Short-Term TSLA Price Movements - 2016

[ludicrousspeed]

Regarding the next earnings, any thoughts on the missed deliveries numbers or general consensus coming out of the conference call? My back of the napkin was that they came up about 30m (net cash gain/loss) shy of guidance due to the deliveries, but with the model 3 pre-orders that added about 300m which makes that 30m seem pretty insignificant, but then again revenues which seem to be the focus sometimes will still be off by 5ish%. So assuming improving model x margins, growing battery sales, and maybe re-affirmed or upped guidance, it seems fairly optimistic to me. My sense with the model x is that maybe with the recall and getting through the order backlog there will be a fairly short-term slow down but the reviews and consensus will build and it will sell about as much or maybe a bit better than the model s.

I'm personally not too optimistic about the Q1 ER, which should be in about three weeks. Keep in mind that about half of that $300M of reservation deposits came in after the quarter ended. Also, the X margins will probably not be as high as Tesla wanted due to QC issues with the initial production ramp. I believe poor Q1 financial performance won't affect the stock terribly because everybody already knows about the delivery miss and because forward guidance will still be very optimistic.

On the hand hand, I think Tesla is going to knock this quarter out of the park when they report Q2 earnings in the beginning of Aug. I see many similarities between this quarter and Q1'13 and think that this is the next big event that will move the stock past its current trading range.

 

[SBenson]

Wow. Not sure how the market will treat SP in the short-term regarding MX new orders for MAY delivery.

Others have discussed before but how is it REMOTELY possible that tesla will clear its existing MX order book by May?!

Let's assume the following:

- Tesla makes 1000 MX per week moving forward

- Current order book at 20k (w.a.g)

- most orders are for 90kwh (big battery)

Here is a pretty good post on TMC in regards to this: Model X April Deliveries

 

[Fallenone]

Wow. Not sure how the market will treat SP in the short-term regarding MX new orders for MAY delivery.

Others have discussed before but how is it REMOTELY possible that tesla will clear its existing MX order book by May?!

Let's assume the following:

- Tesla makes 1000 MX per week moving forward

- Current order book at 20k (w.a.g)

- most orders are for 90kwh (big battery)

I'm convinced by @vgrinshpun 's post (Website wait times for delivery change) that the May delivery is not the correct time. July is.

 

[doctoxics]

Well, you're close so far.....I see where the X design studio is up and you can order a 75D with 237 miles of range for $84,300 (plus shipping). That's $10k less than the 90D that gets only 20 miles more. I would be willing to bet the 100 is right around the corner.

Let's see, 237 mile range with the new 75D battery pack in the Model X. That means, assuming a proportional increase to the current 90D battery pack, we should have a range of 284 miles and not the 257 miles advertised by Tesla. Does this mean that we have new battery technology in the 75D and are about to have the same in the 100D? Using a proportional increase for the 100D, the Model X would then have a range of 316 miles! If this is new battery technology, is it the same as was in the Model 3s demonstrated on the 31st?

The implications of all of this to the short-term stock price should be obvious.

Just noted that the 5 kwh upgrade to the 70D Model X increased range by 17 miles to 237 miles. So the 90D might be expected to increase range from 257 to 291 miles. Probably a little less, since the range per kwh is not proportional going from 70D to 90D. I guess there is some loss of efficiency going from 70D to 90D.

 

[doctoxics]

Wow. Not sure how the market will treat SP in the short-term regarding MX new orders for MAY delivery.

Others have discussed before but how is it REMOTELY possible that tesla will clear its existing MX order book by May?!

We still have the Model X orders to Europe and Asia to fill.

 

[austinEV]

Concerning Q1 ER... This is a tough one.

Pros:
1) M3 deposits, although only 1 day's worth.
2) M3 stuff... but nothing we don't know
3) X deliveries (but not as many as expected)
4) Guidance. Here is where things are positive. They could guide for profit or FCF for Q2 or Q3, they will CERTAINLY be asked about it. They pretty much have to say they still plan to do that, which is not new. I doubt SERIOUSLY they will guide up for deliveries. They will keep guidance even if God himself was helping double production rates.

Cons:
1) Deliveries off (known)
2) Profits poor (known, but not exactly. I will leave it for others to wag this but I expect they won't try to make a miracle here)
3) Probably higher expenses than guided, because X issues and they are usually high.
4) X seat recawl and other issues no doubt.

