Short-Term TSLA Price Movements - 2016

[30seconds]

At what point does it make more sense to just build and ride share the cars rather then sell them and share the ride share profits? You could go right to that but it would require more capital. If they where already apple and had piles of cash to burn then maybe but doesn't it make more sense to start off having customers front the initial capital?

I think once this is complete
The Secret Tesla Motors Master Plan (just between you and me)

and this one
Master Plan, Part Deux

 

[dha]

At what point does it make more sense to just build and ride share the cars rather then sell them and share the ride share profits? You could go right to that but it would require more capital. If they where already apple and had piles of cash to burn then maybe but doesn't it make more sense to start off having customers front the initial capital?

The company would be swimming in cheap financing if they could pull off autonomous ride-sharing-as-a-service at the kind of ROIC other members of this forum are suggesting.

Maybe going to customers for financing makes sense in the short term (first 1-2 years) so as not to over-leverage while the tech and business model prove themselves.

After that, why settle sharing a piddly 10-20% of revenues when you could just issue debt for dirt cheap and own the entire market?

 

[Irishjugg]

@drinkerofkoolaid

Follow-up question for you. What do you think the secondary market for Model 3's looks like if $35,000 + annual income is guaranteed from mere ownership. Wouldn't you expect to see Model 3's on the secondary market in excess of $100,000? For comparison, a cap rate of 10% is considered good in the real estate market. And that comes with much higher risk and overhead than what you're suggesting.

As someone planning to buy several model 3s to build my fleet, I fully expect the market to be saturated and that I'll need to sell them relatively quickly before they lose value.

 

[esk8mw]

Although I think the incremental cost maybe low in your calculation, it could just be about whether its 3.5% or 3.0% increase on GM, so not important. But one word of caution on the eps estimate, I think a big chunk of revenue of AP2.0 cannot be recognized next Q because the software is not ready yet. Tesla defers revenue like this that are not fully recognized at the time of sale. Quoting latest 10-Q

"
We recognize revenue for products and services when: (i) a persuasive evidence of an arrangement exists; (ii) delivery has occurred and there are no uncertainties regarding customer acceptance; (iii) pricing or fees are fixed or determinable; and (iv) collection is reasonably assured.

Vehicle sales include standard features, customer selected options and accessories, and specific other elements that meet the definition of a deliverable under multiple-element accounting guidance including free internet connectivity, free access to our Supercharger network, and free future over the air software updates. These deliverables are valued on a stand-alone basis and we recognize their revenue over our performance period, which is generally the eight-year life of the vehicle, except for internet connectivity which is over the free four year period. If we sell a deliverable separately, we use that pricing to determine its fair value; otherwise, we use our best estimated selling price by considering costs used to develop and deliver the service, third party pricing of similar options, and other information which may be available.

As of June 30, 2016, we had deferred $55.9 million, $66.1 million, $42.0 million, and $3.7 million related to the purchase of vehicle maintenance and service plans, access to our Supercharger network, internet connectivity, and future software updates, respectively. As of December 31, 2015, we had deferred $53.6 million, $49.5 million, $32.4 million, and $2.7 million related to these same performance obligations, respectively.
"

The deferred revenue from future software updates here is small because there's not a lot of value not delivered back then. Now with the significant increase in price and absence of the software to make it work, I think the deferred revenue would be quite high.

However, this won't affect cash flow, which I think is more important than eps at this stage.

You bring up a good point about deferred revenue, but are you sure that's how it works with AP? If that's the case, I'd expect the deferred revenues reported there to steadily increase over time for sales of AP1, as more AP cars are sold and the revenue is counted over some time horizon instead of immediately. Instead, looking back at the 10-Qs since Q1 2015, the numbers look like this:

1.2 million 2015 q1
4.9 million 2015 q2
11.6 million 2015 q3
2.7 million 2015 q4
2.6 million 2016 q1
3.7 million 2016 q2

Not saying you are wrong, I just don't understand how the AP portion of deferred revenue could ever drop if it's being recognized over some time period, since AP car sales have only accelerated throughout this period.

 

[adiggs]

Yes. I think Model 3, being resold, will sell for 30-100% above MSRP until at least 2018/2019 for a number of reasons.

Tesla Model S Worth More Used Than New

The methodology used in this article to arrive at "used model S worth more than new" is outrageously bad. They take average selling price of used Model S' of around $99k (or whatever the number they had was - it was in the 90s), and compare it to a top of the line BASE price of $89k.

The original claim of model 3 selling for more than MSRP for some period may or may not prove true - this particular article from Forbes doesn't add to the discussion.

 

[xhawk101]

I find it notable that we have already reached a point where the computers and auto pilot Hardware is already more of it cost factor then the battery.

 

[Fallenone]

You bring up a good point about deferred revenue, but are you sure that's how it works with AP? If that's the case, I'd expect the deferred revenues reported there to steadily increase over time for sales of AP1, as more AP cars are sold and the revenue is counted over some time horizon instead of immediately. Instead, looking back at the 10-Qs since Q1 2015, the numbers look like this:

1.2 million 2015 q1
4.9 million 2015 q2
11.6 million 2015 q3
2.7 million 2015 q4
2.6 million 2016 q1
3.7 million 2016 q2

Not saying you are wrong, I just don't understand how the AP portion of deferred revenue could ever drop if it's being recognized over some time period, since AP car sales have only accelerated throughout this period.

