Short-Term TSLA Price Movements - 2016

[maoing]

unfortunately, might be institution investors which I'm afraid

I would really like to know the reason for this decline since beginning of this year and who is selling that many shares, a bunch of retail investors?

 

[Fallenone]

For InsideEV estimates, we should note that for Jan they are pushing for those orders overseas and a dip in US deliveries is not a good comparison with Oct.

Bingo. Actual math, as opposed to make-believe. Cutting negative FCF in half is far more reasonable and exactly what I expect. This will not be any surprise for the market since we already have the delivery numbers. The question is what it will take to get Q1 to positive FCF. Yes it is only an "aspiration" but I am pretty sure the market will be disappointed if we don't get there. Capx should come down from $400M and R&D might decline marginally as well in Q1, but to what extent? Even if we cut capx by half, my very rough back of the envelope math say we still need well over 20k in Q1 deliveries to achieve FCF+. If that is even remotely the case, it is not looking good. Insideev just came out yesterday, NA deliveries at 850 Model S and 370 Model X. For comparison, to achieve 17k in Q4, Tesla delivered 1900 for NA in Oct.

- - - Updated - - -

They are halting SC for Q1 numbers, that's pretty much certain. Sorry if you feel bad for this.

We are now on day 36 with only 1 new supercharger construction start in the U.S. I'm REALLY hoping there's a good reason for this sudden stop in the supercharger build-out (like a partnership announcement), otherwise, it's just a weak attempt to make the numbers look better this quarter. It will be REALLY disappointing to learn that the very features that are causing such an issue in the ramp up of the Model X, were also so expensive to design and build that they caused Tesla to have to stop construction of the very lifeblood of its infrastructure growth - the supercharger network.

Man, when the Model X was revealed, I commented here that I pray that the Model X is not the mistake that kills Tesla. I still don't think it will be, but it has definitely been a decision that has set the company back a LONG way. I pray Musk and Co get a chance to learn from this huge mistake. But, the car industry is not one that usually allows for mistakes - especially when everything else seems to be stacked against you (like - what were the chances that oil would crash 3 years after Tesla started making cars!!!).

Oh, and start being big boy auto-makers and stop paying attention to what people say in articles. 99% of people never saw that guy's article, but almost everyone that pays attention at all to Tesla is hearing about this ban. Doesn't Musk have much bigger and better things to worry about?

 

[jesselivenomore]

My own calculations give me 17k deliveries in Q1 to be positive FCF. But I also assumed CapEx being only 100m which is quite a stretch. I also factored in 100m ZEV sales since they saved up ZEV in Q4.

Ah, my math didn't include any ZEV, my mistake. Yes that should help. I'm not sure if they can do $100M but using that number I get 18,700 needed, assuming 200M in capex(cut by half).

With Jan numbers trickling in for European registrations (362 so far), and 850+370 for NA, it is looking increasingly bleak to achieve 18k+ for Q1, unless something extraordinary happens in Feb and March.

 

[techmaven]

We are now on day 36 with only 1 new supercharger construction start in the U.S. I'm REALLY hoping there's a good reason for this sudden stop in the supercharger build-out (like a partnership announcement), otherwise, it's just a weak attempt to make the numbers look better this quarter. It will be REALLY disappointing to learn that the very features that are causing such an issue in the ramp up of the Model X, were also so expensive to design and build that they caused Tesla to have to stop construction of the very lifeblood of its infrastructure growth - the supercharger network.

The Supercharger book value is only about $160 million - that's the entire network. The Supercharger construction costs are mostly born *before* visible construction takes place. After all, all the equipment must already have been purchased, the architectural plans, the permitting process, and so forth. Visible construction phase itself might only be about 25% of the cost. From the start of a site to completion is likely a 6-12 month process. I don't think Supercharger construction has all that much to do with quarterly numbers.

If you look at the graphs on supercharge.info you'll see that the global trend of Superchargers is pretty much even through 2015. The U.S. build out has pretty much the same slope.

Now where those Superchargers are going is something else. In some cases, the Supercharger rollout is about enabling new routes, in some cases it's about handling demand along existing routes. When Tesla concentrates on existing routes, that looks less appealing to those that are awaiting new routes to open up.

In any case, I think Tesla knows they need to continue to build out and whatever is going on is short term. I can say that now that I'm almost fully surrounded by Superchargers.

