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first of all... i don't actually post that much content.
second of all... I KNOW TESLA IS A GROWTH STOCK.
the point is... regardless of whether or not it's a growth stock... it's a company just like any other...
12 months ago... nearly all analysts were predicting at least $1 EPS for 2016... many were predicting $3... and one (credit suisse) was predicting 7 freaking dollars EPS for 2016...
now they've all lumped together sub -$1.
i'm sorry... you don't just get to forget about the past 12 months because it's a growth stock... and now you're going to tell me about reinvestment of capital... etc... and then we're going to have the exact same discussion at this time every year for the next 3 years... just like we did for the last 3 years... and Tesla will always be just about to break out.
MitchJi
Trying to learn kindness, patience & forgiveness
Elon Musk Receives Product Suggestion On Twitter, Tesla Implements It 6 Days Later - OfficeChai
Elon Musk Receives Product Suggestion On Twitter, Tesla Implements It 6 Days Later
Elon Musk didn’t end up starting diverse startups like Paypal, Tesla and SpaceX by not being proactive. And if Tesla’s latest product update is any indication, Musk remains as entrepreneurial as ever in his role as Tesla CEO.
On 11th December, a Twitter user sent Elon Musk this tweet.
Loic Le Meur, who’s an entrepreneur himself, was complaining about the lack of available slots at Tesla supercharger slots. He said that users were using Tesla’s superchargers as free parking spots, leaving their cars on the chargers even after they were fully charged.
Now Musk has 6.42 million Twitter followers, and receives thousands of such tweets per day. But he immediately responded to this tweet, saying he’ll “take action.”
Now this could easily have been lost among the thousands of things that are presumably on Musk’s to-do list – not only is he the CEO of Tesla, he also runs SpaceX and Solar City, two huge other startups in their own right. But exactly 6 days later, on 17th December, news reports emerged of Tesla having actually implemented a clever way to prevent drivers from misusing its parking stations. -
Tesla was going to charge $0.40 for every minute a fully charged Tesla would stand at its parking stations after a five minute grace period. This simple change would ensure that people wouldn’t leave their cars at parking stations, preventing others from using them.
And what’s incredible is the pace at which the product change was implemented. Tesla might still call itself a startup, but it hardly is one – it has over 30,000 employees, and large engineering teams. To have a product feature conceptualized, implemented and shipped in a week is nothing short of miraculous.
But then Musk also sends rockets into space and has a plan to send people to Mars in 6 years, so the normal rules don’t apply to him, really.
Elon Musk Receives Product Suggestion On Twitter, Tesla Implements It 6 Days Later
Elon Musk didn’t end up starting diverse startups like Paypal, Tesla and SpaceX by not being proactive. And if Tesla’s latest product update is any indication, Musk remains as entrepreneurial as ever in his role as Tesla CEO.
On 11th December, a Twitter user sent Elon Musk this tweet.
Loic Le Meur, who’s an entrepreneur himself, was complaining about the lack of available slots at Tesla supercharger slots. He said that users were using Tesla’s superchargers as free parking spots, leaving their cars on the chargers even after they were fully charged.
Now Musk has 6.42 million Twitter followers, and receives thousands of such tweets per day. But he immediately responded to this tweet, saying he’ll “take action.”
Now this could easily have been lost among the thousands of things that are presumably on Musk’s to-do list – not only is he the CEO of Tesla, he also runs SpaceX and Solar City, two huge other startups in their own right. But exactly 6 days later, on 17th December, news reports emerged of Tesla having actually implemented a clever way to prevent drivers from misusing its parking stations. -
Tesla was going to charge $0.40 for every minute a fully charged Tesla would stand at its parking stations after a five minute grace period. This simple change would ensure that people wouldn’t leave their cars at parking stations, preventing others from using them.
And what’s incredible is the pace at which the product change was implemented. Tesla might still call itself a startup, but it hardly is one – it has over 30,000 employees, and large engineering teams. To have a product feature conceptualized, implemented and shipped in a week is nothing short of miraculous.
But then Musk also sends rockets into space and has a plan to send people to Mars in 6 years, so the normal rules don’t apply to him, really.
I subscribe to a trading newsletter called Terry's Tips. This weekend's newsletter had a piece that, while specific to some of Terry's portfolios, I think is relevant in a more generic sense to our discussions here regarding TSLA manipulation. I apologize if it's a bit long...
