Short-Term TSLA Price Movements - 2016

[MikeC]

Why am I the only one who sees this?

It's just the way Tesla operates. Model S priority was given to "Roadster friends and family". Obviously, people on the wrong side of this are not going to be particularly happy about it. On the bright side, Model 3 owners will probably get first dibs on the Model Y, pickup truck, and new Roadster.

On topic, I don't think this will affect short term price movements in any way.

 

[bh1783]

Unlike airlines, Tesla already has an extremely loyal customer base. Where they need to grow is in expanding their customer base. Conquest sales are worth more than loyalty sales.

80/20 rule. it's much easier to sell multiple vehicles to a single buyer(like that doctor in norway with 5 roadsters). Also, model s owners are anchored to a higher price point and will have no problem spending 70k on a model 3

 

[Fallenone]

Sure there are operational and profit based reasons for such distinctions. But what is profit advantage of making first-time buyers wait longer than owners? Both are putting up the same money for the same configuration. Indeed, I believe that the first-time buyer is actually creating more value for Tesla. They do not have a Tesla to trade in and dilute the resale value of a Model S or X. And they have whole new social networks in which to be sharing positive word of mouth. First-time buyer's also have greater opportunities for selling a second vehicle. Just compare on couple with two Model S to another couple with two non-Tesla vehicles. So selling a Model 3 to the first couple is a down sell, but to the second couple you can sell two cars, one now and a second in a couple of years.

I really do believe that conquest sales create more value for Tesla than loyalty sales. Why am I the only one who sees this?

I don't think a lot of S/X owners will trade-in their S/X for the 3. From what I heard, they are reserving the 3 for their kids. So from a profit perspective, there's not much difference between owners and first-time buyers. Plus, the total production of the 3 in 2017 and 2018 combined may not be more than 200k. S/X owners are more likely to order highly optioned ones compared to first-time buyers so this helps the company to make money during early production when they need to work things out. Also, if the first-time buyers are delivered with a less than ideal early production Model 3, the complains may spread to a wider audience.

 

[EinSV]

As a Tesla shareholder for more than three years, I am an owner of the company. I don't own a Tesla car. Does that mean I am not the type of owner who would qualify for Model 3 priority?

Anyone who made a modest investment of $5-6K or more in TSLA in the timeframe you mention gets a free Model 3 (or many free Model 3s, depending on how much they invested). A little extra wait for a free car (or cars) seems eminently fair to me : )

And, for more recent investors, a strong Model 3 rollout should bring its own rewards.

 

[hoang51]

... Why am I the only one who sees this?

It's a business decision that involves many factors. Money is one big factor. Another is showing respect to proven loyal supporters. Repeated customers are easier to attract and some of those are willing to spend. Keep in mind though that even though previous owners have priority over many others, there's no guarantee Tesla is going to keep the priority when it comes to meeting numbers for financial report, such as prioritizing based on geographical location and higher priced options Model 3. The way I think about it, a previous Tesla owner who is going to order bare bones Model 3 at $35,000 is most likely not going to get their's before the higher options Model 3 orders and might have to wait a little bit longer, but most likely ahead of the mainstream that want a bare bones one.

But at this point, we'll just have to wait and find out. It doesn't help that the mainstream also have anxiety over $7,500 tax credit that may expire and end up having reduced tax credit if any by the time the car is received.

 

[esk8mw]

R/S/X owners have paved the way and they deserve special recognition, IMO. I would support a modified lottery type of system for allocating build order. Something like R/S/X owners have a 40% shot of being selected, 40% for employees and 20% for new buyers. You could even make the percentages a sliding scale or a "points" system to create better probabilities for multiple Tesla owners, those that have been owners the longest, hardest-working/longest-tenured employees, etc. Then just allocate this percentage to each "batch" and set up the queue. This way, a mix will come out of the factory but certain groups will have a better chance of getting an earlier build. Rewards loyalty, gets cars to new owners and builds hype/anticipation for the product.

