Short-Term TSLA Price Movements - 2016

[Krugerrand]

Since EM has pledged to look at all the deals someone will know But I am not expecting it will be shared with us.

What purpose would it serve? I can't think of any practical reason that serves the company's end goal to discuss it further. It's been acknowledged by the CEO. He's issued a clear statement about where he stands and how things will be going forward. What else is left?

 

[vgrinshpun]

I am not sure whether this just happend, or was done some time ago, but looks like Tesla re-introduced P90D. I seem to recall that upon introduction of P100D variant the P90D was eliminated from the available options for new orders.

The kicker is that the P90D used to carry a $20K premium over the 90D, but now premium is upped to $22.5K ($114.5K - $92K).

Discounts, discounts everywhere...

View attachment 196738

There was also re-introduction of P90D variant for Model X, but the premium is still $20K ($115.5 - $95.5)

 

[AlMc]

What purpose would it serve? I can't think of any practical reason that serves the company's end goal to discuss it further. It's been acknowledged by the CEO. He's issued a clear statement about where he stands and how things will be going forward. What else is left?

It would serve very little purpose. I was just indicating my opinion that it would be very unlikely we will ever know. Nothing more, nothing less.

 

[3Victoria]

People are sure getting fidgety ... must be getting close to end of quarter or something

 

[Krugerrand]

EM is managing the company. He is reassuring customers that he will maintain his standards and step in personally. We know he likes hands on. I find it refreshing, actually. I also note he has been quite busy recently. Some here like to crucialize unnecessarily, and to micromanage from their couches.

I'm disappointed in the people who think he's suppose to know everything that's going on, every second of every day. He has VPs, and other management that are suppose to be doing their jobs. A CEO should be able to trust his/her management team to do their jobs and not be concerned about babysitting them. No?

Maybe we will see another clean up like we did after the China incident went down.

 

[tander]

I'm deeply disappointed at the moment.

First, it appears that Elon didn't know about the new car discounts going on. I can understand how it happened. He probably okayed heavy discounts on inventory cars for the Q3 delivery push, and he didn't intend for new cars (never driven) to be added as "inventory cars subject to inventory discount". Somehow though, Tesla was producing more cars than were ordered and those cars were piling up. And so, they added those cars as "inventory cars" and included a discount with them. There was probably some miscommunication and misunderstanding between Elon and his management team that allowed this to happen.

It's concerning that Elon didn't find out about all of this until today, when he replied to a tweet. Now, I understand that Elon is busy and all (especially w/his Mars presentation) but for the CEO to find out this late about a firesale going on with his new cars is... disappointing to say the least. Elon and Tesla is in desperate need of a COO. Someone like Tim Cook. Let Elon be S Jobs... but please let's stop the madness and stop having Elon try to be S Jobs and T Cook at the same time. The Model X rollout was a fiasco, and now we have this new car discount fiasco. How are we not going to have a fiasco w/Model 3 rollout.. with an operationally-challenge organization that Tesla is at the moment?

The board should be on Elon, pressing him to hire a COO. I hope the board is involved and not afraid to press Elon. Somehow though, I doubt this.

This new car discount fiasco reminds me of the scene in the Revenge of the Electric Car where Elon enters a warehouse filled with Roadsters needing repair before they're sold. And he holds his head in disbelief saying in effect, "What's going on here?"

It's like he finds out Tesla has sold hundreds of new cars at heavy discount, and he tells his team, "What's going on here?!? It's our policy to never give discounts on new cars!!!" And people are look at each other w/wide eyes and then look to the ground like they don't know what to say.

Seems like stuff that happens at an amateur company, not a company that's trying to change the world.

I guess the silver lining is the discounts probably juiced sales even more for q3. This sort of thing is pretty common, when management puts pressure on sales, they start doing what they do, then when the goal is met or things get too aggressive things go back to normal. The uncommon thing is to see a CEO tweeting what is normally an internal memo as a public announcement at the same time. More free advertising I guess. The other silver lining which someone upthread commented is this makes this a one time rarity and secures q4 sales from getting tanked by people thinking they can just wait till the end of the quarter when things go on sale.

