Short-Term TSLA Price Movements - 2016

[Krugerrand]

First of all, Elon himself said he needed to help his troops' morale by letting a win feel like a win. So he is abandoning that. Maybe the troops are thrilled with it, but it feels like a flipflop where he has decided to squeeze them instead. Fine, I don't work for him. But MANY theories around here have been couched on the idea that he was going to try to aim for more realistic goals and so those theories were shot to hell. So it is a material short term, trading theory observation that he will never actually do this. Plan accordingly.

The situation is never static. In the moment that's what he thought was the best thing, now not so much. Or, if it's more comfortable for you to believe; old habits die hard.

I read what people were saying here. I even read what people were saying in the thread that specifically covered the topic of Elon's tweet about rethinking the ramp/production of Model 3 based on the incredible demand. Nobody in that thread or this one guessed he'd double down like he did. In hindsight, it's a very Elon thing to do.

So what's your trade then?

I have no short term trade because of what I just wrote above. I can not predict what Elon will do next because he's too far ahead of everyone, has information I do not, and thinks like no one else I know. Without knowing what he'll do, I can't predict the market's reaction. I like a rollercoaster ride as much as the next person, but repetitive circuits would have me upchucking my breakfast, lunch and dinner from the entire week. As such, LAS.

 

[anticitizen13.7]

It really boils down to market expectations and the trust that it has in Tesla. This will not change over night.

Which is exactly why I advise market participants not to short-term trade TSLA or play with options. The level of uncertainty makes wild price swings at the current plateau ($150-$280) nearly impossible to predict.

My advise continues to be: "invest only what you can afford to lose, and plan on holding for 5+ years."

 

[jesselivenomore]

I haven't gone through all the posts from the past 2 days, so pardon me if any of this has already been discussed. After reviewing the ER some more, there are some things I am not concerned about and some things I am a little concerned about. What the media and analysts have focused on, and perhaps many here as well, funny enough I am not at all concerned about. I do have some questions regarding actual Q1 financials that hopefully someone here can explain for me.

First off, what are the talking points right now and why I am not too concerned:

I think the biggest question mark right now is what is the size of the upcoming capital raise, and what is the total size of the capital costs going forward. This was left unanswered, despite numerous attempts on the CC to get clarification. The market is left a bit jittery with this uncertainty. I posted about this immediately after ER and still believe this is the primary cause for the current share price volatility. However, this is not really a cause for concern because I believe a cap raise is eminent, and that will provide the clarity that was missing. The market may still have some questions over long term capital needs, though. Also for some who are panicking over the need for this cap raise - it is totally reasonable to raise money now to ramp production given the demand Model 3 has demonstrated. This compared to the prior cap raise at $242 when the reason given was merely to "de-risk", and that one did not cause nearly this level of scrutiny. So this concern should blow over.

Another reason for the circus right now is the disbelief over the production plans. I have to give credit to Dave as he's called that the night of the ER. While I did expect some incredulity, but not to this level. I mean some are physically angry that Musk would even dare say such a thing. In the end, I am not too concerned about this either because most these people didn't believe the original 2020 target anyways. As long as Tesla is accelerating the ramp, they will be making more than what people originally expected(and that is what's important) - the exact number people can plug in their own guesses.

So the combination of these two concerns is what's driving the narrative right now. What we know for sure is that they will need to raise capital(unknown how much so there is risk), what we don't know for sure is how much production can be ramped(in fact most people don't believe the numbers at all).

Actually a lot of this is sentiment driven. The exact same situation can be presented a different way: What we know for sure is that they will increase production(unknown how much so maybe there is upside), what we don't know for sure is how much capital is needed(perhaps not that much at all).

But that is not how it is being presented right now. In fact there seems to be an all out assault on sentiment coming from the media. I leave CNBC on in the background for work and I have never seen their coverage more bearish. From bringing Jim Chanos on as the main guest the day of ER, to their talking heads repeatedly bashing the stock. Even before that, the WSJ attacking Musk's character to the media reports over some $250k unpaid bills in Norway. Not to mention coordinated multi-publication falcon wing bashing. I mean, CR, WSJ, and Forbes all had interviews with Model X owner(singular) with door issues lined up in a span of 48 hours. Why didn't we hear about it before, why are we not hearing about it since? Not saying these are all related or malicious, but no denying the media sentiment is one sided right now.

Anyway, I am not too concerned about sentiment either because that will only drive short term prices. Eventually reality determines the final destination. At the end of the day if you are an investor in TSLA you believe in Elon Musk and what he says. In the past they have been late and fallen short at times, but achieved 90% of what they intended. If they can do the same for the new Model 3 ramp, none of those concerns will matter.

