Short-Term TSLA Price Movements - 2016

[dc_h]

Is Tesla hoarding capex for potential solarcity problems not a valid concern? Capex is so much below guidance that it should cause concern.

I think they are hoarding capex for capex. They just finished "pencils down" for M3, so what capex could they be spending? They also want to update the assembly line to reduce human interaction, outside of feeding and training the robots. It's not all rainbows and unicorns, but they seem to be on track. The short term challenge, to me, seems to be if demand can rise above the current ~4500 Model S per month rate we seem to be tracking. The other short to medium term issue will be Europe, China and ROW deliveries. Numbers were not impressive for July, but S model update and X hitting stride in late June may mean international deliveries don't hit stride until August-September.
After Q3 everything will be considered in the context of setup for Model 3. It will be important to show GM improving through Q3-Q4 as an indicator of manufacturing efficiency continuing to improve, which are critical for Model 3 success. Is TE ramping speed adequate and economy of scale paying off sufficiently for Model 3 profits at 35,000 base price.

 

[racer26]

Seems pretty simple, and if you were listening, Elon told you during the call why the M3 CapEx is slow in 1H16 and will be big in 2H16.

New product development is cheap, right up until you're about to start up the production line, and that is when it gets expensive. Don't worry, its not hard for them to spend $2B getting things going from here.

 

[Papafox]

Unless there's a surprise, shorts are toast.

* Demand- A new store every 4 days, Taipai, Mexico City, Seoul presence, and knowledge of when AP 2.0 hardware plus new options hit the market = necessary demand levers to meet increasing production

* GM growth as we progress further into the year

* 50,000 production expectations in Q3 and Q4

* Model 3 pencils down, gigafactory should be ready to make M3 batteries in time, furious expansion at gigafactory at moment

* Nearly 400,000 M3 pre-orders

And where are the negative catalysts ahead? Wall Street has some jitters over Solar City merger, but otherwise the shorts have little to support remaining in their positions.

Edit: A push downward at opening is not surprising. It's about all the shorts have left

 

[dmckinstry]

Actually, JB would have to give up also before I sell.

They would both have to give up. And I mean losing faith in their dream, not just having to leave the company because of health or some other urgent problems.

 

[SBenson]

Tesla knows, which is why they gave Capex guidance. How does that suddenly change by hundreds of millions per quarter? Spending hundreds of millions doesn't just happen. It originates in long term planning. They are aggressively deferring capex leading up to the M3 launch. A normal investment inquiry would be "why" and "how".

Maybe the gap is simply a function of Tesla timeline vs reality timeline?

 

[techmaven]

Tesla knows, which is why they gave Capex guidance. How does that suddenly change by hundreds of millions per quarter? Spending hundreds of millions doesn't just happen. It originates in long term planning. They are aggressively deferring capex leading up to the M3 launch. A normal investment inquiry would be "why" and "how".

Actually, this is mostly about coincidence of timing. Additional capex for Model 3 at Fremont will ramp in the second half of this year. It is definitely long term planning and they applied for $106 million tax break from CA for a $1.26 billion expansion plan:

Tesla applied for a $106 million tax break on $1.26 billion expansion of Fremont Factory for the Model 3

Certainly, as the Model 3 launch went so well, there were changes to the plan. Further, the intensity of Gigafactory spend was lower in Q2 as many parts and pieces were done and the additional sections had not yet started. They have started now.

 

[MitchJi]

So someone on my ignore list posted nonsense about the lack of Cap-ex spending being a problem and I get the dubious pleasure of reading a slew of posts explaining why it obviously is not.

Oh and while I remembered the SCTY ER to be at the same time as TSLA it seems to be a week later so the next "catalyst" for motion is likely to be next week with SCTY ER and colour on the merger given.

Unless they have a negative ER, which isn't unlikely given that they installed less panels than expected in Q2.

Elons comment about 30%GM for MS and 25% for MX possible exiting the year (not entire quarter) leads me to speculate that he's expecting the cost of packs to decline suddenly (about 3% GM combined) in last few weeks of the year. Tesla removed the language though from the letter states they are not sure when will this happen if this were to be true. Goes well with the stationary storage production end of the year.

Not sure why you think that. I don't see any connection with TE since they are not planning to use GF cells in the MS-MX until after the M3 ramp.

 

[ggr]

Does anyone know the # of Model S and Model X produced (of each) during Q2? They gave a total, 18345 but didn't break it down.

