As I suspected I think the news was taken as "mixed" rather than bad. I read all of the "musk is losing credibility" posts and I keep thinking that he basically already lost credibility last quarter. Bad delivery news fatigue has set in and just isn't as impactful anymore. I sorely wish they would stop promising more than they can deliver, but... in a weird way as long as your metrics are consistent investors can make sense of performance. Maybe from now on the narrative will be Tesla guides to 17k deliveries and 20k production and we all speculate how much the miss will be? A bull says I think they will only miss this much, and a Bear says I think they will miss this larger number
Then in a quarter or two they actually deliver a beat and the market freaks out to the upside.
Silver linings:
1) It feels now like the choke point is delivery to customers, not the factory. that is the very problem we have been pining for.
2) Maybe they are distracted by the model 3 dev. Valuation is based on the model 3 not this quarters Model S deliveries.
Come on, guys, I can't believe I keep reading about choke point being delivery, while it is clearly productions shortcomings, specifically their inability to ramp-up in the first two month of Q2, that caused the miss in deliveries. As I posted few times, in Q1 and Q2 Tesla use extreme geographical batching to maximize delivery of cars produced within the quarter by the end of the same quarter. In order to make this work they produce cars slated for Asian deliveries for the first couple weeks of a quarter, then for about 4 weeks switch to manufacturing the European cars, and finally finish the quarter (remaining 6 weeks) manufacturing cars for NA.
Since they produced only about 1000 cars per week in the first 8 weeks, the quntity of cars shipped to Asia and Europe was much less than they planned. So the reason for underperformance is not inability to deliver all cars that were shipped, but inability to ship enough cars to begin with. So the issue is delayed production ramp (as is clearly stated in the Press Release), not inability to deliver cars that were shipped in time to be delivered.
This all squares with Elon having sleeping bag on the factory floor - I can understand that, when production was crawling at about only 1000 cars/week in April and May! The departure of manufacturing executives, I think, is linked to the same problem. Thanks God, we have a CEO who can roll his sleeves and demonstrate that what he was probably told "was not possible" is possible indeed - i.e. scaling general assembly line to produce about 2,000 cars/week, even though the MX ramp was obviously not working as planned, slowing down the general assembly line, and having negative impact on MS throughput.
I am very frustrated with the miss, but perhaps it is the time to pause staring in the rear view mirror. The net result is that new manufacturing team is in place, Elon proved that they can
sustain 2000 cars/week, and, by the way, with more that 5K cars on a way to customers and the Asset Backed Line of credit to be used to count cash from sales of these cars in Q2, the financials will not look as bad as many seem to believe.
The strength of TSLA today might just be reflection of the fact that large institutional shareholders increase their positions as I am typing this...
EDIT: ABL will help with cash flow, not revenue