This is good data and we can try to see how Tesla deferred revenue of AP1.0 in the early days.

AP1.0 rolled out Oct 14 2015 (can't believe it's just one year ago!) but cars sold since Oct 2014 had the hardware. Q1 2015 delivery was 10k vehicles. Q2 2015 11.5k, Q3 2015 11.5k. Deferred revenue in 2015 q2 and q3 correspond nicely for the accumulative deliveries in Q2 and Q3 and when Q4 comes, the previously deferred revenue was realized and future AP revenue can also be realized so the deferred revenue in 2015 q4 was reduced a lot. But I don't understand why 2015 Q1 was so low. Perhaps a delay effect of the just introduced AP feature? Assuming 80% of the 33k deliveries from Q1-Q3 2015 bought AP on AP equipped cars, then there were about $440 deferred revenue. So compared to the $3k selling price, not much.

Hopefully it will be the same case for AP2.0

 

[Curt Renz]

 

[racer26]

Darn, I knew I should have saved the press call before it was taken down from YouTube. If anyone saved the call, could they PM me? Thanks.

Its still up on the periscope link: DrivingTheNation @drivingthenatio

 

[racer26]

Thats... one of the better reports I've seen on this. Fairly balanced, tells the facts without delving too much into the FUD beyond saying that Elon's set himself another crazy deadline to meet, which... well. I think we can all agree its a pretty ambitious timeline, though I don't consider it impossible.

 

[Skryll]

Sounds like the Tesla Network will involve:

Passenger:
Autonomous door-door mini buses, supplemented by autonomous company and customer owned passenger vehicles and pickup trucks.

Freight:
Autonomous semis between cities, autonomous delivery vans in cities.

Energy:
Autonomous energy delivery to your home battery in case it is low, using vehicle2home technology with either of these vehicles. (supercharger -> off the grid homes home battery)

 

[Spidy]

Thats... one of the better reports I've seen on this. Fairly balanced, tells the facts without delving too much into the FUD beyond saying that Elon's set himself another crazy deadline to meet, which... well. I think we can all agree its a pretty ambitious timeline, though I don't consider it impossible.

Was there any date mentioned for when cars will get the update to enable self driving? Only read about the trip they planned at the end of 2017.

 

[Value Ev]

partyers will go to San Francisco, and then the cars will be "home" for their owners to use that morning maybe, then when the Modesto commuters wake up and want a ride to work, bam! They hate Tesla (Network), because they're fired (because there's no Tesla Network cars available within 50 miles). !

Actually, they are more likely to hate Tesla because the partiers were smoking in the car, drinking, puking and leaving used condoms in the ashtray.

Of course you can charge the people extra for that, but then it is always the "it wasn't me, it was like that when I got into the car" excuse.

Maybe they can have the automatic charging snake also disinfect the car between uses.[/QUOTE]

 

[stealthology]

@SBenson mentioned this morning that Morgan Stanley re-iterated it's underweight and same PT today, can anyone confirm? I don't think they did. Can anyone confirm?

 

[Ulmo]

Darn, I knew I should have saved the press call before it was taken down from YouTube. If anyone saved the call, could they PM me? Thanks.

I listened to the whole thing on the ride home yesterday, but my YouTube downloader doesn't work on Apple macOS Sierra, so I wanted to download it from my stable system at home. But, I never got the chance ... anybody else have it? There was good information in there that I've memorized but will forget again. Although I liked referencing it, I could quote it instead when necessary, but now I'll go by memory, so screw you, because I'll mismemorize it and that's your fault, Censorship.

Its still up on the periscope link: DrivingTheNation @drivingthenatio

Thanks. Misses the intro, and first few questions.

 

[FredTMC]

@SBenson mentioned this morning that Morgan Stanley re-iterated it's underweight and same PT today, can anyone confirm? I don't think they did. Can anyone confirm?

Reiterated PT and outlook.

Not underweight. Just "equal weight"

PT remains $245

I think we will get a PT lift from AJ AFTER ER if tesla resolves concerns about SCTY acq and cash flows

 

[dennis]

and when they do that... they completely destroy the equations that exist in the auto industry today and cannibalize their own product!... don't you see this?

Oh, you mean like NFLX that was dominanting the DVD rental market and cannibalized it with streaming? That sure was a losing strategy...don't you see this?

 

[sdtslafan]

So what was today's price action about? Why down, then up, then down? Or is that a rhetorical question?

 

[dmckinstry]

"Never attribute to malice that which can be adequately explained by stupidity. " -- Hanlon's razor.

Which is by no means in short supply.

 

[DaveT]

I love yesterday's announcement on so many levels. But I don't think we'll get any significant analyst upgrades for quite a while (as in many months). Why? The dark cloud of SCTY hangs over Tesla, and I don't think the cloud will leave anytime soon. I hope I'm wrong though.