Short-Term TSLA Price Movements - 2016

[BobSk]

While still possible, the downside risk is limited, upside is 200% in 2 years. 2000% in 10 years. Shorts are wrong on this company.
500k cars at 60k average selling price, 10% net profit, translates to $3B net profit. For such a high growth company, at P/E 30, I will not be surprised to see the market cap reach $90B by end of 2018. (not counting the Tesla Energy business).

 

[tander]

With the Roadster, Model Y (compact SUV) and Model P (pickup) appearing not to be part of the current 2018 500k output plan. So more capacity will be needed.

As someone is is generally not really interested in cars, I'm really looking forward to seeing how they do a pickup. Not to mention that as an investor that's the biggest market.

 

[VanE]

Wow, there is some great information in the ER! I will definitely buy some extra shares tomorrow morning, the stock will probably rise for the coming days.

But a warning for all (including myself): don't become to bullish! After the last CC a lot of people were yelling that a new ATH was just a few weeks out and some members are already starting again today. I don't say that it won't happen this quarter, but I think there is a big chance that the market first wants to see a quarter where the production problems are under control before the stock price skyrockets.

 

[StapleGun]

Unless you think Elon is a liar, all demand growth concerns should end due to this statement :

"we remain confident that we can deliver 80,000 to 90,000 new Model S and Model X vehicles in 2016. This is due to the growing demand we are seeing for Model S and Model X"

Well growing technically just means at least 1 unit more than last year. I was quite impressed with the numbers they shared though, 45% YoY reservation growth for S and X is quite good!

 

[Tenable]

What if this really was their plan all along, a refreshing approach to over-deliver for once? It may not have been good timing to disclose it until now. Now is crucial as clearly we want this and clearly they know from building the working prototypes that this is doable and that they are holding their suppliers accountable in order to meet this goal.

I truly hope this is the case as a large portion of my net worth is tied to TSLA currently.. however.. from a strategic point of view this has given me the first terrible sense of the incredulity the shorts must feel. Its so aspirational that I had almost completely discounted them increasing guidance this quarter. I know Julian would say that this stems from my lack of knowledge / imagination. This kind of ramp, with deadlines.. it seems crazy. Which as crazy bullish as I am.. this is the first time of thought anything remotely close.

I suppose all we can do is cross our fingers that between the additional real estate and lessons learned that we hit these targets.. though I can hardly imagine how.

 

[2Pearls]

If you look back in this thread, several of us predicted a soft Q1. We were of course pooh poohed by the faithful. You say production problem. I say a slack in demand caused by pushing sales hard to make 2015 sales.

A Model X can be ordered now with early summer delivery. The tea leaves are available for those wishing to look.

We stated a soft Q1 because of Model X delays, not because of their sales push towards the end of 2015. You are definitely reading the wrong tea leaves, or, you choose to throw dry pasta at the wall and hope it sticks.

 

[LargeHamCollider]

You are making a link between advanced cells and form factor that doesn't exist. It truly doesn't matter if the cells are cylindrical or rectangular. The cell chemistry matters and the form factor is a secondary concern. There are many cell chemistries made in multiple form factors. You can buy NMC in both cylindrical and prismatic. You can buy LiFePO4 that way too:

All of these are LiFePO4. Given that the Gigafactory is a ground up operation where one of the world's leading battery cell producers is a major partner, Tesla could choose whatever form factor makes the most sense to them.

It does matter if cells are cylindrical or prismatic... but not all that much. Prismatic cells have issues that cylindrical cells don't, partly because a cylinder is a great pressure vessel and a prism is not. You show above A123 cells, A123 publishes pack design guides for their cylindrical cells and their prismatic cells, these guides are publicly available on the site of Stortronics, their US dealer. Read both design guides and you will find that prismatic cells have several issues that cylindrical cells don't. In one of my current jobs we rejected prismatic cells due to their lower performance when compared to cylindrical cells of the same chemistry and from the same company (the trade off is is small cylindrical cells means greater pack complexity [edit: as you rightly pointed out above]).

