Short-Term TSLA Price Movements - 2016

[Ulmo]

I just thought of a theory: the customer service Tesla and Solar City gives their respective customers is equivalent, but because of the relative cost of the predecessor of each provider, cars at each unit price for ICE cars were cheaply made, but electricity made at utility scale using fossil fuels were done very expensively, and delivered relatively stable electricity. Now, with Tesla cars, those are better than ICE cars, but solar power is worse in terms of reliability than PG&E or other utilities, in the experience of the long-time users. This might be a perception issue, and Elon Musk is equally bad and good at customer service for both companies.

 

[yesla]

TSLA just brought onboard legendary CPU architect,Jim Keller, then started talking about building factories as a product. This is what allows them to be the best manufacturers in the world. Automation is cheaper/better QC than human labour - this is the ONLY competitive way to bring manufacturing back from the East.

That is the goal for SCTY factories. They said they could produce PV panels at the same price as China imports - I think this is a conservative estimate and may end up being even cheaper as the manufacturing automation improves via firmware updates. They cannot do that unless SCTY is part of TSLA. - this is the type of IP TSLA is not sharing with everyone.

 

[TSLA_Hopeful]

If TSLA keeps dropping like a rock, there's a chance this deal CAN'T go through as the offer for SCTY would be lower than the price before news of the offer from TSLA. They still might take it because SCTY is worth even less without the bailout, but all of this might be for complete naught.

 

[RobStark]

Just a few things I keep seeing that I feel makes no sense:


Home Powerwall and home solar synergy.

This is not very important at all for Tesla. According to Elon on calls last year, Powerpack was expected to be 90%+ of TE's business, with Powerwall at the much lower end.

This was the case pre-Merger.

Tesla can have stores and sell cars anywhere!

They can do this with Powerwalls and Tesla merchandise now, without Solar City.

They can lose money that way now. With Solar City those non-automotive stores can make money. In order to sell you need foot traffic and people to enter the store. The Tesla Brand does that for solar panels too.

Solar panels v. electric cars

Solar panel companies are a dime a dozen, and many countries like China have a huge inherent advantage here. Tesla is unique and an absolute market leader, far ahead of other companies. So is SpaceX. Solar City, not so much. There's nothing unique or innovative with Solar City. Unless Musk has some radical plans to transform Solar City (somehow managing three companies instead of two), this won't be changing.

China paying trans Pacific shipping plus a 25% countervailing duty is not an inherent advantage. See several Chinese panel makers going bankrupt. The pickup truck 25% countervailing duty has been around since 1963, and I don't see the solar panel duty being eliminated any time soon.

Solar City Silveo high efficiency panel that uses copper instead of rivals silver is unique and innovative. SC's GF that is paid for by the State of New York is innovative.

 

[TMSE]

TSLA just brought onboard legendary CPU architect,Jim Keller, then started talking about building factories as a product. This is what allows them to be the best manufacturers in the world. Automation is cheaper/better QC than human labour - this is the ONLY competitive way to bring manufacturing back from the East.

That is the goal for SCTY factories. They said they could produce PV panels at the same price as China imports - I think this is a conservative estimate and may end up being even cheaper as the manufacturing automation improves via firmware updates. They cannot do that unless SCTY is part of TSLA. - this is the type of IP TSLA is not sharing with everyone.

IMHO, you are mixing it all up. Jim Keller is a CPU architect with semiconductor micro-circuit design expertise. He works with manufacturing experts, but he isn't one. He isn't a do it all superhero.

There are manufacturing process experts and equipment engineering experts who make factory automation possible. Even there, the expertise and skill set required for an auto manufacturing plant vs. battery cell making plant vs. solar cell (semiconductor) manufacturing plants are vastly different.

 

[FredTMC]

I hesitate to even wade into the quagmire of Tesla-City....and I have been prone to hopium in the past, reading benevolent outcomes from dubious actions, but this is a forum, so here it goes.

I haven't understood the $215 capital raise or the SCTY acquisition. It would seem that Tesla and TSLA would both be stronger without either. In a fanciful world of frictionless planes, had Tesla waited to raise capital, move up deadlines and acquire companies until they were cash flow positive, they could have done so in a way more understandable to us all....and yet they chose not to.