Que? In the shareholder letter:

In Q2, we delivered 14,402 new vehicles consisting of 9,764 Model S and 4,638 Model X, which was slightly higher than what we stated in our July announcement.

Edit: I see you asked about production, not delivery. My apologies for misunderstanding.

 

[BornToFly]

We are green. Can we close over 230 and cause short heads to explode?

 

[Rarity]

Oh and while I remembered the SCTY ER to be at the same time as TSLA it seems to be a week later so the next "catalyst" for motion is likely to be next week with SCTY ER and colour on the merger given.

What's would be the new information, given that SCTY preannounced operating results on August 1?

 

[Quesder]

We are green. Can we close over 230 and cause short heads to explode?

No, we are not. The price swings between green and red. Tesla have to have good Q3 delivery, otherwise it will be doomed. According to InsideEv, I don't see particular good results.

 

[vgrinshpun]

No, we are not. The price swings between green and red. Tesla have to have good Q3 delivery, otherwise it will be doomed. According to InsideEv, I don't see particular good results.

These are results for the first month of the quarter, which historically are low compared to the second and last month of the quarter. Compare July InsideEV estimate to January or April to get a better picture...

 

[Tslynk67]

So, let's imagine that as of now, nobody buys a MS or MX, does it really matter? The way I see it, it's all about the long game anyway...

 

[ev-enthusiast]

Personally I see this ER as an inflection point. Ignition of next stage (Model X sales and Gen III moving from design phase to production phase). Placed my money accordingly.

Shorties running for the hills.

 

[eloder]

So, let's imagine that as of now, nobody buys a MS or MX, does it really matter? The way I see it, it's all about the long game anyway...

No, we are not. The price swings between green and red. Tesla have to have good Q3 delivery, otherwise it will be doomed. According to InsideEv, I don't see particular good results.

Inside EVs only reports US sales. Tesla has always, always, always prioritized non-US sales in the first and second months of a quarter so that the int'l deliveries arrive before quarter end, and US deliveries arrive before quarter end.

But hey, feel free to put money behind such a drastic drop in S and X MOM production

Honestly I am surprised at the stock price action today as well, but at this point I think the stock is just still way too undersold/depressed compared to market performance. The stock ATH happened when the company had considerably less potential, product lines, supplier confidence, cash, and capital that it does now. The stock price now seems to be the market pricing in worst-case scenario buoyed by steady S and X production and costs, which is still makes for an extremely bright future at Tesla.

 

[Quesder]

Inside EVs only reports US sales. Tesla has always, always, always prioritized non-US sales in the first and second months of a quarter so that the int'l deliveries arrive before quarter end, and US deliveries arrive before quarter end.
.

At the end of June everybody here was expecting a beat of delivery numbers, based on what Elon said there were 1400 cars were produced at the last week of Q1 but not delivered. At that time I checked the InsideEVs numbers, found they were so low, and cannot imagine the beat was gonna happen. However, I listened to people here with their cheers. Then the number came out and the bad effects are still here today.

 

[Mario Kadastik]

I think the one and only red flag I have is that registrations tracked in EU trend lower or on par with prior quarters, insideEVs numbers for us too, so... Where are the >2k cars in the pipeline compared to prior quarters. China?

 

[bonaire]

I think the one and only red flag I have is that registrations tracked in EU trend lower or on par with prior quarters, insideEVs numbers for us too, so... Where are the >2k cars in the pipeline compared to prior quarters. China?

Question is - did China suddenly get Tesla hungry? Or, was the 5150 all cars including inventory/marketing/demo/MFG/etc but stated to be "customer cars"? One thing is "if we build it they will buy it" so perhaps they consider all cars customer cars - or if a sales manager at a Tesla store orders inventory, they are also a "customer"?

 

[ZsoZso]

Honestly I am surprised at the stock price action today as well, but at this point I think the stock is just still way too undersold/depressed compared to market performance. The stock ATH happened when the company had considerably less potential, product lines, supplier confidence, cash, and capital that it does now. The stock price now seems to be the market pricing in worst-case scenario buoyed by steady S and X production and costs, which is still makes for an extremely bright future at Tesla.

Current price with current potentials vs ATH price with potentials at that time is in conflict that much is sure.
But to play devil's advocate: the disconnect can also be resolved by saying that the current SP is realistic and it was way over-inflated at the ATH point

 

[schonelucht]

These are results for the first month of the quarter, which historically are low compared to the second and last month of the quarter. Compare July InsideEV estimate to January or April to get a better picture...

July is actually very good compared with Jan or April according to InsideEV.