There are people saying Musk is promising the impossible to pump up their stock price for a cap raise. I don't think that is true. If the stock went up 10% instead of falling 5%, does that really make a huge difference on dilution? We are counting pennies now. There are others saying he should have waited to announce the ramp once financials are better, to burn the short sellers. For that, I doubt Musk is as concerned over the shorts as we investors are. He is loyal to his mission statement, not on some vindictive ego trip.

The reason he announced his plan IMO was not for the cap raise or the short sellers. It was for the suppliers and consumers. You need to announce these ambitious plans now to see which suppliers are on board. If some suppliers think it is impossible, then they are unwanted. They need to find out which suppliers are up to the task. Also, by announcing the ramp, consumers are more willing to preorder knowing the wait is not years. More preorder numbers will attract more suppliers and not to mention a cushion on the balance sheet.

So that is the good news. On the other hand I do have some questions over Q1 financials that I am hoping someone can answer, I'll ask on a separate post.

 

[MitchJi]

Yep. Agreed. Tesla/Elon said on call what I assumed all along. They only need the single GF in Reno and the single factory (Fremont) to get to 1M cars/year.

They'll be a lot of talk about new GFs and new Factories in the near term (media etc).

Read My Lips: No new factories needed

New factories are NOT on the critical path to 2017-2020 production volumes.

He said:

I don't think we'll be raising money for new factories before we add volume production for the Model 3. And then as Jason was saying earlier, we'll try to find as much of this as possible from operating cash flow.

But he also said, which could mean he's considering building all M3's for Europe and China locally. That would be aggressive (the wild ride will continue):

But some of the things are just sort of common sense that manufacturing cars in California and then
shipping them all around the world is not a very efficient thing to do, particularly as you go to more
affordable vehicles.

So at some point it's going to make sense to have a plant in Europe and a plant in China and probably
plants in other parts of the world. So that's kind of the natural thing you'd expect to do. It wouldn't make
sense to ship cars from California to Europe or California to Asia in those volumes. It's not an efficient way
to go.

And particularly as we saturate on Fremont volume in terms of satisfying demand in North America, just to
satisfy demand in North America, for our future product lineup we're going to need more than one plant
in North America, just to satisfy North America demand.

Do we know for certain that there will be significant CAPex spending in Q2? I am of the opinion that they will make Q2 the watershed quarter to prove that Tesla is profitable based on Q2 deliveries+TE. As vgrinshpun projected based on conservative assumptions, it is indeed possible.

So could the plan be, silence the doubters in Q2, SP skyrockets, then get investors on the table for a new offering and Capex begins Q3 and onwards?

So it's going to make sense for us to raise some amount of money, some combination of equity and debt, and to make sure the company has a good buffer of cash on hand. I think it's important for de-risking the company.

I don't want to go into the details of what we think the total capital cost is going to be for the Model 3 program, but certainly as we continue to ramp, there's going to be more capital requirements of the company. That's just a fact. Ideally I'd like to fund as much of that as possible with cash flow from operations, so that is really the focus that we have in the short-term.

I think that they will probably get a loan at good terms and then supplement that with self-funding from operations, but they could flip the order.

I can't help thinking that this buying opportunity ($210) is even better than the most recent buying opportunity ($140s). The 140s opportunity was one of the best. But this $210 opportunity, I think, is probably better because it's POST-Model 3 reveal with 400k reservations, which proves demand high enough to fuel Tesla growth for the decade to come.

I completely agree. An excellent time to load up on stock or LEAPS.

It's always easy for new money to think like that. I bought a bunch of 2017 leaps a while back, 200 strike at a price of about 50. I am worried about the play here. Before ER the game was obvious. Then suddenly management chose to change the play for worse. Now I don't know what to expect.

I think that they just changed the long-term play for much much better. Your LEAPS closed today at bid/ask 36.55/37.40. I think that rolling them to J18's strikes between 220 43.00/44.30 and 250 32.70/34.25 will be safer and prove quite lucrative. I think that keeping your current options will also work, but I think rolling them (at some point, not necessarily now) will be safer.
Edit addition:
I'd use an options price calculator to see if it makes more sense to roll with a higher SP or a lower SP is better before deciding when to roll.

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.

That is incorrect.

The GF Will Use Custom Cell Manufacturing Equipment:
Tesla and Panasonic will be using custom cell manufacturing equipment at the GF, and that will have a big impact on the cost reductions:

“In your question you had [indiscernible] should be corrected, like the -- so the 30% savings is not just due to logistics. Logistics is a big factor. We are --”

“It's not even the biggest though.”