While not an Ayn Rand officianado (any more) there is a good quote from Atlas Shrugged, "Whenever you think you are facing a contradiction, check your premises. You will find that one of them is wrong."

The disclosure to purchase SCTY seems ill-timed. Tesla should be concentrating on marshaling Capex to build Model III and not purchasing a business that is a cash flow drain at the same time they are ramping up to the MOMENT OF THEIR STATED existence....a compelling and affordable electric car.

And yet....and yet...Tesla will not purchase SCTY today, or tomorrow, or in the next 3-6. months. So what if, on advice of counsel, Elon and Tesla/SCTY decided to meet the SEC requirements for a disclosed merger, a merger that they believe will occur in 3-6 months, at a TSLA stock price much better than the stock price yesterday and the stock price today. In this case, the cart has to come before the horse. Because of the intertwined nature of the companies, the notice of merger has to come prior to the takeover.

If the deal happens in November/December at a TSLA stock price well above $200, then the deal will truly be a "no brainer". Both in discourse and in actions, Elon and Tesla are not acting as if they are a nascent business on the edge of success and failure - they are acting boldly, as if success is inevitable and underwritten by deeper corporate pockets. Layering on $2.3 Billion of debt for SCTY seems not only Ill timed, but reckless.

It may be wise to check our premises.

Nice summary. Q2 Delivery numbers in early July better be stellar.
Likewise, Q2 overall better be stellar.

I ASSUME Mr Musk took this into account when making this crazy offer announcement

 

[yesla]

Even tho TMC is adept in analyzing the value proposition of EV vs ICE.
We are not sold on the value of PV as an industry. For good reason. It doesnt make money. There are many examples where Solar generates more energy than can be consumed, effectively killing the return on investment (in the capitalistic way) - Countries like Chile and Germany have had to give away energy for free due to over capacity. and isnt it the free energy model that lead to Nikola Tesla's ultimate demise?

Is this a repeat of the curse of Tesla?

I personally don't think so. Nikola never got to realize his dream, I believe much to the detriment of human progress or maybe people were not ready for it yet then. There must be a more EFFECTIVE model than capitalism where energy is monetized for profit. Energy in terms of physics is the ability to do work. What can we do with a conceivably limitless source of energy?

How about... desalinate the ocean for starters? The technology is there, but its not worth it because it requires too much energy! We have abused the environment and the affects are slow but we are starting to see them. how much wealth is needed to maintain a comfortable standard of living when EVERYTHING has been extracted for all its worth?

I know this is a bit science fiction-y, but im just a dreamer. so... please dont hurt me.

 

[yesla]

IMHO, you are mixing it all up. Jim Keller is a CPU architect with semiconductor micro-circuit design expertise. He works with manufacturing experts, but he isn't one. He isn't a do it all superhero.

There are manufacturing process experts and equipment engineering experts who make factory automation possible. Even there, the expertise and skill set required for an auto manufacturing plant vs. battery cell making plant vs. solar cell (semiconductor) manufacturing plants are vastly different.

Take a look at a diagram of a CPU.

I picture a factory, that looks like a CPU layout. where instead of 1's and 0's are calculated and output results, the factory turns raw materials into end products. Elon said this very thing on several occasions. a CPU architecture is the way to get there. Current factories are still in analog, TSLA is gonna turn manufacturing digital. That is how Gigafactory can provide 3x additional capacity and produce at a sprinting pace in the very same footprint. This is just ver.1.0

Jim Keller is an architect. He specializes in design. Design can be implemented on any medium.

 

[Cosmacelf]

This is why I'm leaning towards the "Elon is crazy" side of things...

Tesla is just getting past the Model X debacle. Yah, they'll sell them, but it is stuffed with design problems, and in Elon's own words, it is "the hardest car to manufacture in the world". Elon actually apologized about all the new technology they stuffed into the Model X which delayed and delayed its arrival.

