Short-Term TSLA Price Movements - 2016

[techmaven]

It seems Q4 sales push started right after the ER.
Tesla Model S CPO Website - Now Live

Ah, these vehicles have the standard algorithmic discounts that apply to all demo vehicles. These are not the discounts that Musk was referring to nor what people were clamoring over in the previous quarter. Check the VINs of the two vehicles with high discounts... I bet one was a showroom car, and the other is an actual driving around demo car.

 

[Crowded Mind]

Ah, apparently some people sent me messages late and I didn't see them. Sorry about that! we had a terrific discussion, mostly around trading actually. Thanks to all those that joined.

If it makes sense, shall we have another next week after the SCTY why-we-are-doing-this party, or whatever they are going to do with that?

No problem. Care to share any brief summary or consensus from the discussion?

Personally, I'll probably sell some at the money or slightly out of the money short term puts tomorrow depending on the bids.

 

[anticitizen13.7]

It seems Q4 sales push started right after the ER.
Tesla Model S CPO Website - Now Live

Perhaps to cycle out Autopilot 1.0 cars or demos with too many miles. Tesla likes to have customers test drive the latest and greatest. When I test drove a Model S last year, the demo car was a P90D with almost all options (I think Luducrous Mode was the only thing not equipped).

 

[EinSV]

It seems Q4 sales push started right after the ER.
Tesla Model S CPO Website - Now Live

FUD:

• Sales to Europe/Asia already sold out for 2016
• Deliveries for new orders in the US not scheduled until December/January
• Inventory vehicles are not discounted beyond the ordinary Tesla depreciation schedules
• Notice that virtually every inventory Model S is a 75/75D -- only one 90D, No P100s, No 60s, Two P90Ds (which are outdated)

Tesla Inventory Search

The discounting FUD in Q3 was obvious nonsense and that showed up in the Q3 automotive gross margins of 29.4%.

Tesla is going to kill it in Q4. Automotive GAAP gross margins will be over 30% -- take it to the bank.

 

[Green Pete]

I'm also interested in doing a Google hangout. Great quarter and Q4 looks like it may be even better.

Personally, I have been a little hung up on Elon's comment on the Tesla Network, specifically in regard to the majority of revenue going to the customer. I did a bit of math below trying to explain my thoughts for those interested. On one hand, it made me a feel a little better, but I still don't fully understand how Tesla can justify giving the majority of revenue for ride-sharing to customers. Apologies for excessive use of parentheticals.

---

It looks to me like UberX charges about $1.50 -$2.00 per mile. Anyone have the math that Julian did on the all-in cost an autonomous EV? I think it came out to something a bit under $0.10/mile? I don't think this factored in any cleaning or upkeep time, so perhaps a little aggressive.

So let's say Tesla Network charges $1.00/mile and Tesla takes $0.30/mile while the owner gets $0.70/mile. This would generate the owner $0.60/booked mile. Assuming the car books about two 5-mile trips per hour (avg. Uber trip looks to be 6.4 miles) and has to travel about the same distance to pickup the passenger, cost would be about $2.00 and revenue would be $10.00. Tesla gets $3.00, the owner gets $7.00 and profits $5.00. Say the car is in service mode on average 10 hours/day so it generates profit of $50/day. This would generate ~$18,000 per year in profit for the owner which would pay for the ~$45k vehicle in two and a half years. Over a 5 year investment period, that's a 15% annual return (plus a free car for 14 hours a day). The car would have 365,000 miles on it at this point, plus any owner miles. Still, Tesla also generates ~$9k (20% GM) on the initial sale of which maybe $2k-$3k make it to the bottom line. Then, over that 5 years, Tesla generates ($3.00 * 10 * 365 * 5) = $55,000 which GM% is probably 100% on, and maybe a 70% operating margin? So a Model 3 in this scenario would have a COGS of roughly $36k and Tesla will generate $100k in revenue for a GM% of 64% (minus any discount on the cost of capital over 5 years) with a whopping 40.5% operating margin (ok, I have to be wrong on this, right?? ) $45k with operating income of $2k, $55k with operating income of $38.5k. This would put operating expenses + COGS (are there any not included in Model 3 COGS?) of the Tesla Network at $1.6B/year for 500,000 cars, which I guess is the big question mark.

An owner only needs to generate $31.50/day to earn a 5% annual return over 5 years (and come on, a normal car depreciates 60%, or -17% annually, over 5 years) so with the variables above, Tesla could keep 48.5% of revenue and earn $6,750 more per car per year. On 500k cars, this is $3.4B/yr on the bottom line that Tesla is giving away to the owners if they only take 30%. It doesn't make sense to me to do that unless Tesla is demand constrained at that point. $3.4B/yr in Tesla's hands will accelerate sustainable energy more than $3.4B in the owners' hands.