 

[The Blue Owl]

Markets are spiking all of a sudden. NASDAQ just went vertical about 30 points. Any idea why?

 

[hockeythug]

Markets are spiking all of a sudden. NASDAQ just went vertical about 30 points. Any idea why?

Fed leaved rates unchanged

 

[ev-enthusiast]

Markets are spiking all of a sudden. NASDAQ just went vertical about 30 points. Any idea why?

No change on interest rate by the FED.

 

[JRP3]

Why am I the only one who sees this?

Maybe because most of us expected exactly what Tesla is doing, and don't think it's surprising, elitist, or a big deal? I'm not a current owner and I'm fine with it, it was expected. I think it presents a good message to the general public, Tesla supports it's current customers with special treatment. That should make more people want to become customers.

 

[jhm]

I don't think a lot of S/X owners will trade-in their S/X for the 3. From what I heard, they are reserving the 3 for their kids. So from a profit perspective, there's not much difference between owners and first-time buyers. Plus, the total production of the 3 in 2017 and 2018 combined may not be more than 200k. S/X owners are more likely to order highly optioned ones compared to first-time buyers so this helps the company to make money during early production when they need to work things out. Also, if the first-time buyers are delivered with a less than ideal early production Model 3, the complains may spread to a wider audience.

I think many here are missing the point about conquest sales. Loyalty sales are always easier to obtain. Someone who is buying a Model 3 for their kid would probably do the same whether give priority or not. So the priority adds very little incremental value to Tesla. They would have gotten that sell either way.

However, a conquest sale opens up a whole new stream of future loyalty sales. Suppose you sell a Model 3 to a couple who has been loyal BMW or Toyota customers for many years. This is a big deal to cut into their loyalty with BMW or Toyota. So definitely don't want to delay this conquest by a year or two. In that time they are likely to have purchased another car from BMW ot Toyota reinforcing their loyalty. But if you sell the Model 3 quickly, you stand a very good chance of replacing their second car in a couple of years. That second car may even be an up sell into a Model S or X. So the way to look at a conquest sale is to value the loyalty sales that will follow in the next 5 years. If you don't make that first conquest sell, you don't make any of the downstream loyalty sales either.

So the customer value added with a conquest sale is much higher than the value added from single loyalty sale. So if anything, a growing company needs to give priority to a conquest sale over a loyalty sale.

 

[hockeythug]

If it was the other way around I'm sure current owners would be complaining about how Tesla wasn't loyal to them.

 

[Bunky]

I think many here are missing the point about conquest sales. Loyalty sales are always easier to obtain. Someone who is buying a Model 3 for their kid would probably do the same whether give priority or not. So the priority adds very little incremental value to Tesla. They would have gotten that sell either way.

However, a conquest sale opens up a whole new stream of future loyalty sales. Suppose you sell a Model 3 to a couple who has been loyal BMW or Toyota customers for many years. This is a big deal to cut into their loyalty with BMW or Toyota. So definitely don't want to delay this conquest by a year or two. In that time they are likely to have purchased another car from BMW ot Toyota reinforcing their loyalty. But if you sell the Model 3 quickly, you stand a very good chance of replacing their second car in a couple of years. That second car may even be an up sell into a Model S or X. So the way to look at a conquest sale is to value the loyalty sales that will follow in the next 5 years. If you don't make that first conquest sell, you don't make any of the downstream loyalty sales either.

So the customer value added with a conquest sale is much higher than the value added from single loyalty sale. So if anything, a growing company needs to give priority to a conquest sale over a loyalty sale.

As a future conquest sale/customer, I totally agree.

 

[Fallenone]

I think many here are missing the point about conquest sales. Loyalty sales are always easier to obtain. Someone who is buying a Model 3 for their kid would probably do the same whether give priority or not. So the priority adds very little incremental value to Tesla. They would have gotten that sell either way.