Logistics [indiscernible] the fact that it's just go to one station to the next instead of going from multiple entities to multiple entities. But really when you get to the kinds of scale that we're talking about, you really get to design custom equipment that's much better at processing each step. And you really get to design the machine that makes the machine, not just do so with off-the-shelf equipment. So it took -- everything about it is going to get a whole lot better. That's why we think the 30% number when the Giga Factory is at full production is a conservative number.”

Some implications of that:
Colocation and the use of custom large scale equipment and getting good prices on raw materials are the main reasons for the GF cost reductions.

Designing and building the custom equipment only make sense financially because of the massive scale of the GF, (they need to build more than one of these production lines). This equipment is designed and optimized to be used in large scale production lines. The first line will probably complete phase one of about seven(?) of the plants cell production capacity. Assuming seven phases it means each line will produce about5 GWh per year, or about 15% of the entire worlds supply of Lithium Ion batteries!

Using custom equipment was clearly Tesla's idea. A big part of the reason GM's pack costs will be at least 2x (probably 3x) of Tesla's. It makes no sense to me that anyone could think that Tesla can't learn to produce cars as well as or better than GM. It's a simpler more well understood problem.

Sure, I wish Elon and his team would have handled this ER differently. Ie., Don't share the stretch goals or internal targets, be more specific on capital needs, raise the money together with announcing production plan increase, etc. But it all doesn't bother me much. As a long-term investor, I'm just happy that people are going to be buying Model 3 cars like crazy. I'm happy that production is increasing so that more people don't have to wait for years and as a result more people can buy the car. All this means more revenue, and more growth. As a short-term hobby trader, I'm fine the stock is down after ER because it provides me a trading opportunity as I think the post-ER reaction is an over-reaction and the stock will bounce.

Might be a good idea to wait a few weeks to make a decision?

 

[tftf]

Other things you have said below. And I only had to read one article to find these.

"Only if the TSLA Gen III car is a resounding success and sells 150-250k units or above per year does a high (triple-digit) valuation of TSLA stock make sense." - 400k reservations enough?

"The crucial question to ask:
Will the TSLA Gen III be better rated by consumers/auto press and have higher margins than...

1. GM Volt +4 years of refinements
2. Nissan Leaf +4 years of refinements
3. BMW i3 +4 years of refinements ?" - Umm, yes.

"(Not to mention likely additional new entrants between now and 2017..)" - Can't think of any over here, can you? Bolt is it, but that's essentially "GM Volt + 4 years of refinement". How many orders does GM have?

"Also keep in mind the three brands mentioned above will have built up nice economies of scale in EVs until 2020" - Nah.

"In my view, one should only compare cars within the same price range/market segments:
The BMW i3 and other EV /PHEV cars mentioned above should be compared to the (future) Model Gen III car from TSLA," - Still think they compare?

"One could even turn the argument around and say GM, Nissan and BMW have a 4-year headstart in the lower-end/mass-market EV and PHEV price segment until the Gen III is available from TSLA." LOL

"I am looking to add to my short in case TSLA rises above 150-175 $.
Disclosure: I am short TSLA." - Hope you closed that position.

That's basically the entirety of one article. Maybe you should post a "tales from the future - revisited" instablog.

I long closed that position with a nice gain and opened a new new one, my current average is well above today's price.

Still think they compare?

Nobody can answer this and your other questions/remarks regarding Model3 sales and margins as of today, because neither the Model3 nor the competitors' EVs, PHEVs and conventional cars have been released. I don't have a time machine for late 2017 (or whenever Tesla actually ships the first cars to real consumers).

If you believe in the newest 2017-2018 ramp projections and earlier promises from Tesla ("category-leading margins"), then feel free to buy even more Tesla shares at this level.

I continue to see the Model3 introduction (especially now that Tesla has burned bridges with earlier partners such as Daimler and Toyota that could have helped with the Model3) as a suicide attack - good for EV consumers, bad for Tesla investors.

The only difference from a few days ago? Tesla has accelerated the suicide attack timeplan with even higher stakes, a lot more leverage/debt will be needed until 2018 to execute the new strategy.

Now it's all about actual execution. Let's await how the next 24-36 months ago and then compare reality and projections. Tesla has a thing with timelines and promises so far...

I don't see how they will produce these 500k batteries and cars at reasonable margins and with appropriate QC by 2018. In fact, I don't see any Model3 cars shipping in real volume to actual consumers until 2018.

 

[Fallenone]

It was for the suppliers

While I agree they need to know which supplier would be up to task, why would they need to do so by ER? Can't it be done by directly contacting the suppliers, which actually should have been going on for a few weeks?

