Short-Term TSLA Price Movements - 2016

[MitchJi]

The delayed payment is interesting. But how does it affect profitability? It's not recorded until they send out the check? It does have direct impact on cash flow I think. But compared to capex, it's just a drop in the bucket. Btw, I really hope they do not delay capex to engineer FCF+ this quarter. That would jeopardize M3 too much.

Maybe, maybe not. I think we can leave that decision to Elon.

 

[AlMc]

Hi Al,

You were correct to sell before Q2 earnings. That's twice that you sold, LEAPS and I didn't and you were correct. Please continue to post when you decide to sell (hopefully I'll get it right eventually).

Mitch,
I have always considered my investing style as 'dumb luck' mixed with a little bit of research on my own and from our 'group think' here.
But I will post my moves in the future or PM you.
Currently, I have no idea in the short term what to do. WS will be impressed with a blow out quarter but if it is just a big push so that TM can get better financing terms I suspect they will see what I call the 'Eddy Haskell' move (Leave it to Beaver reference) and discount it somewhat.

 

[kenliles]

Haha

No disrespect towards JB Straubel intended. JB's closest counterpart at Apple would probably be Johny Srouji, the SVP in charge of Apple's custom silicon (like the A9 chip that powers the current generation of iOS devices), batteries, and other specialized hardware.

Bob Mansfield

 

[Matias]

I think people use the word 'leak' too readily nowadays.

It's not like it was intended to be a secret or something they wanted to hide. It's just an email.

If you send an email to thousands (?) of people, it is clear that it will leak.

 

[kenliles]

for the subset group that believes SpaceX 'crash-n-burn' events are detrimental to TSLA,
here is the SpaceX update site for the recent event:
Anomaly Updates

[I assume this is a different subset than the group believing SolarCity crash-n-burn would be net-beneficial to TSLA... hmmm..
Could be wrong about that though, there might be overlap in those groups. Confusion reins when it pours]

 

[Krugerrand]

@Krugerrand , I drive out to a SpaceX launch devoting most of my day knowing there is a good chance of a scrub & heavy fog to hang out with other Tesla owners & meet some SpaceX employees but according to your analysis's I am "mad, negative, cynical and angry". thanks for trying to put labels on me but your analysis needs some help if thats your conclusion.

Okay, got it. You can't remain impartial or pragmatic (or on topic). Investing is emotional for you all the time and Elon makes decisions based on desperation. Carry on.

 

[MitchJi]

If you send an email to thousands (?) of people, it is clear that it will leak.

Agreed.

But that also means (sent to thousands of people) it's probably true.

 

[stealthology]

There is definitely a pick up on the VIN assignments the last two weeks but generally with a delivery estimate of October, so that won't help this quarter...

Couldn't this mean demand is higher than production (ie. good thing)? Doesn't Tesla usually schedule mostly US deliveries in the back half of a quarter?

...There's a reason TSLA is falling... While everyone here (for the most part) knows for a FACT TSLA is worth $260/share+, and can see the value in what Elon is trying to accomplish, the street is extremely skeptical..

Not disagreeing with you, but just curious how you arrive at $260ish. Is it partially because we've been above there multiple times over the past few years?

..still 325K shares available to short at Interactive Brokers..

Pretty sure IB's been front running my frequent trades for years. I wonder how this isn't illegal. I'm glad they're not doing so great, and their user interface sucks. I've just been using them for so long.

 

[schonelucht]

A personal experience: While it is a small amount of $ individually, I turned in my first S under the GRV program (not as a trade but for cash).

You must be one of the first ones to make use of the resale guarantee. Did you get exactly the minimum guaranteed amount, or was the trade-in valued at above that price?

 

[MitchJi]

for the subset group that believes SpaceX 'crash-n-burn' events are detrimental to TSLA,
here is the SpaceX update site for the recent event:
Anomaly Updates

Thanks!

Thankfully it wasn't a crewed mission!

Again, our number one priority is to safely and reliably return to flight for our customers, as well as to take all the necessary steps to ensure the highest possible levels of safety for future crewed missions with the Falcon 9. We will carefully and thoroughly investigate and address this issue.

 

[Stretch2727]

On the OpEx side, they guided 20% higher in H2 compared to H1. H1 had on average 434M per quarter. So, we're looking at 521M OpEx here. Then there's another ~40-50M of interest loss. So Tesla needs ~565M in gross profit to break even.

Last two quarters had 336.5M in gross profit on average. Adding your optimistic case of 150M, that's 486.5M, still missing 80M for break even. Under your assumption, they need 9000 more cars or 24k to break even non-GAAP in Q3.

And I don't think they can achieve 22% GM in Q3. Low margin 60 is in Q3 while high margin 100 is not. They have been doing just a little over 20% on GM in the past 3 quarters and I don't see it can increase to 22% with a shift towards lower margin cars, even considering they may have improvements on COGS. ASP will be lower too. And then you throw in all the promotions we're seeing, I would say using 20% as overall GM and ASP of 90k may be more realistic. So, in the 6000 additional car situation, it will bring in 108M of gross profit. At 21k cars gross profit is 378M, resulting in a 187M loss. To break even, they need 31k delivered, which is impossible. Even if I am more generous and optimistic to go with 22% GM and 95k ASP, that's 27k deliveries required.

So all in all, I don't think there's a reason to get any hope of non-GAAP profitability in Q3. It's not even an illusion.

