Short-Term TSLA Price Movements - 2015

[Vger]

In Q2 they have guided for flat deliveries in Q3, so I really don`t understand those folks who "knew 2015 will be a miss as soon as Tesla published Q3 delivery numbers". That part actually went according to plan. We may still see a miss in 2015 if S production can't or won't be ramped enough, but it mainly just comes down to this: when they announced the revised target for the year, was X a significant chunk (e.g. 5k) of that, or was that move from 50-55k to 50k an indication of "we`ll make 49-50k Model S and whatever X we manage to get out will be the icing on the cake". I suspect the latter, so if we have a miss it will be by the hundreds, not the thousands.

It seems to me that Q3 could not have been a beat due to the radical rebuild of the factory during the quarter. That was the constraint, and that is what set up the drama for Q4.

If the rebuild is now completely successful on the Model S side, Tesla will be Model S production unconstrained for Q4, for the first time. So what about Model S demand? There seem to be multiple indications, including talk from Elon, that the referral program was big success. Based on some of the reports by influential owners here, it might not be unreasonable to do this back-of-the-envelope math: If (only) the most enthusiastic 10% of owners made an average of about one referral each, Tesla will have driven up demand by at least 5,000 Model S. That would be enough to completely replace the best-case lost shipments of Model X in Q4.

So I agree, I think we would be looking at 49,000 - 51,000 for the year. The low side of that will still get punished because that is how knee-jerk the Street is; the top end of that might get a mild relief rally, but I doubt much more.

The lingering question is how explicit will Elon and Deepak be about that Q4 guidance on the call next week. I have very little idea.

 

[FredTMC]

But he could have bought 3 KIAs for what he paid for that Tesla. Then he'd have too spares. Now he has to wait for Tesla to build a replacement. Of course his spare KIAs would just go into his estate.

Not true about replacement car... If you want a tesla Model S, just call or visit a tesla store and they will tell you what cars they have currently in inventory. You can get it very quickly in a week or so. These are demo, marketing and service loaners. No muss no fuss. I have a couple friends who bought this way.

 

[mrdoubleb]

What is puzzling is that the company gave the 50k yearly guidance too at the same time. So a beat was expected unless they plan on some serious Model S deliveries in Q4. And Q4 is always a bad time for that with holidays, weather etc. But if they manage to do that in Q4 it will silence the bears for some time.

For me it`s the exact opposite: as they have guided for 50k in the same ER, it was always their plan to do a flat Q3 and a big jump in Q4. They may miss that big jump, still does not mean Q3 did not go according to plan.

- - - Updated - - -

It seems to me that Q3 could not have been a beat due to the radical rebuild of the factory during the quarter. That was the constraint, and that is what set up the drama for Q4.

If the rebuild is now completely successful on the Model S side, Tesla will be Model S production unconstrained for Q4, for the first time. So what about Model S demand? There seem to be multiple indications, including talk from Elon, that the referral program was big success. Based on some of the reports by influential owners here, it might not be unreasonable to do this back-of-the-envelope math: If (only) the most enthusiastic 10% of owners in made an average of about one referral each, Tesla will have driven up demand by at least 5,000 Model S. That would be enough to completely replace the best-case lost shipments of Model X in Q4.

So I agree, I think we would be looking at 49,000 - 51,000 for the year. The low side of that will still get punished because that is how knee-jerk the Street is; the top end of that might get a mild relief rally, but I doubt much more.

The lingering question is how explicit will Elon and Deepak be about that Q4 guidance on the call next week. I have very little idea.

Agree. There was none of the "usual sources", factory tour reports, EU monthly numbers researched, discussions with delivery specialists, etc. indicating a big beat in Q3. If 2015 is a miss, it is because they will only get out 700 instead of 1400 X, and not because of Model S.

 

[Curt Renz]

Listen to Paul Santos's opinion. At least I benefit a lot from his call of shorting TSLA right after Model X release. Btw, I didn't short, but I adjusted my position accordingly.

Portuguese TSLA bear Paulo Santos has been spreading FUD about the company at Seeking Alpha ever since early 2013 when the shares were priced in the thirties about the time that I first bought mine. Apparently Santos quickly realized that writing negative articles about TSLA was effective clickbait that brought him a penny per view and mounted up enough to encourage him to keep going. If I had followed his advice, my assets would not be nearly as high. A broken clock is right twice a day, and so occasionally will be Santos. I would not advise clicking into his articles and encouraging him.

 

[FredTMC]

It seems to me that Q3 could not have been a beat due to the radical rebuild of the factory during the quarter. That was the constraint, and that is what set up the drama for Q4.

If the rebuild is now completely successful on the Model S side, Tesla will be Model S production unconstrained for Q4, for the first time. So what about Model S demand? There seem to be multiple indications, including talk from Elon, that the referral program was big success. Based on some of the reports by influential owners here, it might not be unreasonable to do this back-of-the-envelope math: If (only) the most enthusiastic 10% of owners in made an average of about one referral each, Tesla will have driven up demand by at least 5,000 Model S. That would be enough to completely replace the best-case lost shipments of Model X in Q4.