I may make a spreadsheet that has these different assumptions as variables so we can all run some sensitivity analysis on them if people are interested. This is somewhat inconsequential now because if anything like either of these scenarios come to fruition, Tesla is going be one of the highest market cap companies in the world, but I would still like to understand the logic behind Elon's comments.

I'm off to dig into other threads that I am not fully caught up on as I would not be surprised to see this has already been discussed. Thanks for any replies.

You have some very reasonable math but your missing some key data

Uber rate vary hugely based on market. Driving I. SF vs Driving in a college town vs driving in NY all hugely different.

Tesla hasn't announced how their platform will work. Uber's surge algorithm makes some sense, market demand equals higher price. But it needs some revision. I drove uber for awhile to occupy myself, I actually enjoyed it as I live in a college town and met a lot of interesting guys people. But I also took a pompous ass to his house 45 minutes away after the U team lost. He was a raving lunatic the whole ride but the fare was $650.

So whole point of that last segment was to point out that adjustable fares make sense and actually can bring in real revenue.

That is some analysis! Unlike many of you I hate this. Nowadays capital struggles to find 3% return. If a Tesla car gives you nearly risk free 5% return people with money will jump on this, either buy up all new cars or drive up "used" car price, making Tesla cars unattainable to ordinary people, defeating the very purpose of mass market Tesla

I'm also interested in doing a Google hangout. Great quarter and Q4 looks like it may be even better.

Personally, I have been a little hung up on Elon's comment on the Tesla Network, specifically in regard to the majority of revenue going to the customer. I did a bit of math below trying to explain my thoughts for those interested. On one hand, it made me a feel a little better, but I still don't fully understand how Tesla can justify giving the majority of revenue for ride-sharing to customers. Apologies for excessive use of parentheticals.

---

It looks to me like UberX charges about $1.50 -$2.00 per mile. Anyone have the math that Julian did on the all-in cost an autonomous EV? I think it came out to something a bit under $0.10/mile? I don't think this factored in any cleaning or upkeep time, so perhaps a little aggressive.

So let's say Tesla Network charges $1.00/mile and Tesla takes $0.30/mile while the owner gets $0.70/mile. This would generate the owner $0.60/booked mile. Assuming the car books about two 5-mile trips per hour (avg. Uber trip looks to be 6.4 miles) and has to travel about the same distance to pickup the passenger, cost would be about $2.00 and revenue would be $10.00. Tesla gets $3.00, the owner gets $7.00 and profits $5.00. Say the car is in service mode on average 10 hours/day so it generates profit of $50/day. This would generate ~$18,000 per year in profit for the owner which would pay for the ~$45k vehicle in two and a half years. Over a 5 year investment period, that's a 15% annual return (plus a free car for 14 hours a day). The car would have 365,000 miles on it at this point, plus any owner miles. Still, Tesla also generates ~$9k (20% GM) on the initial sale of which maybe $2k-$3k make it to the bottom line. Then, over that 5 years, Tesla generates ($3.00 * 10 * 365 * 5) = $55,000 which GM% is probably 100% on, and maybe a 70% operating margin? So a Model 3 in this scenario would have a COGS of roughly $36k and Tesla will generate $100k in revenue for a GM% of 64% (minus any discount on the cost of capital over 5 years) with a whopping 40.5% operating margin (ok, I have to be wrong on this, right?? ) $45k with operating income of $2k, $55k with operating income of $38.5k. This would put operating expenses + COGS (are there any not included in Model 3 COGS?) of the Tesla Network at $1.6B/year for 500,000 cars, which I guess is the big question mark.

An owner only needs to generate $31.50/day to earn a 5% annual return over 5 years (and come on, a normal car depreciates 60%, or -17% annually, over 5 years) so with the variables above, Tesla could keep 48.5% of revenue and earn $6,750 more per car per year. On 500k cars, this is $3.4B/yr on the bottom line that Tesla is giving away to the owners if they only take 30%. It doesn't make sense to me to do that unless Tesla is demand constrained at that point. $3.4B/yr in Tesla's hands will accelerate sustainable energy more than $3.4B in the owners' hands.

I may make a spreadsheet that has these different assumptions as variables so we can all run some sensitivity analysis on them if people are interested. This is somewhat inconsequential now because if anything like either of these scenarios come to fruition, Tesla is going be one of the highest market cap companies in the world, but I would still like to understand the logic behind Elon's comments.