From Terry's Tips, December 24th Saturday Report:
----snip----
Some Thoughts on Options-Related Market Manipulation
Many years ago, I was trading on the floor of the CBOE as a market maker. I hung out in the Teledyne (TDY) crowd. It was a volatile stock but not traded heavily most of the time. I remember an incident where another market maker seemed desperate to sell a particular call for $1.50. He kept barking out “at a buck and a half” louder and louder as if the volume of his voice would convince us that it was a good deal that we were all missing out on. After several unsuccessful tries, he handed a piece of paper to his clerk who scurried off to the trade desk. Another market maker who had befriended me approached and whispered, “Do you know what he just did? He just placed a market order to buy 1000 shares of stock on the New York Stock Exchange.” Sure enough, a 1000-share order passed on the ticker screen in front of us, and the stock ticked up 25 cents. This small change in the stock price put the call he had been trying to sell at its intrinsic value, and he quickly made the sale of 50 options (representing 5000 shares of stock). A few minutes later, another trade of 1000 shares appeared on the screen, and the stock fell back to where it had been a few minutes earlier.
This little event was a microcosm of what I believe is happening on a large scale in the market today. It has seemed especially evident to me in our Rising Tide portfolio. MA is a stock that historically has not fluctuated very much. Short-term options carry on IV of only 15. For those of us who like to sell short-term premium, we could collect only about $1.60 for the sale of a one-week at-the-money straddle (selling both a put and a call). Over the last several weeks, this stock has fluctuated by over $3 in one direction or another almost every week.
The likely buyer of that straddle we sold was a market maker. It is also likely that he (or someone like him, an institution or hedge fund) has enough spare cash to influence the market by placing market orders to buy or sell the stock. If such action moved the market in either direction by $3, the buyer of those puts and calls could nearly double his money on the straddle purchase (and still have the other side which might have considerable value remaining if the market turned around and went the other way). Their stock-trading efforts might have broken even or suffered a small loss through commissions, but their option trading doubled its investment.
I believe that much of the difficulty we have had successfully carrying out the 10k Strategy is due to this kind of market manipulation. Market makers (or anyone with a seat on an option exchange) operate by a different set of rules than we ordinary investors. As long as your total portfolio is essentially net delta neutral (and gamma is low), you can sell (or buy) about as much stock as you would like. I often bought over a million dollars’ worth of stock when my equity was about $50,000. As long as I owned puts which would protect me if the stock fell, I was allowed to buy that much stock, and more, especially if I bought it during the day and sold it again before the closing bell (in which case, no one would ever know).
Since the statute of limitations has long since expired, I guess I can admit that my fellow market makers in TDY often carried out our own little collusion at expiration time. Back then, expirations only came around every quarter for most stocks, and monthly for a few others. On Wednesday before the Friday expiration, we would go to lunch and collectively agree which strike price we would move the stock to in two days. We all agreed to use our buying power to buy (or sell) shares with market orders to push the stock to the agreed-upon strike. You can guess how profitable it could be if you knew exactly where the stock would close on expiration day. If the stock were trading at $47 on Wednesday and we believed we could sell it down to $45 by Friday afternoon, we could sell a ton of 45-strike calls when they were $2 in the money, feeling confident that everything we collected could be pure profit.
On occasion, someone else out there, a hedge fund or something, had apparently decided that some other strike price should be achieved, and our efforts met with failure. But that did not happen too often, and expiration days were usually our greatest trading times.
I got a big kick out of an article written by some academics who congratulated themselves for discovering that stock prices on option expiration days were highly likely to be extremely close to strike prices, far closer than they would be on a random basis. They offered no explanation for this confusing but persistent pattern. I had long been aware that there was a very clear reason for that phenomenon to persist, and with the emergence of hedge funds, there is probably more of this kind of market manipulation going on today than ever before. It is one of the reasons that I believe that long-term bets which are exempt from this kind of short-term market manipulation are a more profitable way to play the market, and the predominant method we will employ at Terry's Tips in 2017 and beyond.
