Short-Term TSLA Price Movements - 2016

[myusername]

You haven't even provided us with a quote from the earnings call you are referring to. What is often the case is that analysis try over and over to extract predictions from Elon, and Elon does his best to emphasis this is his "best guess" and point out over and over again that it is hard to predict the timing of the production ramp and so on. But people like you come on, don't use the actual quote and context and burn down your little strawman.

here's your quote:

Colin Michael Langan - UBS Securities LLC

Great. Thanks for taking my question. Can I just follow up on some of the numbers you threw out on stationary storage – the $1 billion, is that orders or reservations? I just want to get a sense of how firm that was? And did you imply that because it sounds like $400 million to $500 million for next year? And then is it a few billion dollars for 2017 is the storage market, is that what you said?

Elon Reeve Musk - Chairman & Chief Executive Officer

Yeah. These are reservations, so you can – reservation may be in order or maybe not, but that's certainly what people have said that they want. Yeah, so there's over 100,000 reservations that have been placed for Powerwall and Powerpack. And of that, you can sort of speculate as to how many Powerwalls, how many Powerpacks per reservation. It's likely to be more than one, particularly in the Powerpack case. So, yeah, that's what leads us to think $40 million to $50 million, Q4, maybe 10x that number next year. And then 5x to 10x that number in 2017. But as I said earlier, as we get further away in time, the numbers are more speculative. Yeah.


----

"So, yeah, that's what leads us to think $40 million to $50 million, Q4, maybe 10x that number next year. And then 5x to 10x that number in 2017"

this was Q215... $40 to $50 million in Q4 of 2015 and 10x ($400m) "next year" (2016) and "5x to 10x that number in 2017" is $2b to $4b in 2017.

These numbers were referenced repeatedly after the call and were part of the continued support around the $240 level... prior to the Aug 24th drop due to market conditions.

 

[myusername]

true the market may not materialize, but the US is really just a proof of concept. Everyone needs power, and alot of factories are running world wide, from my limited knowledge and experience the IndoPak area would benefit greatly from a cheaper energy solution for a large factory.

I'm saying right now TM is making a premium product which is basically committed--paid for by the time it is built. TM is going to use its premium product to fund M3-- they have said this. I would think they need to make a profit on this premium product in order to use it to fund the M3.

TE, true it has competitors, but the main component is the battery, and they have stated they have the largest battery factory ever. So i presume (big presumption) that TE batteries will cost them less to make based on economies of scale--i'm not in manufacturing.

TE+TM are gng to buy a solar plant. No they are not going to alibaba to source their cells, i presume they are making an integrated roofing material to OEM to builders. At least that's what i would do if i could make a roofing product with solar, go to the home and factory builders and schill my solar roof...

These are all presumptions.

Yes. I agree that they are currently making TE products. My only concern is that the dramatic growth expectations we're all factoring into the potential for the stock are somewhat refuted by previous claims that haven't materialized... that's all.

 

[myusername]

here's your quote:

Colin Michael Langan - UBS Securities LLC

Great. Thanks for taking my question. Can I just follow up on some of the numbers you threw out on stationary storage – the $1 billion, is that orders or reservations? I just want to get a sense of how firm that was? And did you imply that because it sounds like $400 million to $500 million for next year? And then is it a few billion dollars for 2017 is the storage market, is that what you said?

Elon Reeve Musk - Chairman & Chief Executive Officer

Yeah. These are reservations, so you can – reservation may be in order or maybe not, but that's certainly what people have said that they want. Yeah, so there's over 100,000 reservations that have been placed for Powerwall and Powerpack. And of that, you can sort of speculate as to how many Powerwalls, how many Powerpacks per reservation. It's likely to be more than one, particularly in the Powerpack case. So, yeah, that's what leads us to think $40 million to $50 million, Q4, maybe 10x that number next year. And then 5x to 10x that number in 2017. But as I said earlier, as we get further away in time, the numbers are more speculative. Yeah.


----

"So, yeah, that's what leads us to think $40 million to $50 million, Q4, maybe 10x that number next year. And then 5x to 10x that number in 2017"

this was Q215... $40 to $50 million in Q4 of 2015 and 10x ($400m) "next year" (2016) and "5x to 10x that number in 2017" is $2b to $4b in 2017.