They are now on the cusp of starting a brand new battery factory that is the biggest in the world. I'm guessing Elon doesn't think there will be any start up issues? I'm predicting right now that 6 months or so from now Elon will be on conference call saying something about ramp up rates and how it is so hard to predict when the factory will be spitting out cells as fast as machine gun bullets, but gosh, it'll be great when it finally happens.

The Model 3 unveil and their predicted end of next year production date was their get out of purgatory card from disappointing sales. It only happened weeks ago. And now Elon wants to complicate the life of his senior staff (his CFO will have to clone himself, at the very least) for the next two years trying to take on Solarcity? For a better product integration with the Powerwall, which is 10% of the projected Tesla Energy business, which is a non factor in Teslas revenues right now?

No matter how valuable Solarcity is, it still doesn't make sense to buy it. There are too many potential potholes ahead for Tesla itself to be distracting everyone on the management team. Elon can't sleep in a sleeping bag in Fremont, Reno, and New York at the same time...

 

[MitchJi]

This is why I'm leaning towards the "Elon is crazy" side of things...

They are now on the cusp of starting a brand new battery factory that is the biggest in the world. I'm guessing Elon doesn't think there will be any start up issues? I'm predicting right now that 6 months or so from now Elon will be on conference call saying something about ramp up rates and how it is so hard to predict when the factory will be spitting out cells as fast as machine gun bullets, but gosh, it'll be great when it finally ...

And SpaceX's rockets will start crashing into the barges? Equally silly IMO.

The cell manufacturing technology wss developed by Panasonic and tweaked by Tesla to increase the capacity by 3x. From listening to the scty call I'm pretty sure that Elon has seen the machines in action and it sounded like they will show them at the party. Which means that they should have about about 3gwh available in Q4 !

 

[TMSE]

The cell manufacturing technology wss developed by Panasonic and tweaked by Tesla to increase the capacity by 3x. From listening to the scty call I'm pretty sure that Elon has seen the machines in action and it sounded like they will show them at the party. Which means that they should have about about 3gwh available in Q4 !

3Gwh by Q4? Wow! That's a lot. Where did you get that number?

 

[Fallenone]

Have been away for conferences the past two weeks, plus the boring SP movemnet so been pretty much away from TMC, epecially this thread, as well. But yesterday, man. I still haven't got the chance to really try to understand the financials of SCTY yet and hope I can find some time soon to do so. I really like to understand as much as possible for the company I am most invested in. Just spent over 2 hours catching up on this thread and I would like to thank everyone for their input. My thoughts on this merge deal:

1. It will go through, without a doubt. Sure we can vote no when the time comes. But it is up to the institutions to determine the result. Since we are still months away from the vote, those who are not in favor would probally sell their shares before the vote, leaving the ones still hanging around voting for this motion.

2. It could be worse if this gets denied by the institution investors. That would mean they cast a big doubt on TSLA and Elon himself. They would be more like "weak longs" and the only reason they are still around to vote might be their position is too big and the time to exit takes more than several months before the vote.

3. I do agree TSLA and SCTY may have synergies. But not so much at this stage. I would be more than happy if they do this two years from now (provided Model 3 execution was OK) even if SCTY is $100/share at that time.

4. As I said, I'm not familiar with the risk of SCTY's business and espcially financial model. But, assuming constant instrest rate environment and very low defaults from users, I see a possible silver lining here - whole sales team get laid off. SCTY stop growing as they were. The sales cost for SCTY in the latest Q was almost 30% of their total cost. Reduce this to 0, then you get positive cash flow for the next 20 years or so. Focus only on commercial/grid level and forget about residential solar. I think this is the only way to realize Elon's "significantly reduce operation cost" and "generate positive cash flow in 3-6 months". In this scenario, having SCTY within TSLA could be a good thing.

5. I have next to 0 knowledge about the other GF in NY. Is it possible to convert part of it to a car factory or battery factory? I think I heard it is quite late in progress.

6. I know some of you would disagree, but I personally find Elon's presentation on his moves and communication with investors getting worse and worse since 2016 Q1 ER, shareholder meeting, and the recent CC on this deal. Throwing out big words (trillion dollar company, bullets from a machine gun, increase manufacturing efficiency by an order of magnitude or higher, 3X output compared to original plan, etc.) without concrete, detailed, tangible explanations is not really working for me. Now I think 500k cars in 2018 is the most conservative thing he said. I don't like this. I hope I can be proved wrong, sincerely.