However, a conquest sale opens up a whole new stream of future loyalty sales. Suppose you sell a Model 3 to a couple who has been loyal BMW or Toyota customers for many years. This is a big deal to cut into their loyalty with BMW or Toyota. So definitely don't want to delay this conquest by a year or two. In that time they are likely to have purchased another car from BMW ot Toyota reinforcing their loyalty. But if you sell the Model 3 quickly, you stand a very good chance of replacing their second car in a couple of years. That second car may even be an up sell into a Model S or X. So the way to look at a conquest sale is to value the loyalty sales that will follow in the next 5 years. If you don't make that first conquest sell, you don't make any of the downstream loyalty sales either.

So the customer value added with a conquest sale is much higher than the value added from single loyalty sale. So if anything, a growing company needs to give priority to a conquest sale over a loyalty sale.

This is true, but given the time frame of phase out tax credit and the ramp-up of Mode 3, IMO it won't really matter.

 

[jhm]

Maybe because most of us expected exactly what Tesla is doing, and don't think it's surprising, elitist, or a big deal? I'm not a current owner and I'm fine with it, it was expected. I think it presents a good message to the general public, Tesla supports it's current customers with special treatment. That should make more people want to become customers.

Tesla has not become the company that it is by doing what is "expected." Tesla excels precisely when it challenges what is expected and does something better. I believe Tesla can do better by using an unveiling event like this to make conquest sales, not simply to reward the faithful. It's a missed opportunity that offends me.

 

[Muaddid]

If it was the other way around I'm sure current owners would be complaining about how Tesla wasn't loyal to them.

Of course, and thats why you should always try to avoid discriminating people, one way or another, when you give someone an edge over someone else, that someone else will be unhappy.

I really don't think jhm was asking for non-owners to be prioritised but to simply be put on an equal level as owners

 

[gigglehertz]

I think many here are missing the point about conquest sales. Loyalty sales are always easier to obtain. Someone who is buying a Model 3 for their kid would probably do the same whether give priority or not. So the priority adds very little incremental value to Tesla. They would have gotten that sell either way.

However, a conquest sale opens up a whole new stream of future loyalty sales. Suppose you sell a Model 3 to a couple who has been loyal BMW or Toyota customers for many years.

+1 Especially with the growing number of 200+ miles EV's expected to be released soon. It would be huge to take a sale away from a Bolt, Leaf 2.0, etc.

 

[doctoxics]

I'm not sure if this has been posted before, but Bloomberg has an article on the Model 3 unveiling.

Daniel Sparks of Motley Fool also just commented on the Model 3 reveal. He quoted from his Tesla media invitation that he would be able to DRIVE the Model 3 at the reveal:

"to take a quick spin in what we've been working on."

Apparently, the Model 3 to be revealed on the 31st is road-drivable. We might get more information on performance than we expected.

 

[hobbes]

Daniel Sparks of Motley Fool also just commented on the Model 3 reveal. He quoted from his Tesla media invitation that he would be able to DRIVE the Model 3 at the reveal:

"to take a quick spin in what we've been working on."

Apparently, the Model 3 to be revealed on the 31st is road-drivable. We might get more information on performance than we expected.

Wow, we´ve come a long way quick from 'possibly just pictures'! Here is the article doctoxics quoted:
Tesla Model 3 Unveil: What There Is to Know About the Super Secret Car -- The Motley Fool

Also, $220 didn´t seem to offer that much resistance.

 

[NOLA_Mike]

I believe Tesla really does need to build out this customer base to take the Model 3 mainstream, and this takes time to build.

Believe me, Tesla needs that time. Building cars is hard. Servicing and supporting those cars at all corners of the earth is harder. Tesla needs time to build out their Service and Support network before expanding their user base.

The mainstream is not going to accept (like the early adopters do) their nearest service center is 350 miles away and if you want a Ranger to come fix it then pay $3 per mile for him to come.