 

[AlMc]

EM is managing the company. He is reassuring customers that he will maintain his standards and step in personally. We know he likes hands on. I find it refreshing, actually. I also note he has been quite busy recently. Some here like to crucialize unnecessarily, and to micromanage from their couches.

That is an explanation not an excuse. If he is too heavily worked or distracted he should have a COO.
Let him be a visionary and leave the day to day to someone else who has time to do the day to day.

 

[Krugerrand]

That is an explanation not an excuse. If he is too heavily worked or distracted he should have a COO.
Let him be a visionary and leave the day to day to someone else who has time to do the day to day.

If the current management can't be trusted to do their jobs and stick to company policy, what makes you think adding another person solves the problem? It doesn't matter what someone's title is at a company; it only matters that they do their job within the parameters and guidelines of the company mission.

 

[Cosmacelf]

@DaveT, no CEO of a large company knows everything that is going on. It is impossible, just too much information.

Also, this discounting thing is really, really small potatoes, weak beer, a molehill rather than a mountain, etc.

 

[Turing]

@DaveT, no CEO of a large company knows everything that is going on. It is impossible, just too much information.

Also, this discounting thing is really, really small potatoes, weak beer, a molehill rather than a mountain, etc.

I agree. Seems like some are making a big deal out of a fairly minor thing. Tesla's sales team was trying to maximize performance this quarter so they took advantage of inventory loophole to maximize sales. Also, some of this could simply be the byproduct of increased inventory discounts trying to clear backlogged inventory, so that stores are getting new inventory replacement cars which they are allowed to sell at discount as always, but since increased discount they fly out as soon as they get in and that cycle repeated itself for a few weeks.

 

[sundaymorning]

My friends and I are loving these discounts. Tesla has stated in the past that it can pull demand levers whenever it wants. Now let's think about this for a second. Tesla spends almost zero on advertisement & gimmicks, much more effective to save that money and put it towards customers' pockets. Discounts on options really doesn't hurt Tesla, a buyer who chooses tech package $4k and super charger $2,500 does nothing to hurt Tesla. All that's needed is an engineer punching in already established codes, and baaaam!! Deal closed, buyer happy.

 

[vgrinshpun]

The heavily discounted new cars have been publicized in Tesla's system for the past two weeks. Every store in the U.S. has been pushing these cars and pushing them hard. My rough guess is that 500-1500 of these new cars w/discounts have been sold. (Note: I could be wrong, and perhaps we'll never know unless Tesla eventually discloses how many new cars were sold at a discount.)

We probably will never know the quantity of cars sold "out of policy", but we will know whether it was material or not. According to guidance given in Q2 letter GM in Q3 supposed to be between 22% and 23% (non-GAAP). If Tesla meets this guidance, the "out of policy" sales were immaterial.

 

[DaveT]

If the current management can't be trusted to do their jobs and stick to company policy, what makes you think adding another person solves the problem? It doesn't matter what someone's title is at a company; it only matters that they do their job within the parameters and guidelines of the company mission.

It's not just adding another person. It's about who's in charge of operations at Tesla and is that person doing a great job or not. Currently, the default head of operations is Elon since he doesn't have a COO heading that role. Usually, in a company the size of Tesla you have a COO heading operations so that the CEO can focus on his job of leading the company with new products, growth, strategy, etc. In Tesla's case, Elon has chosen to not hire a COO and as as result he takes the burden of operations on himself. This is in addition to his role as CEO of the company, and in addition to his roles at SpaceX.

Put simply, problems like this "new car discount fiasco" (and many other problems) are largely due to poor communication, execution, and organization within the company. These are roles that the head of operations are in charge of. Thus, the blame falls on Elon. But the guy is super busy, which we all know. So, the question is... why is he still refusing to hire a COO?

 

[DaveT]

My friends and I are loving these discounts. Tesla has stated in the past that it can pull demand levers whenever it wants. Now let's think about this for a second. Tesla spends almost zero on advertisement & gimmicks, much more effective to save that money and put it towards customers' pockets. Discounts on options really doesn't hurt Tesla, a buyer who chooses tech package $4k and super charger $2,500 does nothing to hurt Tesla. All that's needed is an engineer punching in already established codes, and baaaam!! Deal closed, buyer happy.