They did guide to 2-3% improved margin in the 3rd and 4th quarters even with the introduction of the 60Kwh versions. Steady production and no stoppages can do a lot to help gross margin. If number of units increases from (Q2)18K to (Q3) 24K this is 33% increase, total labor hours will not increase 33%.

Guessing the payroll in the factory is likely around $150M qtr. which is $8200/car @ 18.3K cars (Q2). If this can hold at $160M this quarter @ 24K cars the factory labor cost drops to $6600/car. This is more than 1.5% margin improvement. This is why scaling to volume lowers costs.

Also, Suppliers will also begin to drop prices as the volume increases. Also, Tesla has been likely using their leverage with the Model 3 to get price concessions on the X And S. If you want the 3 contract give me a reduction now on the X and S parts.

 

[racer26]

Thanks!

Thankfully it wasn't a crewed mission!

There's a video floating around the web that superimposes the Dragon abort test on the Amos6 fireball, and it looks like (assuming that it could have detected the failure of the vehicle below it) Crew Dragon could have carried it's occupants to safety in a similar event.

 

[neroden]

In my area, the cost savings, for at least the quarter, appears to be a delay in opening SCs in Pittsburgh, Baltimore and Cherry Hill, NJ. The delays *could* be zoning but from what Hear ( *rumor *) I suspect it is to help cash flow. This is a tough decision as by delaying it might hurt deliveries in this area making Devon, PA push out a large number of vehicles.

Blech. Service centers are the weak point restricting sales. That's getting into "penny wise pound foolish" territory.

If they take the extra time to "get it right" by making sure the service centers are totally ready to go when they open (as opposed to the "soft openings" we've had for a number of service centers) then I guess it would be worth it.

 

[neroden]

Pretty sure IB's been front running my frequent trades for years. I wonder how this isn't illegal. I'm glad they're not doing so great, and their user interface sucks. I've just been using them for so long.

I doubt that it's actually IB doing the front-running.

The HFT guys are the ones who front-run your trades. It is illegal, but the HFT guys have figured out how to avoid prosecution. It's well-known that the only purpose of HFT is front-running; they ought to be shut down.

 

[neroden]

Niagara long lines bypass Buffalo and go far east downstate. 2.7 GW plus 2.3 GW on Canada side leave the area. NF NY is in dire conditions overall and most factory jobs and lifestyle is gone.

The hydro is still cheap, and there's plenty of power, because the lines were installed to go to those *now-closed factories*.

 

[neroden]

Hey can anyone tell me on what website I could register and buy some tesla shares ?
sorry, I am a newbie

You need to find what is known as a "stockbroker" (Google tells me that the Romanian for that is "agent de bursa"). Watch out, there are lots of them and many will try to cheat you with very high fees. (And occasionally some will simply cheat you outright!) So go to several, get all the paperwork and read it carefully and compare them. Then read reviews of them. Eventually you will find one you are comfortable with and you can give them money and have them buy stock in Tesla with it. They will send you statements like bank statements.

Sometimes banks will have their own stockbrokers, sometimes the stockbrokers will be independent, I don't know how it is in your country.

I do not advise buying any stock of any sort until you have done a lot of research and know what you're doing.

 

[neroden]

Oh my god, this whole merger ordeal is like taking off a band-aid really really slowly.....the slower, the more it hurts. I wish this could have been merged right away (ripping off quickly) after the papers were filed.

Having watched a lot of mergers, this is actually about as fast as it could possibly go. Merger proposal on June 21st. Go-shop period expires in 11 days. They'e already filed the tentative proxy with the SEC. They already have FTC approval. If there are no SEC delays, the merger could be complete before November 1st -- less than six months. This is greased lightning for a corporate merger; they usually take over a year.

 

[neroden]

Do people realistically think that's going to happen though?

Obviously there are people who think this. Are they realistic?

The big institutional holders are in favour on both sides of the fence. Elon is in favour. Much of the retail investors have blind faith in Elon. Those that don't want it to happen would have simply sold out their shares. There's no risk of antitrust laws nixing it. Both boards have had independent advisory groups recommend FOR the merger, so its pretty much a done deal at this point.

I agree if the merger falls apart that SCTY very well could go to zero, but I just can't see a scenario in which the merger falls apart at this point.

Apparently mispricing in corporate mergers is endemic and there are specialists who make money *consistently* doing nothing but merger arbitrage. So this is one case where the market is often wrong. Doesn't mean it's wrong *this* time, of course, it's just a point of information...

 

[neroden]

This is my question to the finance-type folks:
I understand Elon's macro-vision, and the benefits of SCTY in that vision.
SCTY is clearly in a death spiral, and the future doesn't look good unless TSLA merger goes through.
From TSLA and Elon's perspective, why not sit it out for next 6 months, watch SCTY crash, burn, and go bankrupt... then pick up SCTY for pennies on the dollar? Wouldn't that make more financial sense in short term and long term

[irritable]I've given one of the answers to this four times already, several times in this thread. Please look up my answer and come back. Or do your own research. Hint: there is something valuable in SolarCity which probably cannot be bought out of the bankruptcy estate. Do you know what it is? If you have been doing your research, you should know.[/irritable]

 

[neroden]

Either way, they should clean up SC urgently. Now, before the merger, during the merger, after ---- maybe they're just waiting until after the merger so that people aren't caught in a churn of multiple reformats within months.

SolarCity has already fired (they said "laid off", but this is firing) the director of sales and the director of recruiting, as part of the 180 people laid off at HQ. I think they are *not* waiting until after the merger to clean house. They may wait until after the merger to '"refurnish" the house since the positions appear to be left vacant for now...