Man, when the Model X was revealed, I commented here that I pray that the Model X is not the mistake that kills Tesla. I still don't think it will be, but it has definitely been a decision that has set the company back a LONG way. I pray Musk and Co get a chance to learn from this huge mistake. But, the car industry is not one that usually allows for mistakes - especially when everything else seems to be stacked against you (like - what were the chances that oil would crash 3 years after Tesla started making cars!!!).

Oh, and start being big boy auto-makers and stop paying attention to what people say in articles. 99% of people never saw that guy's article, but almost everyone that pays attention at all to Tesla is hearing about this ban. Doesn't Musk have much bigger and better things to worry about?

Model X is a required vehicle for Tesla. I don't think they had a choice.

 

[tinm]

And now for something completely different.

Well, ok, not different at all. More bad news, this time CNN, in its inimitable "the sky is falling! fear! fear!" way, decides to write about Tesla.

http://money.cnn.com/2016/02/03/investing/tesla-stock-earnings-elon-musk/index.html

 

[Fallenone]

Historically, ZEV is about 4% of their new car GAAP revenue, which can then be translated to delivery numbers. 17k deliveries for 50m ZEV revenue sounds reasonable to me. So if they can deliver 17k again in Q1, 100m ZEV is likely and significant. It is also my observation that they are halting SC construction to save up every penny they can. And since CapEx is very discretionary, without pressing need on this (X is pretty much done for CapEx by the look of it, GF phase 1 hulk completed, Panasonic should take the helm for the equipment, Model 3 CapEx can wait), they can press CapEx down quite a lot. But I have no idea how much they can press it.

Ah, my math didn't include any ZEV, my mistake. Yes that should help. I'm not sure if they can do $100M but using that number I get 18,700 needed, assuming 200M in capex(cut by half).

With Jan numbers trickling in for European registrations (362 so far), and 850+370 for NA, it is looking increasingly bleak to achieve 18k+ for Q1, unless something extraordinary happens in Feb and March.

 

[mmd]

Bingo. Actual math, as opposed to make-believe. Cutting negative FCF in half is far more reasonable and exactly what I expect. This will not be any surprise for the market since we already have the delivery numbers. The question is what it will take to get Q1 to positive FCF. Yes it is only an "aspiration" but I am pretty sure the market will be disappointed if we don't get there. Capx should come down from $400M and R&D might decline marginally as well in Q1, but to what extent? Even if we cut capx by half, my very rough back of the envelope math say we still need well over 20k in Q1 deliveries to achieve FCF+. If that is even remotely the case, it is not looking good. Insideev just came out yesterday, NA deliveries at 850 Model S and 370 Model X. For comparison, to achieve 17k in Q4, Tesla delivered 1900 for NA in Oct.

If Tesla makes fewer cars and sells a lot of cars from existing inventory, and also massively cuts back on new expansion and capex, then I think it is possible to be FCF positive in Q1. But then, it reduces future growth potential. Can they simply convert a large portion of inventory to cash flow for GAAP accounting?

PS: I'm hoping for a rebound after the ER. The stock has been pushed quite low by all these analyst notes.

 

[ev-enthusiast]

Ok, I do not see a bottom anywhere close here.

These wild swings down could go on for some time.
It would only need a couple of days for the SP to go below $100.

Who is selling part of their long position here?
Who is adding some protective puts to protect their long positions?
What needed to happen for folks here so that they did one of the above mentioned things?

Or is everybody simple sitting on their calls/shares and watching values decline?

 

[jesselivenomore]

I would caution about using anyone's intra-quarter numbers, even InsideEVs. Especially 1st month of a quarter numbers. We should all know by now how misleading that usually ends up being and there really isn't anything reliable about anyone's intra-quarter numbers for the U.S. as a whole.

1st month of a quarter's numbers are usually the lowest and they ramp up exponentially from there. I am already factoring that in, since they also ramped up from the 1900 in Oct(also the 1st month of Q4).

No, insideev may not be 100% reliable. EU registrations could be off as well. But they can be used as an indication, and rarely end up wrong by much.

 

[Fallenone]

They already sold more than they produced in Q4 so I doubt this can work again in Q1.