 

[FredTMC]

Toyota could. But then again I'm sure the current CEO Toyoda has never needed to be in final assembly checking quality. I aslo can't imagine either the service centers or the superchargers with another 500K cars in a couple of years.

This won't be boring.

Tesla VP of manufacturing at Fremont is from TOYOTA. Built 300K RX350s CUVs per year.

They'll build more service centers. That's easy. Superchargers easier than gas pumps.

 

[Fallenone]

My thoughts on the ER letter:

Apparently advancing 500k goal to 2018 is the biggest news. But people will doubt it. Heck, I doubt it.

Other stuff:
1. Good news on increased deposits.
2. Bad news on Model X gross margin. Based on the numbers they've provided, if Model S had 25% GM this quarter, Model X had 0%; if Model S had 27.5%, Model X had -10%. This certainly was caused by the quality issues and I suspect some cars were just discarded as defect good as some Model X owners waited for months since they were first noticed their cars entered production.
3. Disciplinary capex. This is supposed to be a good thing but somehow overshadowed by their new goal of 50% increase of capex for 2016. But, it is related to their advancing production goal. So overall, I think this one is neutral.
4. Reaffirming guidance. Pretty much expected I think.
5. Breaking out the numbers for TE. I think this shows their increased confidence of ramping it up.

 

[Curt Renz]

You just gotta love the curmudgeonly Wall Street Journal's spin, reflected in their headline for the news:

Tesla’s Losses Widen on Lower-Than-Expected Deliveries

Note they updated the headline from being about the two VPs leaving to being about the gloomy doomy earnings report.

We can always count on WSJ reporter Mike Ramsey to toe the line for Rupert Murdoch and his journal's big advertisers.

 

[tinm]

Uh-oh, they switched back to classical music for the on-hold music.

 

[LargeHamCollider]

There's always been this tension between putting the complexity in the cell production side or the pack production side. Tesla has chosen for cheaper cells and more complicated packs, while it seems everyone else goes for more expensive cells for a less complex/cheaper pack. Is that what you see? Which way do you think will win out?

I think eventually cylindrical will win the high end and prismatic the low end, but it's tough to predict where the technology will go in the future, at 35k I think cylindrical still wins.

 

[electracity]

He's explicitly talking about demand, in the context of customer deposits that have already been placed. You are deliberately changing the subject to forecasting and production dates. They are not the same thing, and you know it.

The dislike is for making a dishonest argument.

Yet surprisingly there was never a week when the model S didn't have a short lead time to production. Yet they fell far short in Q1. You may enjoy completely non-critical analysis, but an investment thread is an odd place to do it.

 

[The Blue Owl]

Yet surprisingly there was never a week when the model S didn't have a short lead time to production. Yet they fell far short in Q1. You may enjoy completely non-critical analysis, but an investment thread is an odd place to do it.

I deleted my post because you were referring to the forecasting part of the post you were replying to, not the demand. You are still wrong on the subject, though, and you still know it, unless you think Tesla is lying in their ER about the growing S demand. (As for the lead time, that is consistent with increased S production. Doesn't mean S sales aren't growing.)

 

[electracity]

I think eventually cylindrical will win the high end and prismatic the low end, but it's tough to predict where the technology will go in the future, at 35k I think cylindrical still wins.

I think knowing the answer would require a detailed analysis through the entire build to the finished battery pack. Tesla has had years to think about clever ways to reduce cost. They could even end up with a unique cell format.

 

[Fallenone]

"sleeping bag in the conference room at the end of production line"

 

[30seconds]

"Leading manufacturer of large, complex objects in the world"

Elon is thinking about way more than cars.

 

[electracity]

I deleted my post because you were referring to the forecasting part of the post you were replying to, not the demand. You are still wrong on the subject, though, and you still know it, unless you think Tesla is lying in their ER about the growing S demand.

I actually think Musk never lies. But rather what he says is often interpreted in the most wildly optimistic terms possible.

 

[Ulmo]

He's making it sound like it's still fun to work there.

 

[The Blue Owl]

I actually think Musk never lies. But rather what he says is often interpreted in the most wildly optimistic terms possible.

How should we interpret his statement that Model S demand has been growing?