These numbers were referenced repeatedly after the call and were part of the continued support around the $240 level... prior to the Aug 24th drop due to market conditions.

here's a link:

http://seekingalpha.com/article/340...2015-results-earnings-call-transcript?page=12

it's at the bottom of the page.

 

[dha]

Google is an advertisement company... 99% of Tesla's revenue comes from auto... the remainder is purely speculation. whereas companies like Netflix and Amazon are currently tech companies."tech" is sort of a strange category... to me it means it has the capability of dramatic net profit margins in the many 10s of percents in ridiculously short periods of time.

What an arbitrary way to classify companies to serve your own point. Why is Google an "advertisement" company but Amazon gets to be "tech." Why is Amazon not a retail company. > 90% of their revenue comes from retail after all. And your sentence about net profit margins makes little sense. Amazon's net profit margins currently stand around 3% and not anywhere near "the many 10s of percents" you said define a tech company.

Shouldn't Amazon be compared to peers like Walmart and Target, then? Many people believe so. Amazon has been an extremely popular short over the years from bears who can't wrap their heads around the premium valuations the market gives to rapidly-growing companies with a plausible path to becoming giants.

And that's the common denominator--growth--not vague and arbitrary notions of what isn't and isn't a "tech" company. Any innovative company that disrups a major industry in the 21st century is going to leverage tech in a major way. Whether it's Amazon with retail over the internet, Netflix with direct streaming of content or Tesla with autopilot, direct internet-based sales, manufacturing automation, over-the-air updates, cutting edge batteries, charging and on and on and on.

And Tesla is growing. 60% YOY revenue growth in the auto industry is INSANE. 400,000 pre-orders for an unseen car--when the company has yet to produce half as many cars in its entire existence--is LUDICROUS. Leveraging battery expertise and resources to secure utility contracts worth $10's of millions is DISRUPTIVE. Show me a comparable company and then talk about Tesla being an "auto company" but Amazon being "tech" and not "retail."

 

[DaveT]

Yes. I agree that they are currently making TE products. My only concern is that the dramatic growth expectations we're all factoring into the potential for the stock are somewhat refuted by previous claims that haven't materialized... that's all.

Valid point.

 

[myusername]

I think you have to define a company by what they are investing in, i.e. where they are headed. While Tesla Motors gets labeled as just another car company, it's plainly not. They aren't building a giant car factory in Nevada, it's a battery factory, and batteries can be used in many ways. Moreover not only is Tesla run at the pace of a software company (continuously improving), they are heavily invested in software by auto industry standards. Oh and pretty soon they're going to be the largest maker/installer of solar panels and energy storage units. So while Tesla has often been clumped into the Auto category, it really hasn't been a straight car company for many years, it's a tech company disguised as an auto co.

"While Tesla Motors gets labeled as just another car company, it's plainly not."

This I completely agree with you on. I see Tesla's and Elon's greatest achievements being solidifying this in the minds of the world. While Tesla's revenue is comprised [nearly] completely of automobile sales which are subject to auto industry profit limitations... the brand that is Tesla is far more reaching... Elon is one of the greatest brand generators that has ever existed in history and will always be remembered this way no matter what happens. My concern is a brand and dreams can only outpace the company's performance for so long.

There are many projections Elon has made that I wish had materialized but haven't... including TE. I would like to see the auto portion of the company explode into the dream that's been proposed... but from an investor's perspective... I'm highly skeptical at this point.

 

[dennis]

I'm starting to wonder if it'll be something like 22k + 6k in transit. The majority of people were predicting 17-19k for Q2, which was wrong, but not entirely wrong, considering how it ended up being 14+5k in transit.

Doubt it. Remember that inventory car push at the end of Q2 like we are now experiencing in Q3? Oh there wasn't one.

 

[Turing]

here's your quote:

Colin Michael Langan - UBS Securities LLC

Great. Thanks for taking my question. Can I just follow up on some of the numbers you threw out on stationary storage – the $1 billion, is that orders or reservations? I just want to get a sense of how firm that was? And did you imply that because it sounds like $400 million to $500 million for next year? And then is it a few billion dollars for 2017 is the storage market, is that what you said?