I'm off to dig into other threads that I am not fully caught up on as I would not be surprised to see this has already been discussed. Thanks for any replies.

Look. I'm a former uber driver and I've ordered my 2 model 3s. I made average 3k at 35 am hour. That rate will vary hugely depending on the market. If the car can work 20 hour days 6 days a week it could

On all the lux cars I've ever owned, rented, or considered buying, I calculated the cost to drive them at about $0.70-$1/mile. I'm guessing my Model S will be slightly more, but we're talking about the Model 3 here. The Model 3 better be half that ($0.50/mile), otherwise, they'd be losing money at your $1/mile charged. $1/mile-$0.30 Tesla - $0.50 Car = $0.20 owner. $0.50/mile for the empty miles (2), so $1.00 for the ride sank. Then, another 5 miles revenue, with a net of $0.20/mile = $1 net. Your profit: 0. I don't like your numbers.

Let's say Tesla charges $1.50 per mile. Now: sunk 2 miles is $1.00, and revenue miles $0.30/mile for Tesla, $0.50 for the car, and you get $0.70/mile less sunk costs so .7*5=3.50-1=$2.50/ride.

Let's say it takes 5 rides every day, so that's $12.50/day profit, less cleaning and messy riders (cleaning is half hour and wear and tear is about $15/messy rider) -- still a loss.

I'm not seeing the numbers add up right.


Let me re-run my numbers (at the $1.50/mile customer rate): 10 rides per day is $25/day profit less cleaning and vandalism, or about $4 profit per day. Over a year, that's $1,460. Over 5 years that's $7,000. That's enough to reduce the cost of the vehicle to you by 20%.

Will it be worth it? If the edge cases are refined properly, I see it working out: a fleet of cars able to fill the demand of all the un-car'd people in the first world, at a rate that is slightly worth it on average to the car owners, but only for when they're not using their own car, not as a profit engine.

5 miles in San Jose is about 45 minutes. 45 minutes * 10 = almost 10 hours. Half the night is dead time. You need the car during rush hour. That only leaves 10 hours, really. I see this as workable, but not always a great income producer.

Now, if you make the cost $2/mile, that's $10 - $0.30/mile Tesla ($1.50) - car cost (7 miles = $3.50) = $5, x 10 rides = $50, less cleaning and vandalism, = around $30/day. That's enough to pay for the cost of the car. That would be much more worth it.

Either the per-mile rate has to be way more then $1 or even $1.50, or the drop has to be much bigger. ("The drop" is the charge for pickup added to every ticket.) I'd be tempted to do an estimate of 1 mile per drop, so $0.50 just wear and tear on miles driven (of a Model 3), and then $0.25 for banking fees, so really a drop of $0.75. Round it to $1, and it covers waiting and charging time. Then in my $2/mile rate for 5 miles = $10, take out $1 from that total, and you can charge $9/trip miles + $1 drop, or $1.80/mile + $1 drop.

However you cut it, the profitable charge rate is somewhere in the ballpark of Uber X - Yellow Cab rates. You just can't cut it down from there, unless you can prescreen every single rider to not be a vandal and a mess, and as we know here in California, that is pretty much impossible without a huge database that ends up discriminating on the basis of things the courts say is somehow illegal. That pushes the prices much higher.

Even cameras are considered illegal in California, now. I think the entire backlash against Google Glass was because the wearers could document criminal activity so easily.

Your low-balling of the per mile rate is completely unworkable. I'm sorry. For this to work, it has to be around $2/mile.

Former uber driver. I don't know where your math is wrong but it's just wildly inaccurate. I have looked at this many time over and over since I put down my desposits. I figure one car will bring in 30k a year in revenue. Take off 520 usd a year for car cleaning (I spent a quarter that at a professional car wash). I'm going to venture out there and suggest tesla plans on buying electricity from solar city customers and using it to charge the cars at superchargers through the grid at a favorable rate that will be inclusive of the fee plan.

Actually.. I tried... but there are so many assumptions you've made that make no sense, I realize you weren't trying to suggest it couldn't work and just don't have the right info, Elektrek.co posted an article about the profitability of a self driving model 3 fleet based on Austin Texas infrastructure about 6 months ago. Profits were absurd, long before tesla even mentioned master plan part 2.

 

[larmor]

It seems Q4 sales push started right after the ER.
Tesla Model S CPO Website - Now Live

Actually i have been looking at the CPO and new list pretty actively the last few weeks, and there were more cars just a week ago. They did add a few 90D with AP2. The cars listed fluctuate frequently, nearly on a 24 or 12 hour cycle.