If Tesla makes fewer cars and sells a lot of cars from existing inventory, and also massively cuts back on new expansion and capex, then I think it is possible to be FCF positive in Q1. But then, it reduces future growth potential. Can they simply convert a large portion of inventory to cash flow for GAAP accounting?

PS: I'm hoping for a rebound after the ER. The stock has been pushed quite low by all these analyst notes.

 

[yngwie_2012]

im not buying any tsla options rightnow, no matter how much it falls. I have some shares that im keeping. Lost already some options, im hoping not more.. To be honest, i wasnt expecting tsla to fall sooo much. At most i was expecting something like $190. In 3 days we lost 15% of valuation from 200 to 170. Thats ridiculous!!


I had some cash left, that i used to buy more facebook options. Facebook appears much more stable to me right now...

 

[mmd]

They already sold more than they produced in Q4 so I doubt this can work again in Q1.

Yes, but as I wrote here a while ago, my calculations (and many others') show they should still have nearly 8000 extra cars produced. If you check the produced vs. delivered for the last 10-11 quarters, you will see the same thing.

 

[techmaven]

Ah, my math didn't include any ZEV, my mistake. Yes that should help. I'm not sure if they can do $100M but using that number I get 18,700 needed, assuming 200M in capex(cut by half).

With Jan numbers trickling in for European registrations (362 so far), and 850+370 for NA, it is looking increasingly bleak to achieve 18k+ for Q1, unless something extraordinary happens in Feb and March.

First month numbers are likely meaningless. And I don't think 18,700 is needed.

Capex 2015:
Q4: $500 million (expected)
Q3: $392 million
Q2: $405 million
Q1: $426 million

Q1 2016 capex?

Assuming the ramp of the Model X costs are mostly done, we're talking about another $100-150 million in the Gigafactory? If capex in Q1 2016 was more in line with 2014's, then we're talking maybe $200-250 million?

 

[Fallenone]

Interesting. Subtracting showroom cars and loaners car for customer service, there should still be a few k they can push out if there are enough buyer for those. And for the financials, there's no COGS for these in Q1?

Yes, but as I wrote here a while ago, my calculations (and many others') show they should still have nearly 8000 extra cars produced. If you check the produced vs. delivery for the last 10-11 quarters, you will see the same thing.

 

[ludicrousspeed]

Why Tesla Motors Is the Worst Stock in the World - TheStreet

LOL the media is really something. The parity between Tesla's public perception and actual operations is actually astounding. Let the shorts pile on..

 

[techmaven]

Yes, but as I wrote here a while ago, my calculations (and many others') show they should still have nearly 8000 extra cars produced. If you check the produced vs. delivered for the last 10-11 quarters, you will see the same thing.

You have to be careful that the finished goods inventory includes more than new vehicles. CPO's alone is probably $50+ million. All of Tesla Energy is included in that amount too.

 

[mmd]

You have to be careful that the finished goods inventory includes more than new vehicles. CPO's alone is probably $50+ million. All of Tesla Energy is included in that amount too.

I'm not using any inventory value. Simply adding the delivered and produced numbers from quarterly letters. Not much guesswork there.

 

[Electrifying]

Ok, I do not see a bottom anywhere close here.

These wild swings down could go on for some time.
It would only need a couple of days for the SP to go below $100.

Who is selling part of their long position here?
Who is adding some protective puts to protect their long positions?
What needed to happen for folks here so that they did one of the above mentioned things?

Or is everybody simple sitting on their calls/shares and watching values decline?

I admit I sold most of my calls at a big loss today after 180 is broken. If I have to guess, this huge decline is caused by Solid Energy's new battery investment. Some big investor is probably worried this new technology will make the GigaFactory obsolete, which I believe is not warranted. I am not sure how big this risk is. Anybody can find out which "US car maker" invested in Solid Energy?

 

[mmd]

Interesting. Subtracting showroom cars and loaners car for customer service, there should still be a few k they can push out if there are enough buyer for those. And for the financials, there's no COGS for these in Q1?

COGS line will still INCLUDE inventory value (carried at cost), as I wrote in Q4 ER thread. Question is about its impact on FCF.

 

[Fallenone]

Sorry I should elaborate more on my question about this. Selling surplus cars accumulated in the past at say, 70k a piece, will get 70k for FCF in Q1?

COGS line will still INCLUDE inventory value (carried at cost), as I wrote in Q4 ER thread. Question is about its impact on FCF.