Elon Reeve Musk - Chairman & Chief Executive Officer

Yeah. These are reservations, so you can – reservation may be in order or maybe not, but that's certainly what people have said that they want. Yeah, so there's over 100,000 reservations that have been placed for Powerwall and Powerpack. And of that, you can sort of speculate as to how many Powerwalls, how many Powerpacks per reservation. It's likely to be more than one, particularly in the Powerpack case. So, yeah, that's what leads us to think $40 million to $50 million, Q4, maybe 10x that number next year. And then 5x to 10x that number in 2017. But as I said earlier, as we get further away in time, the numbers are more speculative. Yeah.


----

"So, yeah, that's what leads us to think $40 million to $50 million, Q4, maybe 10x that number next year. And then 5x to 10x that number in 2017"

this was Q215... $40 to $50 million in Q4 of 2015 and 10x ($400m) "next year" (2016) and "5x to 10x that number in 2017" is $2b to $4b in 2017.

These numbers were referenced repeatedly after the call and were part of the continued support around the $240 level... prior to the Aug 24th drop due to market conditions.

lol, as expected you removed important context from the exchange in order to facilitate your strawman:

Rod A. Lache - Deutsche Bank Securities, Inc.

Okay. And just lastly, you've had a few more weeks here since the announcement of the stationary storage business, do you have any additional thoughts on how that's expected to ramp?

Elon Reeve Musk - Chairman & Chief Executive Officer

Yeah. I do want to preface this with some degree of uncertainty, because this is quite new, and again, we've got that challenge of exponential ramp and then depending upon how you move the – on how the dates fit over an exponential ramp, the actual numbers in a given quarter could be quite different, but the demand has been really crazy, so it's well in excess of – I mean if you just take the reservations that have been made thus far, it's well over $1 billion worth of Powerpacks and Powerwalls. So – and that's with no marketing, no advertising, no sales force to speak of, really, we're not trying to sell it, it's basically a presentation and a webcast and 30 minutes of press Q&A.

So there's probably room to improve. So this is – I mean, really, we're basically sold out of what we could make in 2016 at this point. And assuming these orders are real, which they seem to be. So were looking at maybe, again, just to preface with meaningful uncertainty, $40 million to $45 million in stationary storage in Q4 and maybe as much as 10 times that number in for next year. So it's $40 million to $50 million that this year and 10x of that next year. And I mean that growth rate is probably going to just, keep going at quite a nutty level. It's probably at least a few billion dollars in 2017, somewhat speculative at this point, but I think that's likely. So it's sort of growing by half order of magnitude to an order of magnitude per year.

http://seekingalpha.com/article/340...-results-earnings-call-transcript?part=single

 

[myusername]

lol, as expected you removed important context from the exchange in order to facilitate your strawman:

Rod A. Lache - Deutsche Bank Securities, Inc.

Okay. And just lastly, you've had a few more weeks here since the announcement of the stationary storage business, do you have any additional thoughts on how that's expected to ramp?

Elon Reeve Musk - Chairman & Chief Executive Officer

Yeah. I do want to preface this with some degree of uncertainty, because this is quite new, and again, we've got that challenge of exponential ramp and then depending upon how you move the – on how the dates fit over an exponential ramp, the actual numbers in a given quarter could be quite different, but the demand has been really crazy, so it's well in excess of – I mean if you just take the reservations that have been made thus far, it's well over $1 billion worth of Powerpacks and Powerwalls. So – and that's with no marketing, no advertising, no sales force to speak of, really, we're not trying to sell it, it's basically a presentation and a webcast and 30 minutes of press Q&A.

So there's probably room to improve. So this is – I mean, really, we're basically sold out of what we could make in 2016 at this point. And assuming these orders are real, which they seem to be. So were looking at maybe, again, just to preface with meaningful uncertainty, $40 million to $45 million in stationary storage in Q4 and maybe as much as 10 times that number in for next year. So it's $40 million to $50 million that this year and 10x of that next year. And I mean that growth rate is probably going to just, keep going at quite a nutty level. It's probably at least a few billion dollars in 2017, somewhat speculative at this point, but I think that's likely. So it's sort of growing by half order of magnitude to an order of magnitude per year.

http://seekingalpha.com/article/340...-results-earnings-call-transcript?part=single

lol, as expected you removed important context from the exchange in order to facilitate your strawman:

Rod A. Lache - Deutsche Bank Securities, Inc.

