JRP3
Hyperactive Member
Different products, different requirements. You're making a basic assumption that ICE production = EV production. It does not.
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Different products, different requirements. You're making a basic assumption that ICE production = EV production. It does not.
I'm not a bear. I'm close to neutral at the current price. Possibly even a bull, except I think there will probably be a better buying opportunity sometime before the M3 ramps up. Perhaps not caused by Tesla news, but the larger market.
I will guess at the stock being double if the Tesla hits the 500,000 run rate in 2019. Only double the current price because Tesla may be still seen as having the same fundamental constraints: Making an order of magnitude more cars means needing an order of magnitude bigger balance sheet. Instead of needing a couple billion to accelerate the M3, they will need tens of billions to build more factories.
I assume Musk will never run Tesla towards showing a large GAAP profit. I assume this will always cause the headwind of criticism that "Tesla loses money on every sale".
Ever wonder what a trend reversal looks like? I think it looks something like today's daily chart, with high volume and a tug-of-war between bears and bulls early in the morning, followed by a small break upwards later. The fear from 1Q ER is now over and the stock can start trading more rationally again.
LargeHamCollider
Battery cells != scalable
I can buy that, but it didn't quite answer the question. What i was looking for was *your* estimation of what a proper valuation would be, not a guess at how the market would behave.
Car factories do not cost tens of billions. Much less... in the $1.5B-2B range. Add to that the possible incentives from states both regional and national and the possibility of getting a factory for cheap because of ICE manufacturer problems similar to what happened in 2008. Also Model 3 will be produced for a long time so tooling and line setup will be less costly than for a new model.
This is one of the things almost everyone get wrong, they just slap on an average capital cost as a function of growth rate for Tesla and disregard that they are way more efficient than the average. This efficiency has already been proven at Tesla since the start and also at SpaceX and the chance that it will continue at scale is like 1.0 as long as Musk is still at the company.
Just another thought on TE. Elon mentioned about the S curve and admits the flat runway prior to exponential growthis longer for car manufacturing. I think it is the opposite for battery cell manufacturing seeing that this is already an established industry. They likely only need to replicate what Panasonic is doing currently and that the machines that make the machine are already in place.
With a huge pent up demand for battery storage, I think they can also accelerate cell production at the GF which provides additional funding source and could be significant in the back half of 2016.
With a huge pent up demand for battery storage, I think they can also accelerate cell production at the GF which provides additional funding source and could be significant in the back half of 2016.
I think there's a difference between fear and uncertainty. The fear is caused by watching the SP sink and wondering where the bottom is. The uncertainty exists until funding is in place and we see results that confirm Tesla is on the right track.
I don't really think the price fall was caused by fear actually. Could be just profit taking for those believed in Q4 ER but disappointed in Q1 ER. 210 is still 50% more than 140. But I agree we should have some support here. I just don't think we're ready for a big climb.
What you assume is a personal matter. What will happen with Tesla is that in the 2020 time frame and onwards Tesla will most likely be the most profitable company on the planet in terms of total volume of profits. Possibly a record holder in percentage terms too. Definitely well over 100% annual net operating profits would be hard not to retain .
This is not hyperbole. The gross profit on Tesla's autonomous cars will be well over 500% just as a simple function of the fact that manually operated gasoline cars (implying a percentage of the global demand for personal transportation willing and able to pay for it) are very large in number and cannot get cheaper on a competitive basis while still exposing profits of that magnitude to Tesla. As well as a 50% competitive price advantage on the total cost of a driven mile too.
There is no chance of any competitor to be so prepared for this opportunity as Tesla is. No amount of money can alter it and nobody's plans even hinted at come close. Even if a competing offering was brought to market it would make no difference unless it could bring well OVER 100 million units of annual production AND a technically more advanced and better road-tested consumer offering to the table on the day of launch. If not the remaining opportunity space is too vast to bother Tesla or this prognosis for it in the slightest.
The Blue Owl
Endangerous Herbivore
In fairness, electracity was asked to give his opinion, and he did. We can argue with it, but I like that at least he put it out there.
Speaking for myself, it's not bearish opinions that irritate me, it's pointing out everything Tesla did or is currently doing wrong as proof that they cannot possibly succeed in upending the industry (and raising the stock price in due time), while never actually making a prediction about when the house of cards will collapse. Not even to mention plain lies ("Model X margins are negative", "Tesla is propped-up by the government", etc).
Electracity's posts are far from being the worst in that respect.
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JRP3
Hyperactive Member
Comparing his basement to the gigafactory is getting close...
Tanner must be relieved he didn't sell yesterday.
I wish I didn't sell yesterday.
I wish I didn't sell yesterday.
The Blue Owl
Endangerous Herbivore
No idea what to say.
For anyone who missed it here I called off the thesis for the super obvious DTU short squeeze play.
Short-Term TSLA Price Movements - 2016
I have absolutely no idea how it is possible for anybody to be in that trade. How many times I said Patience, Patience, Patience. Because this was the perfect risk-free upside-only setup. How many times I had to say every leg of the thesis has to hold, probability increases with time, entry point pre-announced, if they do something to blow it up sooner then it's off with NOTHING VENTURED and NOTHING GAINED.