So I agree, I think we would be looking at 49,000 - 51,000 for the year. The low side of that will still get punished because that is how knee-jerk the Street is; the top end of that might get a mild relief rally, but I doubt much more.

The lingering question is how explicit will Elon and Deepak be about that Q4 guidance on the call next week. I have very little idea.

I share your view. As for what they say about Q4 guidance... I simply expect them to "reaffirm" Q4 guidance.

I suppose they could adjust the range or bounce back to a single number like 52,500 for example... But they are still so hamstrung by how well the MX "steep ramp" goes that I won't be surprised by a simple affirmation of 50-55k

 

[AlMc]

Based on all the discussion over the last couple pages today.....What are you doing with your investing dollars for Q3ER/CC and what do you expect to see as high/low TSLA price for the remainder of 2015?

Mine: Core shares/a couple J17 220s/ a number of November/Dec/Jan puts (200-220s)...... I expect to see TSLA in the 180s before year end and not seeing positive catalyst in the next two months
a high of $220.
2016 will prove to be a good year in the second half so I will accumulate J18/J17 Leaps in the 180-199 range by DCA and expect that they will pretty good in the late summer next year.

 

[Vger]

I share your view. As for what they say about Q4 guidance... I simply expect them to "reaffirm" Q4 guidance.

I suppose they could adjust the range or bounce back to a single number like 52,500 for example... But they are still so hamstrung by how well the MX "steep ramp" goes that I won't be surprised by a simple affirmation of 50-55k

If you are right, that will probably send the stock up a bit. I think the majority of sentiment prices in a Q4 miss at this point. I think that is what magnified the CR-induced drop.

 

[FredTMC]

For me it`s the exact opposite: as they have guided for 50k in the same ER, it was always their plan to do a flat Q3 and a big jump in Q4. They may miss that big jump, still does mean Q3 did not go according to plan.

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Agree. There was none of the "usual sources", factory tour reports, EU monthly numbers researched, discussions with delivery specialists, etc. indicating a big beat in Q3. If 2015 is a miss, it is because they will only get out 700 instead of 1400 X, and not because of Model S.

I was lucky enough to have a factory tour after the MX event as someone's guest.

Tour was great. I've been before. Very insightful.

It's my view that tesla will hit Q4 guidance.

 

[hershey101]

I'm showing street expectations EPS loss of $0.71.. Anyone think that these lowered expectations might result in a slight relief rally on the 4rd?

 

[Bobbyducati]

Based on all the discussion over the last couple pages today.....What are you doing with your investing dollars for Q3ER/CC and what do you expect to see as high/low TSLA price for the remainder of 2015?

Mine: Core shares/a couple J17 220s/ a number of November/Dec/Jan puts (200-220s)...... I expect to see TSLA in the 180s before year end and not seeing positive catalyst in the next two months
a high of $220.
2016 will prove to be a good year in the second half so I will accumulate J18/J17 Leaps in the 180-199 range by DCA and expect that they will pretty good in the late summer next year.

i think im gonna stay out as much as possible for 11/3. im expecting the stock to take a hit. will straddle accordingly as we get closer.

 

[MitchJi]

Agree. There was none of the "usual sources", factory tour reports, EU monthly numbers researched, discussions with delivery specialists, etc. indicating a big beat in Q3. If 2015 is a miss, it is because they will only get out 700 instead of 1400 X, and not because of Model S.

We are still testing the ability of many suppliers to deliver high quality production parts in quantities sufficient to meet our planned production ramp [for Model X]. Since production ramps rapidly late in Q4, a one-week push out of this ramp due to an issue at even a single supplier could reduce Model X production by approximately 800 units for the quarter. Furthermore, since Model S and Model X are produced on the same general assembly line...

3,200 per month.

 

[SBenson]

Based on all the discussion over the last couple pages today.....What are you doing with your investing dollars for Q3ER/CC and what do you expect to see as high/low TSLA price for the remainder of 2015?

Mine: Core shares/a couple J17 220s/ a number of November/Dec/Jan puts (200-220s)...... I expect to see TSLA in the 180s before year end and not seeing positive catalyst in the next two months
a high of $220.
2016 will prove to be a good year in the second half so I will accumulate J18/J17 Leaps in the 180-199 range by DCA and expect that they will pretty good in the late summer next year.

Have a bunch of core shares. Some J17 200s which turned red today. I'm no trader so will continue to keep them. Hope is by J17 all of this is sorted out and those J17s are well into the green territory.

I too expect stock to hit 180 over the remaining course of this year or early next when they give 2016 guidance (I'm now thinking it will be 75K). I intend to buy a bunch of J18's in times of such weakness.

 

[mrdoubleb]

3,200 per month.