Okay. And just lastly, you've had a few more weeks here since the announcement of the stationary storage business, do you have any additional thoughts on how that's expected to ramp?

Elon Reeve Musk - Chairman & Chief Executive Officer

Yeah. I do want to preface this with some degree of uncertainty, because this is quite new, and again, we've got that challenge of exponential ramp and then depending upon how you move the – on how the dates fit over an exponential ramp, the actual numbers in a given quarter could be quite different, but the demand has been really crazy, so it's well in excess of – I mean if you just take the reservations that have been made thus far, it's well over $1 billion worth of Powerpacks and Powerwalls. So – and that's with no marketing, no advertising, no sales force to speak of, really, we're not trying to sell it, it's basically a presentation and a webcast and 30 minutes of press Q&A.

So there's probably room to improve. So this is – I mean, really, we're basically sold out of what we could make in 2016 at this point. And assuming these orders are real, which they seem to be. So were looking at maybe, again, just to preface with meaningful uncertainty, $40 million to $45 million in stationary storage in Q4 and maybe as much as 10 times that number in for next year. So it's $40 million to $50 million that this year and 10x of that next year. And I mean that growth rate is probably going to just, keep going at quite a nutty level. It's probably at least a few billion dollars in 2017, somewhat speculative at this point, but I think that's likely. So it's sort of growing by half order of magnitude to an order of magnitude per year.

http://seekingalpha.com/article/340...-results-earnings-call-transcript?part=single

I'm sorry but I don't see where you get a straw man out of this... yes... Elon stated that it's a new technology, etc. But he also commented on 2015 Q4 projections which were one quarter away... there was virtually zero revenue during that quarter and since there's continued to be very little... even in the recent weeks headlines were made of deals that are far less in value than the Q4 2015 projections. I'm asking questions about valuation expectations based on previous performance and this is evidence of poor performance. this is not defended with your quote above... rather even in the quote above Elon doubled down on the Q4 and beyond projections... so I really don't understand what your trying to say.

 

[tander]

"While Tesla Motors gets labeled as just another car company, it's plainly not."

This I completely agree with you on. I see Tesla's and Elon's greatest achievements being solidifying this in the minds of the world. While Tesla's revenue is comprised [nearly] completely of automobile sales which are subject to auto industry profit limitations... the brand that is Tesla is far more reaching... Elon is one of the greatest brand generators that has ever existed in history and will always be remembered this way no matter what happens. My concern is a brand and dreams can only outpace the company's performance for so long.

There are many projections Elon has made that I wish had materialized but haven't... including TE. I would like to see the auto portion of the company explode into the dream that's been proposed... but from an investor's perspective... I'm highly skeptical at this point.

I don't really understand what the reasoning is behind that skepticism other than maybe just general cautious skepticism. They currently make pretty much the best all around sedans and suv available, and in spite of that it's value proposition if you're in that price range. The next car will likely be the best car in its class, and be a major value proposition in its price range. If you are worried that they can't make the next car, just remember that the probability that they will be able to make this next car is much much much better than the probably that they would be able to make the Model S or X. And remember making cars are basically only 1/4 of the business that we are aware of if you assume that in a few years they will be making cars, energy storage products, solar panels, and have a taxi service. And that's only of what we are aware of Regarding TE, they only just announced it less than a year ago?

I try to think about companies like athletes. In basketball for example, I think a fair analogy would be to call Tesla Michael Jordan in his early years. Exceptional and gifted, but still years away from all those championship rings and a real mastery of the sport. If you want to be skeptical, I'd be skeptical of all those older players that are currently the masters, will they be able to play at Jordan's level when he matures? Will they even still be playing?

 

[dha]

...even in the recent weeks headlines were made of deals that are far less in value than the Q4 2015 projections

Untrue. The 80 MWh SoCal Edison deal alone should be worth close to $40 million assuming $500 / kWh

So that's on time to be recognized in Q4. ...of 2016

 

[sundaymorning]

So I pulled the trigger on a preowned 2013 MS. As a long time investor in TSLA, I thought it would be prudent to find a preowned, still under factory warranty S. I was fortunate to have came across one with about 40k miles of factory warranty left on it.