From Terry's Tips, December 24th Saturday Report:
----snip----
Some Thoughts on Options-Related Market Manipulation
Many years ago, I was trading on the floor of the CBOE as a market maker. I hung out in the Teledyne (TDY) crowd. It was a volatile stock but not traded heavily most of the time. I remember an incident where another market maker seemed desperate to sell a particular call for $1.50. He kept barking out “at a buck and a half” louder and louder as if the volume of his voice would convince us that it was a good deal that we were all missing out on. After several unsuccessful tries, he handed a piece of paper to his clerk who scurried off to the trade desk. Another market maker who had befriended me approached and whispered, “Do you know what he just did? He just placed a market order to buy 1000 shares of stock on the New York Stock Exchange.” Sure enough, a 1000-share order passed on the ticker screen in front of us, and the stock ticked up 25 cents. This small change in the stock price put the call he had been trying to sell at its intrinsic value, and he quickly made the sale of 50 options (representing 5000 shares of stock). A few minutes later, another trade of 1000 shares appeared on the screen, and the stock fell back to where it had been a few minutes earlier.
This little event was a microcosm of what I believe is happening on a large scale in the market today. It has seemed especially evident to me in our Rising Tide portfolio. MA is a stock that historically has not fluctuated very much. Short-term options carry on IV of only 15. For those of us who like to sell short-term premium, we could collect only about $1.60 for the sale of a one-week at-the-money straddle (selling both a put and a call). Over the last several weeks, this stock has fluctuated by over $3 in one direction or another almost every week.
The likely buyer of that straddle we sold was a market maker. It is also likely that he (or someone like him, an institution or hedge fund) has enough spare cash to influence the market by placing market orders to buy or sell the stock. If such action moved the market in either direction by $3, the buyer of those puts and calls could nearly double his money on the straddle purchase (and still have the other side which might have considerable value remaining if the market turned around and went the other way). Their stock-trading efforts might have broken even or suffered a small loss through commissions, but their option trading doubled its investment.
I believe that much of the difficulty we have had successfully carrying out the 10k Strategy is due to this kind of market manipulation. Market makers (or anyone with a seat on an option exchange) operate by a different set of rules than we ordinary investors. As long as your total portfolio is essentially net delta neutral (and gamma is low), you can sell (or buy) about as much stock as you would like. I often bought over a million dollars’ worth of stock when my equity was about $50,000. As long as I owned puts which would protect me if the stock fell, I was allowed to buy that much stock, and more, especially if I bought it during the day and sold it again before the closing bell (in which case, no one would ever know).
Since the statute of limitations has long since expired, I guess I can admit that my fellow market makers in TDY often carried out our own little collusion at expiration time. Back then, expirations only came around every quarter for most stocks, and monthly for a few others. On Wednesday before the Friday expiration, we would go to lunch and collectively agree which strike price we would move the stock to in two days. We all agreed to use our buying power to buy (or sell) shares with market orders to push the stock to the agreed-upon strike. You can guess how profitable it could be if you knew exactly where the stock would close on expiration day. If the stock were trading at $47 on Wednesday and we believed we could sell it down to $45 by Friday afternoon, we could sell a ton of 45-strike calls when they were $2 in the money, feeling confident that everything we collected could be pure profit.
On occasion, someone else out there, a hedge fund or something, had apparently decided that some other strike price should be achieved, and our efforts met with failure. But that did not happen too often, and expiration days were usually our greatest trading times.
I got a big kick out of an article written by some academics who congratulated themselves for discovering that stock prices on option expiration days were highly likely to be extremely close to strike prices, far closer than they would be on a random basis. They offered no explanation for this confusing but persistent pattern. I had long been aware that there was a very clear reason for that phenomenon to persist, and with the emergence of hedge funds, there is probably more of this kind of market manipulation going on today than ever before. It is one of the reasons that I believe that long-term bets which are exempt from this kind of short-term market manipulation are a more profitable way to play the market, and the predominant method we will employ at Terry's Tips in 2017 and beyond.
Waiting4M3
Active Member
The swing you're quoting is $2 * 160M shares. I'm sure if Tesla had sat on their original CapEx plan, kept the $320M and not accelerated M3 and GF after the 400K reservation came in, investors would've revolted.
Smiegel, Smiegel, Smiegel...
Anyone and everyone on this board would have gladly told you that those analysts are absolute idiots and that Tesla would absolutely not make a profit that year. Watching exactly what you pointed out was the catalyst for me finally realizing that the big fancy Wall Street analysts were actually just the C students of the financial world that weren't smart enough to be traders and that they just aren't good at what they do. Particularly when it comes to growth companies.
Not sure why you would bring that up? Or did you actually think last year was a huge EPS miss? Even Musk had been saying they would not show a profit until 2017 at the earliest, even with that the analysts kept upping their absurd EPS "targets"
I know that I don't know. I know that I don't know the actual production ramp rate of the AP2 vehicles. I know that I don't know the near term peak of weekly production. I know that I don't know any AP2 parts shortages in a concrete way, or issues with delivery logistics. That can swing the results dramatically. I know that I don't know the amount of Model X's sold in China recently.