 

[Fallenone]

BTW, a picture taken (not by me) outside a Tesla store in China today

 

[sdtslafan]

In many ways, I can see that I am an irrational bull when it comes to TSLA. I have invested a large percentage of my net worth in this company and accepted the accompanying risk because of what I consider to be tremendous promise. Every time I get into my Model S, its a reminder of Tesla's great accomplishments and even greater potential. Of course there have been shortcomings along the way. Missing guidance in 2014. Lowering guidance in 2015. Poor showing in China. Model X over-engineering and delays in ramp. I've also had concerns about Tesla's inability to service the fleet as it grows, particularly with the complexity of the model X and potential for costly repairs. I've been concerned about resale values on the used Model S's now that the cheaper 60 is coming out. I cringed when Elon advanced the schedule for the model 3 by 2 years. Why was it necessary? Wouldn't it have been better to stick with the original schedule and surprise with a beat rather than set up yet another failure. As evidence of poor judgement and poor execution has grown, my ability to continue to ignore has become even greater. Because having followed Elon and Tesla these past few years, I know he is capable of doing just about anything. Yesterday marked a change for me because its the first time I felt like Tesla was losing focus in a way that might endanger the primary mission. Elon may be the most brilliant person ever but everyone has a flaw. His might be that he doesn't know his own limits. Those who wish for Tesla to fail would love for us to divide our focus and dilute our strength. So I'll be voting no on this merger.

 

[CyberDutchie]

Ugh... Here comes a MASSIVE downgrade by Morgan Stanley

 

[maoing]

In many ways, I can see that I am an irrational bull when it comes to TSLA. I have invested a large percentage of my net worth in this company and accepted the accompanying risk because of what I consider to be tremendous promise. Every time I get into my Model S, its a reminder of Tesla's great accomplishments and even greater potential. Of course there have been shortcomings along the way. Missing guidance in 2014. Lowering guidance in 2015. Poor showing in China. Model X over-engineering and delays in ramp. I've also had concerns about Tesla's inability to service the fleet as it grows, particularly with the complexity of the model X and potential for costly repairs. I've been concerned about resale values on the used Model S's now that the cheaper 60 is coming out. I cringed when Elon advanced the schedule for the model 3 by 2 years. Why was it necessary? Wouldn't it have been better to stick with the original schedule and surprise with a beat rather than set up yet another failure. As evidence of poor judgement and poor execution has grown, my ability to continue to ignore has become even greater. Because having followed Elon and Tesla these past few years, I know he is capable of doing just about anything. Yesterday marked a change for me because its the first time I felt like Tesla was losing focus in a way that might endanger the primary mission. Elon may be the most brilliant person ever but everyone has a flaw. His might be that he doesn't know his own limits. Those who wish for Tesla to fail would love for us to divide our focus and dilute our strength. So I'll be voting no on this merger.

Good summary and it echoes with many TSLA investors. This is a really bad move for TM, besides Elon Musk, Yes, a lot shorts are looking forward to TSLA&SCTY merging which strengthens their short thesis, sigh.

 

[maoing]

Ugh... Here comes a MASSIVE downgrade by Morgan Stanley

link?

 

[MikeC]

Ugh... Here comes a MASSIVE downgrade by Morgan Stanley

Really?

www.americanbankingnews.com/2016/06/22/tesla-motors-inc-tsla-rating-reiterated-by-morgan-stanley/

 

[schonelucht]

So SCTY only finished up 3% on the day. Seems to me the market isn't confident the deal will go thru....

TSLA on the other hand got slammed hard and little relief even though the deal may not go thru...

Of course. Should the deal not go through (I don't believe that) it's not just business as usual. It means Elon Musk got his first very public rejection from the capital markets. Not good when it's possible your company may still tap the markets for additional funding.

 

[GoTslaGo]

Noticed Morningstar changed TSLA to 4 stars from 3, buy rating today.

S&P still sell (2).

Merrill rating is gone.