Although I was very happy about my purchase, I experienced a few issues with the "early" models... After having scoured through this forum the past several years, I knew exactly the types of problems and remedy tesla uses for my car, Tesla service was aware of them.

I want to report to you here that so far, I am very pleased with service (Herbert was the gentlemen that helped me). I brought the car into the the Newport Beach (Pullman) service center and was given a schedule to return on Oct. 20th at 3:30 PM (I will update you guys the details with pictures, perhaps in a different forum). I was told that although I am the second owner, I won't be treated any differently than the first.. this is bc Tesla takes pride in its name (almost brought a tear to my eyes).

I noticed that the facility was swamped, loaded with S and X ready for delivery/pickup. Virtually every parking lot on the front and sides were taken, all the way to the back. I sure hope we beat this Q. But with all honesty, I don't really care if we miss. The next several months I plan on dumping all my income into Tesla, a miss here will only serve as a buying opportunity

In 2013 I experienced the same problem, I had money coming in, but TSLA was on the cusp of breaking out. Although I was loaded up to my neck with TSLA shares and options, I was hoping for a miss due to funds being available at a later time. Oh how much that would've changed my life you will never know. History tends to repeat itself, it'll likely shoot up days before my funds become available, again :/

 

[myusername]

What an arbitrary way to classify companies to serve your own point. Why is Google an "advertisement" company but Amazon gets to be "tech." Why is Amazon not a retail company. > 90% of their revenue comes from retail after all. And your sentence about net profit margins makes little sense. Amazon's net profit margins currently stand around 3% and not anywhere near "the many 10s of percents" you said define a tech company.

Shouldn't Amazon be compared to peers like Walmart and Target, then? Many people believe so. Amazon has been an extremely popular short over the years from bears who can't wrap their heads around the premium valuations the market gives to rapidly-growing companies with a plausible path to becoming giants.

And that's the common denominator--growth--not vague and arbitrary notions of what isn't and isn't a "tech" company. Any innovative company that disrups a major industry in the 21st century is going to leverage tech in a major way. Whether it's Amazon with retail over the internet, Netflix with direct streaming of content or Tesla with autopilot, direct internet-based sales, manufacturing automation, over-the-air updates, cutting edge batteries, charging and on and on and on.

And Tesla is growing. 60% YOY revenue growth in the auto industry is INSANE. 400,000 pre-orders for an unseen car--when the company has yet to produce half as many cars in its entire existence--is LUDICROUS. Leveraging battery expertise and resources to secure utility contracts worth $10's of millions is DISRUPTIVE. Show me a comparable company and then talk about Tesla being an "auto company" but Amazon being "tech" and not "retail."

I agree that my choice of dialog in separating Google from AMZN and NFLX is a little stupid during a comparison of TSLA... my point is... "tech" to me means the ability to go from zero to ridiculous profits based on scaling to hundreds of millions of users to billions of users in a flash... compared to Tesla's limitation in the *current* sector it's in... auto.

yes. Tesla has some brilliant minds behind it. but most (or all) of that effort is being directed towards Auto... which has very different profit/growth constraints compared to "tech"/apps/etc... which can go from zero to infinity in a flash.

regarding Tesla's growth... it is impressive to say the least... but we still need to keep it in perspective. the growth you're referring to is in Auto... and when you compare 15k cars in a quarter to 20k cars in a quarter... that sounds really great relative to itself... but when compared to the larger automobile industry this amount of growth doesn't even amount to the margin of error since the rest of the industry is producing 100x this.

don't get me wrong... Tesla has definitely changed things... but I don't think it's the company's performance that has done this... but rather... teh EM effect.

 

[myusername]

Untrue. The 80 MWh SoCal Edison deal alone should be worth close to $40 million assuming $500 / kWh

So that's on time to be recognized in Q4. ...of 2016

the winky face is appropriate since that was supposed to be Q4 2015... whereas Q4 2016 was supposed to be $400m.