Here are things I do know:
1) Model X initial RHD versions were made at the factory in October, with some UK signatures due to be delivered this week or so. Presumably, that includes both Hong Kong and UK deliveries.
2) AP2 announcement was October 19th. Presumably, that was right around when AP2 production really got back underway. Assuming the first two weeks were shut down, then production started back up on the 17th and the first cars rolled off as complete on the 19th. That's 11 production weeks. If they are able to ramp up to roughly 2,100 vehicles/week, that's 23,100 vehicles produced in Q4.
3) Overhang of roughly 5,500 vehicles, almost all of which would be sold in Q4
4) Overhang from Q4 to Q1 is a lower amount, but maybe still 2,000 vehicles. Definitely see reports of vehicles being made for Hong Kong and elsewhere. Hong Kong is important due to the possible expiration of the FRT, so they will want to try to regionally allocate heavily there.
5) U.S. cars were pretty much only made starting at the beginning of November. As a result, factoring in delivery logistics, there can be but only a few vehicles delivered in the U.S. They were still making overseas vehicles in November. The real ramp of U.S. deliveries happened at the last week of November and going into December.
So assume out of the ~23,000 produced, they are actually able to deliver about 21,000. Add to it about 4,000-5,000 out of the overhang. That's why I think they think they can hit the 25,000, which is the most recent guidance and 1,000 shy of the lower bound of the 80,000 to 90,000 guidance they gave in early 2016.
My guess in the delivery guess thread is 25,010. But that's because of guidance and apparently Tesla isn't doing nearly everything they could do to meet that guidance number. And I think the calculation is that if they hit guidance, there's not reason to push margins lower in order to try to beat the guidance number by a lot. It would could a better numbers print for Q4, but overall, not good for the business to take a lower margin. Those waiting for vehicles in Q4 that didn't take delivery will take it in Q1, between the change in Supercharger pricing and the AP2 hardware upgrade. It's the AP1 vehicles that we don't know how well they will sell through.
The actual number will be based on a lot of logistical issues... vacations, weather, people canceling AP1 orders, etc. as well as the actual number they can achieve in production. At the 2,200 vehicles/week they averaged in Q3, that would be around 24,000 produced. And if they have enough local orders to fulfill in the last week, they can have a smaller overhang going into Q1.
I do believe that Model X production is still not actually running at real full capacity. There are some reports about this, including hints from Tesla. The gross margin should be much, much higher if the Model X production is fully ironed out. I think it is dramatically much better than in Q2 or earlier, but the improvements are not yet done. This ramp was supposed have been sorted by the beginning of 2016, which clearly wasn't the case.
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Zhelko Dimic
Careful bull
O c'mon, that's just a game that analysts play to justify wild opportunity, in a sense "Tesla could make profit of x.xx if they wanted", but they never want, instead choosing to spend cash on increasing tech. lead.
I'm greatly annoyed with Tesla for SCTY, but you know what? They've been growing over 50% a year for few years in a dead end industry, and that is measurement of success, not silly paper profits
No one that's invested in Tesla cares about Tesla making money at this point. If this is important to you, you don't have right mindset to understand Tesla investor, nor should you be one - it's ok to trade though, but don't ever think you understand psychology of TSLA investors, it will burn you.
Thank you for the extra background on the InsideEV numbers. I didn't know they go back and retroactively adjust... guess it's like the weatherman going back to a 3 day old forecast and adding in the actuals, then touting how accurate he is. I know, I know, they work with what they have... but this still leaves us with little useful data on the US.
About the batching, sure, I was aware of these factors, so I am not even disagreeing with you, but I guess it still stands that Tesla has to (had to?) really outdo themselves this December. Strangely enough, I didn't sense that "all hands on deck" scrambling that we had during other end of the quarter pushes. Remember back in the day when we used to have TMC flooded with reports on how Tesla was delivering around the clock, actively calling people, pushing CPO, selling the cars from the showrooms etc. Somehow things are "calmer" now. Elon seems calmer too (no tweets on the topic, even has time to be silly). Really hope that's a good sign.
Fully agree on Q3 being overshadowed by SCTY. And yes, we have great momentum now, so if we have good numbers next week, TSLA could go ballistic, this could turn into a snowball. Still, if we have a big miss (e.g. 15k deliveries), no amount of positive trend this week could save us from yet another fall.