Got to drive a loaner P85D, amazing car, and may get a used one now, AP2 be darned. I can get by on ap1...

 

[Green Pete]

I'm also interested in doing a Google hangout. Great quarter and Q4 looks like it may be even better.

Personally, I have been a little hung up on Elon's comment on the Tesla Network, specifically in regard to the majority of revenue going to the customer. I did a bit of math below trying to explain my thoughts for those interested. On one hand, it made me a feel a little better, but I still don't fully understand how Tesla can justify giving the majority of revenue for ride-sharing to customers. Apologies for excessive use of parentheticals.

---

It looks to me like UberX charges about $1.50 -$2.00 per mile. Anyone have the math that Julian did on the all-in cost an autonomous EV? I think it came out to something a bit under $0.10/mile? I don't think this factored in any cleaning or upkeep time, so perhaps a little aggressive.

So let's say Tesla Network charges $1.00/mile and Tesla takes $0.30/mile while the owner gets $0.70/mile. This would generate the owner $0.60/booked mile. Assuming the car books about two 5-mile trips per hour (avg. Uber trip looks to be 6.4 miles) and has to travel about the same distance to pickup the passenger, cost would be about $2.00 and revenue would be $10.00. Tesla gets $3.00, the owner gets $7.00 and profits $5.00. Say the car is in service mode on average 10 hours/day so it generates profit of $50/day. This would generate ~$18,000 per year in profit for the owner which would pay for the ~$45k vehicle in two and a half years. Over a 5 year investment period, that's a 15% annual return (plus a free car for 14 hours a day). The car would have 365,000 miles on it at this point, plus any owner miles. Still, Tesla also generates ~$9k (20% GM) on the initial sale of which maybe $2k-$3k make it to the bottom line. Then, over that 5 years, Tesla generates ($3.00 * 10 * 365 * 5) = $55,000 which GM% is probably 100% on, and maybe a 70% operating margin? So a Model 3 in this scenario would have a COGS of roughly $36k and Tesla will generate $100k in revenue for a GM% of 64% (minus any discount on the cost of capital over 5 years) with a whopping 40.5% operating margin (ok, I have to be wrong on this, right?? ) $45k with operating income of $2k, $55k with operating income of $38.5k. This would put operating expenses + COGS (are there any not included in Model 3 COGS?) of the Tesla Network at $1.6B/year for 500,000 cars, which I guess is the big question mark.

An owner only needs to generate $31.50/day to earn a 5% annual return over 5 years (and come on, a normal car depreciates 60%, or -17% annually, over 5 years) so with the variables above, Tesla could keep 48.5% of revenue and earn $6,750 more per car per year. On 500k cars, this is $3.4B/yr on the bottom line that Tesla is giving away to the owners if they only take 30%. It doesn't make sense to me to do that unless Tesla is demand constrained at that point. $3.4B/yr in Tesla's hands will accelerate sustainable energy more than $3.4B in the owners' hands.

I may make a spreadsheet that has these different assumptions as variables so we can all run some sensitivity analysis on them if people are interested. This is somewhat inconsequential now because if anything like either of these scenarios come to fruition, Tesla is going be one of the highest market cap companies in the world, but I would still like to understand the logic behind Elon's comments.

I'm off to dig into other threads that I am not fully caught up on as I would not be surprised to see this has already been discussed. Thanks for any replies.

Here it is.

https://www.google.com/amp/s/electrek.co/2016/04/15/studies-driverless-tesla-model-3-fleet/amp/

 

[stealthology]

Was Morgan Stanley in attendance? *sugar*.

Maybe he really knows nothing about solar.

I want my $465 tgt back, lol.

 

[Xpert]

Anybody notice the tone of the callers? I didn't hear even one of em say "great quarter fellas"! Seems as though this has been said in the past. Maybe they were in such shock? Or Short?

Well.....

NICE QUARTER FELLAS, REALLY, NICE JOB!

Go Tesla! Congrats to the whole Tesla team, You guys ROCK

Indeed the tone of some of the analysts very impolite almost borderline rude. I thought it was just me.

 

[Green Pete]

So I saw some discussion about whether or not a model 3 as a taxi was a profitable item, I wanted to make sure everyone saw this. I've already made my best effort to get my extended family to order them.

https://www.electrek.co/2016/04/15/studies-driverless-tesla-model-3-fleet/amp/

 

[brian45011]

Can anyone explain the big increase in accounts payable from $1.673B on June 30th to $2.3B now? That's an increase of over $600m..

Our cash flow from operations during the quarter was $424 million due to increased sales, coupled with careful expense management.

