounds like the X has the same autopilot hardware as the S, though the response is somewhat unclear.

View attachment 97382

Tesla, take the wheel?

 

[Sound's Good]

[Snipped]

They claim concern about the environment, climate change, etc., until it comes time to vote with your wallet. Then there's "nothing I can do. I'm only one of millions." I'm not convinced.

You're right, though. As more Teslas are bought by former Tesla owners, there are more "used" Teslas out there. And there will be the model 3. And fewer excuses not to do the right thing.

I'm one who considers this purchase the best and most effective vote in my pocket. Unfortunately, vanity plate that reads 'AVOTE' not here yet.

 

[doggusfluffy]

Chanos Sees Tesla as an Overpriced Carmaker Compared With BMW - Bloomberg Business

“It’s an overpriced car company,” Chanos said Monday in a television interview on “Bloomberg <GO>” with David Westin and Stephanie Ruhle. Tesla’s challenge will be growing from about 50,000 sales this year to 500,000 or a couple of million in a few years. “Becoming a car manufacturer is harder than being a tech darling,” he said.