Which bit of NOTHING VENTURED made no sense? I am not angry with you I am angry for you. I do not take losses. I sit on shares and trade calls when the setup is to my satisfaction obvious from entry to exit.
Warren Buffet 101. Trade a Thesis. Check your thesis holds. If it does not hold don't hope, pull it. Well this was Warren Buffet 102. Pick a thesis you don't have to risk anything on to check that it is holding before pulling the trigger only when it does hold, or pull the deal for free if it doesn't. Meanwhile I have called the actual stock price all year to this day to be traded however one wishes whereby I have been calling it down since $255 with indications of $180 at the bottom but no actual better certainty of a bottom than we currently have.
Rant/
WHAT TO DO NEXT:
The Market does not understand that The Market is not Musk's only option or source of leverage for raising Model 3 cash. He has the leverage of being able to put up a bid to fund it from SpaceX and see who wants to beat his own bid. He is nothing like as vulnerable or desperate for the favor of financiers as the market presumes. They can either have a piece of his pie at his price or he can flip them the bird and walk keeping the whole pie for himself (and in reality his private posse of financiers whose boards he sits on).
So basically buy while others are fearful, or if you are already in to 2017 be very happy. Perhaps not equally happy as a vertical squeeze, but I would not rule the end result out by much either. If you are in the money effectively at $250 with any asset class that is still alive in January 2017 I think you will be at least very comfortable to think about a PT around $300 and this will come into clearer view post raise however they go about that. Odds on very soon with an unimaginably friendly bond trade and I am reasonably sure about the extremely counter-intuitive supply chain management equity for options deal that confers massive security on Model 3 execution timing that cannot exist on anything like the same level of security without it.
Good luck!
I think a major point being missed regarding the short argument: by today's valuations, even a 30-50% miss in production on the 2017 or 2018 target would put Tesla far above pre-shift numbers. Most analyst models are based around the 500k in 2020 number, in this range-bound trading between 180-270 that we've seen dominate the past couple of years. A sizable volume of Model 3 in 2017 is probably unheard of with any analysts' pre-call forecasts.
If you were comfortable with the Tesla long-term vision before, and do not think that this production shift will bankrupt them, then pile on the long stock and throw away the sell button for a couple years. The 2018 target seems extremely risky, however a 30-50% miss on either year seems extremely plausible and still way above today's valuations. As long as the miss doesn't come in the form of "we wasted all this capital and half the lines are now worthless", we'll likely still be in for a very profitable but turbulent ride.
If Tesla does hit their goals in their usual ~90% of targets with signs of demand still increasing, then this stock can easily be valued far above $500 in 2017/2018.
If you were comfortable with the Tesla long-term vision before, and do not think that this production shift will bankrupt them, then pile on the long stock and throw away the sell button for a couple years. The 2018 target seems extremely risky, however a 30-50% miss on either year seems extremely plausible and still way above today's valuations. As long as the miss doesn't come in the form of "we wasted all this capital and half the lines are now worthless", we'll likely still be in for a very profitable but turbulent ride.
If Tesla does hit their goals in their usual ~90% of targets with signs of demand still increasing, then this stock can easily be valued far above $500 in 2017/2018.
ludicrousspeed
Member
I agree that Tesla's advantages in the autonomous driving field are by far the most overlooked aspect of their potential earning power.
However, it's not possible to have over 100% gross profit margin, even if the revenues are multiples of the cost of those goods. For example, if an iPhone costs Apple $80 to make and they sell it for $400, they will have an 80% gross margin, not 400%.
My vision is that Tesla builds autonomous cars that will last for 8-10 years providing ride sharing services without the enormous cost of drivers. So they can make a car in the $20k-30k range and reap millions of dollars in benefits from each vehicle they produce. This could be the most profit ale business model I've ever heard of.
This wasn't a trade that I put on based on your DTU thesis. This I put on a while back in 2015 spring, with the express purpose of capturing Model X success. At that time most people thought X will show glowing success by fall of 2015 itself. I gave myself more than an year of buffer, just in case. Turned out X success slipped quarter after quarter. But it has always been the "next quarter" and so I continued staying in quarter after quarter. Q2 or more precisely Q2 ER was meant to be the "show me the money" moment. Now even that is taken off the table. Q3 ER may be the ultimate salvage but by then model 3 expenses might ramp up so much that we don't see anything glowing in the financials and this stock-price muddle through will continue.
So I am feeling down that X ramp has been such a disappointment and Model 3 reservations count turned out to be a 'curse in disguise'. I honestly don't get what makes DaveT, Jessie and folks excited about model-3 reservations. Musk seems to have ruined a perfect opportunity to take the stock price to a new ATH, do a fund raise at much lower dilution, and show some pain to shorts as a small side effect. X ramp is a disappointment. But this deliberate poor play of cards (caused by model-3 reservations) is more disappointing.
Got it - and agreed. Most frustrating for short term traders. Can't argue with that.
The only way to be certain at all times that Musk is working for you and never against you is to invest alongside him in shares to the fruition of his plans.
It's all about your time horizon. If you are like Julian and had an attractive plan for this year, then you are disappointed. If you are primarily in shares and patiently waiting for TSLA to hit $500, then you are probably happy with the change.
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