 

[TrendTrader007]

Ah, apparently some people sent me messages late and I didn't see them. Sorry about that! we had a terrific discussion, mostly around trading actually. Thanks to all those that joined.

If it makes sense, shall we have another next week after the SCTY why-we-are-doing-this party, or whatever they are going to do with that?

Yeah! Sounds good

 

[RobStark]

Tesla is going to kill it in Q4. Automotive GAAP gross margins will be over 30% -- take it to the bank.

Two quarters in a row at over 30% and Tesla can take IT to the bank.

 

[Xpert]

So this is the STEAK we've been waiting for, I could not find anything bad about the ER. lets see:

Model 3 ahead of schedule (full ramp 2nd half 2017)
Q4 strong delivery
GAAP positive likely
Cap raise not necessary
SCTY cash flow neutral to slight positive thru 2017
AP 2.0 is a sure thing (Dont bet against it - Elon)

There isnt a single reason left to be bearish on TSLA.That said, Since the whole world was bearish, It might take a couple weeks for all the bears to wake up from hibernation and for TSLA SP to rise steadily.

ENJOY YOUR STEAK! - courtesy of Elon Musk and cult members.

 

[TrendTrader007]

Listening to the earnings call for the third time
With such a stellar ER I highly doubt that bears stand a chance even though the SP is up only 4% AH I fully expect TSLA to seriously ramp up over the next several days. Infact I suspect that tomorrow we get a relatively modest open but ends strongly and keeps on going higher every successive day (with pullbacks of course)
I think the downtrend in TSLA is already over and it's blue skies from right here
I can tell you that if I was not already super leveraged 120% then I'd be backing up the truck and buying with both hands
As it is I'm already all in so all I can do is sit and watch from sidelines (and make money)

 

[stealthology]

Adam Jonas wasn't on the call, was he (or his 25-yo sounding replacement from last qtr's call who asked if there a strategic rationale for merging SpaceX with Tesla)..

 

[TrendTrader007]

I believe that we'll get analyst upgrades tomorrow morning and raised PTs

 

[TrendTrader007]

So this is the STEAK we've been waiting for, I could not find anything bad about the ER. lets see:

Model 3 ahead of schedule (full ramp 2nd half 2017)
Q4 strong delivery
GAAP positive likely
Cap raise not necessary
SCTY cash flow neutral to slight positive thru 2017
AP 2.0 is a sure thing (Dont bet against it - Elon)

There isnt a single reason left to be bearish on TSLA.That said, Since the whole world was bearish, It might take a couple weeks for all the bears to wake up from hibernation and for TSLA SP to rise steadily.

ENJOY YOUR STEAK! - courtesy of Elon Musk and cult members.

I agree wholeheartedly! I can't see a single negative. Media is harping about ZEV credits but that is inconsequential
TSLA SP will rise much higher from here
It's inevitable
Bears don't stand a chance
They're totally F.......!

 

[brian45011]

A more bullish view would be to recognize that a lot of Signature X's were delivered in Q3 in international markets, wiping $40g/car off the deposits balance, so the fact the deposits have still increased by 10 million is pretty good evidence of a decent jump....maybe 400k net reservations.

That guess is as good as any. When the Model X reservation tally was discontinued last September, it showed 592 Sig X reservations outside of North America; all were in Europe. The European Registration Stats wiki shows 61 European X deliveries through 6/30/16 and an additional 1,836 delivered during 3Q16 (none in the UK (RHD country). Allowing for RHDs, cancellations and conversions to S orders, say 400 European X Sig deposits were subtracted from the balance in Q3. Also assume the Sigs were replaced by new X (P) reservations so the net is 400 x $37.5k = $15 million which would be equivalent to an addition 15,000 $1,000 M3 deposits.

The granularity is just to squishy to conclude anything meaningful--for instance, if the additional ~300 cars in transit at the end of Q3 vs Q2 were paid in full before shipping, it would more than offset the reduction in Sig deposits and increase the ~$11 million increase in the deposit balance.

 

[SteveG3]

Adam Jonas wasn't on the call, was he (or his 25-yo sounding replacement from last qtr's call who asked if there a strategic rationale for merging SpaceX with Tesla)..

Jonas was on the call. He invited Elon to share when he thinks Tesla will start seeing regulatory approval in some regions for full autonomous. Elon didn't go there. fwiw, on another question, he described how at 6 billion miles, by global averages, one would expect 100 fatalities, and that is the scale at which he feels the fatality data may be seen as sufficient (other data on mitigation of serious injuries will be robust with less miles).