It is just all very negative on balance. The ER itself could trigger a relief rally if a lot of pessimism gets built in to the price, if the news is simply as bad as expected. But otherwise I see it being a down day, albeit not a huge one (ER responses haven't been huge really)

Since it seems near impossible to put lipstick on this proverbial Q1 pig, I don't think they will try. Better to push bad news into Q1 and good into Q2. For instance they can (I think) choose when they sell zev credits. Great, do it in Q2. Most of the M3 reservations will be in Q2. X deliveries will be running smoothly. Factory build out and other capital costs will be minimal by design. If we presume they will do a capital raise this year, it now seems that the good time would be either after the Q2 ER or during a late summer run-up. This would be an excellent time to max out the lines too and draw down the order book. They have lots of knobs to turn to make the Q2 financials great and they are signalling they plan to.

I feel like we are in a game of chicken. We need to be in prior to July, but not necessarily now. But, we want to beat the rush and buy when it's still nice and cheap. So is that now, in the next 3 weeks, the day before the Q1 ER, the day AFTER the Q1 ER, or during the summer doldrums (6 week) between the Q1 ER and July 3/4 when deliveries are announced and could/should be good.

I am in some stock and mostly cash, which is about as "out" as I get.

Right now I am leaning towards right after the Q1 ER, figuring that is good enough. If a model S refresh didn't impress the market I cannot see what will in the next 4 weeks.

 

[hoang51]

I find @austinEV post above to be a good summary of what to expect from Tesla's upcoming Q1 ER: nothing ground breaking, and not to expect any big jump on TSLA share price. From the pros and cons, it's mostly balanced, therefore, I can agree that TSLA might trade up before the Q1 ER, but between after Q1 ER and the next Q2 ER, TSLA has a better chance to rise, especially closer to Q2 ER. What I think that might lift up TSLA is if Elon discusses a plan for Model 3 ramp up during Q1 ER, but I highly doubt that they found a good solution to do so.

 

[JRP3]

I'm sure many people were stretching their budget to get into an X, and just figured they'd get their $5k back and just put a grand down on a 3. Still a Tesla.

I find a switch from an X to a 3 unlikely for most people, especially considering the 2 year wait. Maybe to a Model S.

 

[david_42]

Current reservations for the Model 3 represent $13 billion in sales, that's about 1/10th the size of Ford. The respective market caps are: $32 B and $50 B. This looks to be insane, but the stock market has never been rational. On the one hand, I'd like for my Tesla stock to continue to rise; on the other, I'm in the process of selling a house and wouldn't mind a temporary dip in the stock around when I close.

 

[austinEV]

Current reservations for the Model 3 represent $13 billion in sales, that's about 1/10th the size of Ford. The respective market caps are: $32 B and $50 B. This looks to be insane, but the stock market has never been rational. On the one hand, I'd like for my Tesla stock to continue to rise; on the other, I'm in the process of selling a house and wouldn't mind a temporary dip in the stock around when I close.

Here is how you make sense of that. Why is Ford's market cap so low? They are weighed down by legacy retiree costs, debt, union work force, slow growth and (soon) lack of EV progress. If Ford was growing 50% YoY they would have a market cap of, what, 250B?

 

[Johann Koeber]

Years ago, I was able to read every single post on TMC. I learnd a lot.

Nowadays the best I can do is skim the forum. But this is the # 1 thread I follow religiously (plus some of the other investment threads). I am very happy that the scope of this thread is not as narrow as the title suggests.

Sometimes long conversations could be put in separate threads, but please mention a link to them here!

Back on topic:

Yesterday I attended the 'meet the X' event in Munich. Lots of people showed up (I guess several hundred). Many have an reservation but have not ordered. Many (myself included) will not order before a test drive.

So if Tesla is producing X in sufficient quantity now, many (several hundreds) will need to go to the showrooms and to serve as test drive cars. Assume this to be done in April, plus shipping time, plus the time it takes to get the customers in the cars, I can see European orders coming in in the June/July time frame for August/September delivery. So this revenue is due in Q3, not Q2. Btw I am so glad the glitches will be worked out by the time we get our X.

My conclusion: no short term boost for the share price from European model X deliveries.

 

[BornToFly]

This year, we were looking at Non-GAAP profitability Q2 and Q3, and GAAP in Q4. That was based on increased revenue and decreased capital spending. If they decide to increase spending to accelerate production of the Model 3, we could be looking at losses all year. That would be good for the company long term, but could cause the stock price to remain below 300 all year. Thoughts?

 

[lango]

This year, we were looking at Non-GAAP profitability Q2 and Q3, and GAAP in Q4. That was based on increased revenue and decreased capital spending. If they decide to increase spending to accelerate production of the Model 3, we could be looking at losses all year. That would be good for the company long term, but could cause the stock price to remain below 300 all year. Thoughts?

I think the ideal would be like Amazon with 0 profits as long as they can grow with a good rate.
So yes. I think losses and negative cash flow will be a bad thing for the stock short term but still the best strategy for long term investors.

 

[FredTMC]

Thx.