 

[dha]

I agree that my choice of dialog in separating Google from AMZN and NFLX is a little stupid during a comparison of TSLA... my point is... "tech" to me means the ability to go from zero to ridiculous profits based on scaling to hundreds of millions of users to billions of users in a flash....

There's nothing about Amazon that fits your discription. They are in the business of moving physical goods all over the world and that has come with extreme CapEx and logistical challenges (which they have met well). And Amazon's net profit margin is only 3%. Even automakers like Ford and GM have higher net profit margins that Amazon!

I'm sorry but your reasoning here doesn't pass the smell test. There is nothing instantaneously scalable about Amazon's business! And I'm saying that as someone who loves Amazon but finds your reasoning here extremely flimsy and self-serving.

 

[myusername]

I don't really understand what the reasoning is behind that skepticism other than maybe just general cautious skepticism. They currently make pretty much the best all around sedans and suv available, and in spite of that it's value proposition if you're in that price range. The next car will likely be the best car in its class, and be a major value proposition in its price range. If you are worried that they can't make the next car, just remember that the probability that they will be able to make this next car is much much much better than the probably that they would be able to make the Model S or X. And remember making cars are basically only 1/4 of the business that we are aware of if you assume that in a few years they will be making cars, energy storage products, solar panels, and have a taxi service. And that's only of what we are aware of Regarding TE, they only just announced it less than a year ago?

I try to think about companies like athletes. In basketball for example, I think a fair analogy would be to call Tesla Michael Jordan in his early years. Exceptional and gifted, but still years away from all those championship rings and a real mastery of the sport. If you want to be skeptical, I'd be skeptical of all those older players that are currently the masters, will they be able to play at Jordan's level when he matures? Will they even still be playing?

"I don't really understand what the reasoning is behind that skepticism other than maybe just general cautious skepticism."

the skepticism isn't about the quality of the product but on the valuation of the stock... hence the original questions from the thread above.

 

[3Victoria]

There are many projections Elon has made that I wish had materialized but haven't... including TE. I would like to see the auto portion of the company explode into the dream that's been proposed... but from an investor's perspective... I'm highly skeptical at this point.

Yes, EM was wrong in his predictions. In his defence, I think the product underwent a revision, and supply problems have slowed progress. While his timing predictions are wrong, the final results have been amazing. We soon forget where this company was and how fast it has progressed ... Certainly way beyond where I predicted or even hoped in its formative years.

Also, the S shape of growth seems not to be appreciated well. Minor changes in the growth rate make major changes in the ramp in the early exponential growth phase. It is much easier to characterize and predict the linear middle phase and even perhaps the flattening at the top. So, we need to give leeway in the early predictions. I suspect EM is right about magnitude but less good at the timing.

 

[myusername]

There's nothing about Amazon that fits your discription. They are in the business of moving physical all over the world and that has come with extreme CapEx and logistical challenges. And Amazon's net profit margin is only 3%. Even automakers like Ford and GM have higher net profit margins that Amazon!

"There's nothing about Amazon that fits your discription"

AWS.

 

[dha]

"There's nothing about Amazon that fits your discription"

AWS.

AWS is < 10% of Amazon's revenue. And it STILL doesn't fit your description. Datacenters require significant CapEx and are not built instantaneously! Not to mention AWS growth over the past year was 58%--roughly the same as Tesla's growth over the same period!

 

[myusername]

Yes, EM was wrong in his predictions. In his defence, I think the product underwent a revision, and supply problems have slowed progress. While his timing predictions are wrong, the final results have been amazing. We soon forget where this company was and how fast it has progressed ... Certainly way beyond where I predicted or even hoped in its formative years.

Also, the S shape of growth seems not to be appreciated well. Minor changes in the growth rate make major changes in the ramp in the early exponential growth phase. It is much easier to characterize and predict the linear middle phase and even perhaps the flattening at the top. So, we need to give leeway in the early predictions. I suspect EM is right about magnitude but less good at the timing.

good point... my original question was about how to justify 2x to 4x PPS targets of Tesla Auto valuation that transgressed into Tesla Energy.

the fundamental question I was asking is... how is a significant valuation beyond today's stock price justified... based on Auto alone I don't see it... based on other product lines such as TE there's possibility... that then lead to my questions of likelihood based on past performance.

we shall see.