I also really, really hope we'll meet guidance next week for the sake of "optics" and credibility. The usual suspects tried to deflate the Q3 success by floating the theory of Tesla having had "engineered" the numbers for the sake of the SCTY vote and Q4 will reveal the scam. Not that I believe that - this goes back to the usual "Elon is a scammer" theory -, but showing a good Q4 with meeting guidance and a small profit would go a long way to take some of the weight off TSLA and shut the conspiracy theorists up (for a while).
Thank you so much for the invaluable China details. Again, Asia is kind of a dark horse unless we get some of this reporting and if we do indeed have 5k there this quarter, that would go along way to ensure we get to 80k.
Come on guy. Why are you referring to analysts EPS? Were you using their opinion to make investment decisions before? It's pretty obvious that the only way the TSLA stock price is at its current levels is because there are huge growth expectations built in. Any moron with half a finance degree can work out what the value of Tesla is if no growth expected. It's a simple DCF. Do you think all the major investors can't work it out? It's clear that the majority of the market believes in significant growth. The only decision is on how much growth and that is where most of us on this board may or may not be overly exuberant. If you believe there is no growth expected then short away.
Also, you've only been a member here for 3 months. If you have been discussing results for the last 3 years here then what was your previous account name?
That's the thing about a growth stock. The EPS projection is calculated based on an expected growth scenario... but if the growth scenario shifts upwards, the new growth scenario requires more investment which means the EPS drops. But that's not a negative, it's a positive. Things are going more right than expected. It's important to understand what is going on in the business in order to understand the resulting numbers at the end. EPS can drop because of positive or negative events. For example, the counter point is Apple. They are earning a lot of money each quarter, but investors are skittish about the growth prospects. So even with higher EPS, the stock doesn't appreciate nearly the same degree.
MitchJi
Trying to learn kindness, patience & forgiveness
Thank you!
Tesla could solve a lot of production problems within a quarter. Do you think that's was true for Q2, and possibly solved during Q3? If not they should be solved by some time in Q4 or Q1. When that happens it'll be an unexpected (by the market) boost in earnings which could cause a boost to the SP.
How sure are you that their margins will be much much higher when they solve all of the MX production problems? Is it possible that the MX is more complex to build and that that's is what is leading to the reduced earnings?
Tesla could solve a lot of production problems within a quarter. Do you think that's was true for Q2, and possibly solved during Q3? If not they should be solved by some time in Q4 or Q1. When that happens it'll be an unexpected (by the market) boost in earnings which could cause a boost to the SP.
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JRP3
Hyperactive Member
Autopilot predicts crash before it happens Tesla Autopilot’s new radar technology predicts an accident caught on dashcam a second later
Could generate more good press.
Could generate more good press.
I'm talking about this article:
Tesla Model 3 on track for H2 2017, Model X production ‘inconsistent’, says TSLA analyst after meeting with management
From the article, which Pacific Crest talked with Jeff Evanson, apparently Evanson said that Model X production is still “somewhat inconsistent.”
Any slow down in Model X production from expected allotment would have a negative impact on gross margin. Depending on the snafu level, it can have a small or a big impact. In Q2, it looks like the Model X gross margin was likely well below the discounted Model S 60's by a significant margin. The improvements on the Model X production likely had the highest impact on the upward movement of gross margin in Q3. Just getting production rate up usually means better margins as long as they aren't expediting (overtime labor, flying in parts, etc.).
MitchJi
Trying to learn kindness, patience & forgiveness
So Q4 should be similar to Q3, which we can live with. But we can probably expect a nice surprise in the Q1 or Q2 ER?
Ugh... I panicked and sold my shares at 221. Of course, now the SP has barely budged meaning it will probably keep climbing the rest of the week and I will miss it. After getting burned by the election result, I tend to be more cautious. At least I made $23k out of the deal so I am not too bent up about it. NVDA is looking like a really good place to park until TSLA comes back down.
Runarbt
Active Member
Buy in again now at 219?
dc_h
Active Member
Based on X VIN tracker I think X numbers are likely 2000 higher than Q3.
Big unknown: Did 5 seat model X affect weekly production or did they just park these waiting for final part? That would lower mid quarter deliveries and bump up end of quarter deliveries.
If they make 26000 deliveries in Q4 this should be very bullish, with Q1 about sold out.
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