Has "production ramps rapidly late in Q4" been delayed? If so, for how many weeks in Q4? To me this means they planned to hit 800 X per week by late Q4 (mid-December?).

The last "solid" information we got from delivery specialists was that they planned to deliver all 1400 US Sigs in Q4 (1436 invited to configure as per Paul`s site). While we have now heard of 2-3 people who have been told late December-early January, they should still be able to deliver a good chunk of that as at least some of the over 700 people with VINs (703 per Paul) were promised a November delivery.

 

[FredTMC]

It's incredibly normal, and I've been watching Tesla share price action since early 2013. Here at TMC we call the first hour of trading "The Amateur Hour". Although the effect often extends into midday. If I were a daytrader, I could have profited handsomely. The hedge fund algobots are daytraders, and they seem to have been setting up this pattern and profiting nicely from it.

Any good news like a potential Tesla factory in China heard this morning can cause an initial pop upward. Then the hedge funds that are generally short sellers can program their algobots to flush out weak longs and daytraders whose stop loss limits are hit, often in the manner of cascading domininoes. At a point during the day when that appears to have run its course, the hedge fund algobots can start covering some of their short positions by buying back shares.

Looks like more of the same M.O. today, Curt... Final hour will be interesting today

 

[MitchJi]

Has "production ramps rapidly late in Q4" been delayed? If so, for how many weeks in Q4? To me this means they planned to hit 800 X per week by late Q4 (mid-December?).

The last "solid" information we got from delivery specialists was that they planned to deliver all 1400 US Sigs in Q4 (1436 invited to configure as per Paul`s site). While we have now heard of 2-3 people who have been told late December-early January, they should still be able to deliver a good chunk of that as at least some of the over 700 people with VINs (703 per Paul) were promised a November delivery.

I thought the information we got was that they "hoped to invite the sigs to configure " which is almost meaningless.

 

[vgrinshpun]

According to Nikkei (via StreetInsider) LG Chem is in negotiations with Tesla

LG Chem is in talks to supply batteries to Tesla (NASDAQ: TSLA), according to Nikkei

Alerted via Stock: TSLA

 

[MitchJi]

Has "production ramps rapidly late in Q4" been delayed? If so, for how many weeks in Q4? To me this means they planned to hit 800 X per week by late Q4 (mid-December?).

The last "solid" information we got from delivery specialists was that they planned to deliver all 1400 US Sigs in Q4 (1436 invited to configure as per Paul`s site). While we have now heard of 2-3 people who have been told late December-early January, they should still be able to deliver a good chunk of that as at least some of the over 700 people with VINs (703 per Paul) were promised a November delivery.

I thought the information we got was that they "hoped to invite the sigs to configure " which is almost meaningless. I think they can produce ~800 per week, if they can get windshields and second row seats.

 

[mrdoubleb]

I thought the information we got was that they "hoped to invite the sigs to configure " which is almost meaningless.

Nope. They have already invited all US sigs to configure. About 700 of them already have VINs assigned. What they "hoped" to do was invite all current production reservation holders too. You are right in that, that does not mean much except that they are confident in continued ramp in Q1. It my be very relevant for Tesla sourcing though, so they can let suppliers know well in advance how much of what they will need based on config choices.

 

[vgrinshpun]

According to Nikkei (via StreetInsider) LG Chem is in negotiations with Tesla

Another update from StreetInsider (with my highlights).

UPDATE: LG Chem Said in Talks to Supply Batteries to Tesla (TSLA)
(Updated - October 27, 2015 3:04 PM EDT)

LG Chem is in talks to supply batteries to Tesla (Nasdaq: TSLA), according to Nikkei
UPDATE - According to the report, Tesla's current partner, Panasonic, supplies about 46 percent of the lithium-ion battery market.
While it wasn't made known how the deal between LG Chem and Tesla would affect Tesla's relationship with Panasonic, news comes as Tesla is looking to ramp production on its Model X SUV, while also improving production rates for the Model S.
Panasonic and Tesla are also partners on the Gigafactory battery factory in Reno, Nevada.
LG Chem already supplies batteries for 20 other companies and recently finished construction of a facility in Nanjing, China.
Shares of Tesla are down 2.7 percent.

 

[Scott Ales]

Not true about replacement car... If you want a tesla Model S, just call or visit a Tesla store and they will tell you what cars they have currently in inventory. You can get it very quickly in a week or so. These are demo, marketing and service loaners. No muss no fuss. I have a couple friends who bought this way.

Two issues with this, both of which I personally lived out over the last few weeks.

1. I'm not spending a $100k a not getting exactly what I want. Colors, textures, options, not beat to crap. Just to save $1-6k.
2. I'm also not buying a 2015 when I could wait 2 months and get a 2016.

I personally believe the response offered last year for not making guidance in the 4th Q was possibly more centered around the model year issue. Would you want a one year old car 30 days later?