I find @austinEV post above to be a good summary of what to expect from Tesla's upcoming Q1 ER: nothing ground breaking, and not to expect any big jump on TSLA share price. From the pros and cons, it's mostly balanced, therefore, I can agree that TSLA might trade up before the Q1 ER, but between after Q1 ER and the next Q2 ER, TSLA has a better chance to rise, especially closer to Q2 ER. What I think that might lift up TSLA is if Elon discusses a plan for Model 3 ramp up during Q1 ER, but I highly doubt that they found a good solution to do so.

I actually expected them to discussed M3 ramp a lot on call. Message is we are accelerating plans.

Also, tesla MAY actually defer old FCF plans because now the new goal is to accelerate M3 production ramp (e.g, more CapEx). For a growth stock this is net positive imo. Vastly out weighs Q1 numbers

Possible capital raise soon too

 

[FredTMC]

This year, we were looking at Non-GAAP profitability Q2 and Q3, and GAAP in Q4. That was based on increased revenue and decreased capital spending. If they decide to increase spending to accelerate production of the Model 3, we could be looking at losses all year. That would be good for the company long term, but could cause the stock price to remain below 300 all year. Thoughts?

Spending big for future growth is the hallmark of growth stocks. And this growth pays off starting in 2017 with M3 launch. I think the market will view this very favorably.

 

[Irishjugg]

This year, we were looking at Non-GAAP profitability Q2 and Q3, and GAAP in Q4. That was based on increased revenue and decreased capital spending. If they decide to increase spending to accelerate production of the Model 3, we could be looking at losses all year. That would be good for the company long term, but could cause the stock price to remain below 300 all year. Thoughts?

I've been wondering about this as well. My strategy right now is based around a large q1 ER dip and buying followed by the q2 "shocking" non gaap beat and subsequent stock gains. If the new production plans mean immediate spending that would harm fcf positive plans, my strategy probably suffers.
With Wheeler saying cash is king, I don't know how to read these somewhat conflicting needs. Makes it difficult to predict what the irrational market will do in response.

 

[flankspeed8]

Spending big for future growth is the hallmark of growth stocks. And this growth pays off starting in 2017 with M3 launch. I think the market will view this very favorably.

One can only hope. They are going to have to add a lot of service centers and galleries in middle America in the next couple of years to actually allow them to deliver and potentially service all these new M3's. I personally do not think this is going to come cheap, but it is certainly a necessary expense.

 

[FredTMC]

One can only hope. They are going to have to add a lot of service centers and galleries in middle America in the next couple of years to actually allow them to deliver and potentially service all these new M3's. I personally do not think this is going to come cheap, but it is certainly a necessary expense.

Thx.

I don't view service centers as particularly difficult or expensive. Leased building. Not excessive pay. Just all part of growing.

 

[drinkerofkoolaid]

This has to be one of the funniest bear articles I've ever read. The author basically insists demand for the Model 3 is limited, because the majority of people expressing interest today are tech savvy and well educated people.

Tesla Motors : Demand for the new Tesla is wild, but limited to tech fans | 4-Traders

Researchers say other automakers' electric cars haven't caught on because their range is limited to around 100 miles. And even General Motors' Chevrolet Bolt, which will go more than 200 miles per charge and is priced similarly to the Model 3, won't attract a frenzy of buyers because Chevy doesn't have Tesla's tech image, they say.

The author insists the reason people aren't running out to buy the Chevy Bolt is due to GM not having the "tech panache of Tesla". He goes on to claim the big automobile manufacturers such as GM will have an advantage over Tesla when it comes to quality control.

UC Davis research shows that when asked to name rechargeable cars, "hardly anybody can name a Volt, but they can name a Tesla," Turrentine said.

Surveys also show that GM and other automakers don't have the tech panache of Tesla .

"I just do not believe when you're a large automaker, you're necessarily going to solve for that," says Butler.

 

[Curt Renz]

This has to be one of the funniest bear articles I've ever read. The author basically insists demand for the Model 3 is limited, because the majority of people expressing interest today are tech savvy and well educated people.

Tesla Motors : Demand for the new Tesla is wild, but limited to tech fans | 4-Traders

The author insists the reason people aren't running out to buy the Chevy Bolt is due to GM not having the "tech panache of Tesla". He goes on to claim the big automobile manufacturers such as GM will have an advantage over Tesla when it comes to quality control.

Indeed, it was written by an executive for an oil and gas exploration company. Quoting one employee of a computer company hardly indicates that only similar people would ever want to buy a Model 3. Surveys showing that early Tesla buyers were in the computer industry are not surprising considering that they could afford a Model S and live in Silicon Valley where it is produced. Eventually all sorts of people will want a Model 3 when the see them on the streets, just as a century ago the masses wanted a Model T.