Tech package and supercharger option packages were discontinued quite a while ago.

The discounts given on these new cars weren't on options. They were straight discounts ($6.5k-$12k) even on cars with little to no options.

 

[DaveT]

That is an explanation not an excuse. If he is too heavily worked or distracted he should have a COO.
Let him be a visionary and leave the day to day to someone else who has time to do the day to day.

I'm reminded of this:

Lashinsky also mentions the speech Steve Jobs gives every time to a newly-appointed VP, which the author calls "Difference Between the Janitor and the Vice President." The speech focuses on the distinction between "excuses" and "reasons", and the amount of responsibility a VP has to handle in his every day job. When you become a VP you don't have any excuse for your failures, and reasons stop mattering the moment you're appointed.

Jobs imagines his garbage regularly not being emptied in his office, and when he asks the janitor why, he gets an excuse: The locks have been changed, and the janitor doesn't have a key. This is an acceptable excuse coming from someone who empties trash bins for a living. The janitor gets to explain why something went wrong. Senior people do not. "When you're the janitor," Jobs has repeatedly told incoming VPs, "reasons matter." He continues: "Somewhere between the janitor and the CEO, reasons stop mattering." That "Rubicon," he has said, "is crossed when you become a VP.

“Inside Apple” Reveals Steve Jobs Anecdotes, Apple’s Little Known Facts – MacStories

 

[Xpert]

I don't understand the heavy negativity some of you have around his tweets. So what if they had some hundreds of on sale cars that will help Q3 record deliveries? Most of the sales were MS 75D sold as 60 so margin will be fine, and it won't matter now because the fire sale is officially over. what WILL matter is that Elon took this chance to announce that Tesla is about to have the best quarter in history, which means record deliveries and very likely GAAP/Non-GAAP positive in a long time. I actually think that tweet is brilliant, ahead of delivery number.

This might be the last chance for the shorts to get out and go long. I smell a huge squeeze coming soon with over the top Q3 deliveries, profitable Q3 ER and many catalysts in Q4 (solar roof, TE ramping up, M3 reveal part 2).

 

[mrdoubleb]

First, I think some of you guys are making a waaaaay bigger issue out of these discounts than it is. I mean sure, if some sales associates went too far this may hurt the bottom line, but the far reaching conclusions on Elon, disappointment in TM and the COO role itself seem a little dramatic. Not that Elon delegating some of his work would not be welcome, but I also understand how someone with his vision abd drive only trusts a very few people like that.

Second, I think it should be pointed out, that The issue is not with discounts approved by HQ in general, but individual discounts made by sales for specific customers.

 

[trils0n]

He probably okayed heavy discounts on inventory cars for the Q3 delivery push, and he didn't intend for new cars (never driven) to be added as "inventory cars subject to inventory discount". Somehow though, Tesla was producing more cars than were ordered and those cars were piling up. And so, they added those cars as "inventory cars" and included a discount with them.

My thoughts were along these lines, but slightly different. Perhaps I'm missing something, but didn't see anything that lead me to believe they were simply producing excess cars that ended up as inventory. Inventory cars were sold with discounts, and rapidly replaced with new vehicles. Instead of living out their normal life as an inventory car, they were immediately sold as discounted inventory cars. Seems to me that previous policy included a minimum amount of time most cars had to serve as demos/test drive cars/loaners before they were eligible to be sold to ensure stores always had demos, test drive and loaners. To accelerate sales, they eliminated this waiting period and sold the cars immediately as they received them, and ordered new ones to replace them to continue the cycle.

 

[MikeC]

I'm surprised people aren't talking about the preliminary OPEC deal: www.bloomberg.com/news/articles/2016-09-28/in-u-turn-saudis-pick-cash-over-flirting-with-free-oil-markets

Oil prices have been weighing on the stock for two years now. Might help TSLA and SCTY tomorrow.

 

[stealthology]

Elon's open e-mail to Tesla employees yesterday could have partially been a pretty decent marketing idea to garner some last minute inventory sales. It got media attention, didn't it?