 

[LargeHamCollider]

I long closed that position with a nice gain and opened a new new one, my current average is well above today's price.

Still think they compare?

Nobody can yet answer these and your other questions regarding Model3 sales and margins, because neither that car nor the competitors' EVs have been released. If you believe in the newest 2017-2018 ramp projections and earlier promises from Tesla ("category-leading margins"), then feel free to buy even more Tesla shares at this level.

I don't. I continue to see the Model3 (especially now that Tesla has burned bridges with earlier partners such as Daimler and Toyota) as a suicide attack - good for EV consumers, bad for Tesla investors.

The only difference from a few days ago? Tesla has accelerated the suicide attack timeplan with even higher stakes and more leverage/debt needed until 2018.

I don't see how they will produce these 500k batteries and cars at reasonable margins and with appropriate QC by 2018.

I notice you haven't answered my question .

 

[The Blue Owl]

Yes, my math is correct - it is NEGATIVE 420K shares. The trick is, as I learned about a year ago (thank you, jhm), is that as short sellers sell borrowed shares, the actual shares in circulation exceed outstanding shares by the quantity of shares sold short.

I'm pretty sure that's not how it works. The shares sold short are not new outstanding shares. Shares are created by the company from thin air (authorized shares), and become outstanding once somebody (anybody) pays for them. They are reported on the balance sheet.

If your explanation was true, it would mean there are currently only 420K shares sold short, which is obviously not the case.

 

[tftf]

I notice you haven't answered my question .

We can only answer all these questions by the time the Model3 actually ships (and then compare it to other shipping cars in 201x and look at Tesla's financial results). In the meantime, I stick to my updated predictions outlined above.

Tesla will have a very, very hard time - that's putting it mildy in my opinion - outdoing or even getting close to the likes of Toyota (still the sector gold standard in this price bracket in terms of manufacturing, QC and operative margins) within 2 years. This good article makes similar points:

Tesla Can't Survive on Musk's Vision Alone

In fact, most competitors had and have trouble outdoing Toyota's benchmarks within 20 years. 20, not 2.

 

[LargeHamCollider]

We can only answer all these questions by the time the Model3 actually ships (and then compare it to other shipping cars in 201x and look at Tesla's financial results). In the meantime, I stick to my updated predictions outlined above.

Tesla is overvalued and will have a hard time outdoing Toyota (the gold standard in this price bracket) in manufacturing:

Nonsense, there is enough information available today for a ballpark guess.

Edit: At least there's enough information given the assumptions I posited. Also when you edit your post it's good etiquette to note that you've done so.

 

[FredTMC]

Here I am... Shamelessly bragging.

Congrats to all the longs!

Huge thanks to Jesselivermore, DaveT, AIMc, others for keen insights.

Well, I'm on record again.

I was wrong about stock price finishing the week higher. Sorry
(Stock is still below Wednesday pre-ER close)

I think I was right on most data points but clearly the market needed:

- specifics on cap raise &/or announcement

- less aggressive production ramp

 

[vgrinshpun]

I'm pretty sure that's not how it works. The shares sold short are not new outstanding shares. Shares are created by the company from thin air (authorized shares), and become outstanding once somebody (anybody) pays for them. They are reported on the balance sheet.

If your explanation was true, it would mean there are currently only 420K shares sold short, which is obviously not the case.

It is not very intuitive , but it is exactly how it works.

First, there is a distinction between the outstanding shares and shares in circulation. For example if there are 132M outstanding shares and 30M of them are sold short, the shares that are sold short are owned by the original owners that lent them the short sellers, but also the same shares are owned by those who bought them from the short sellers. The result of this is that there are 132M outstanding shares, but 162M shares in circulation.

Going back to my math, note that negative 420K shares, as noted there, are without accounting for shares sold short. In reality the actual quantity of shares owned by retail holders is current short interest minus the 420K.

 

[The Blue Owl]

We can only answer all these questions by the time the Model3 actually ships (and then compare it to other shipping cars in 201x and look at Tesla's financial results). In the meantime, I stick to my updated predictions outlined above.

It is perfectly possible to make money on the short side (like you did) while being wrong about the long-term prospects of the company (like you are). The reasons for the stock price drops over the periods of your successful short trades need not be (and are not) the ones in your thesis. The stock did and will continue to yo-yo because there were and will continue to be significant challenges for Tesla to overcome, which they did and will continue to do. You think they will go bust. Even though they won't, it doesn't mean there won't still be profitable TSLA short trades to be had in the future.

Tesla is overvalued and will have a hard time outdoing Toyota (the gold standard in this price bracket) in manufacturing:

The two statements are unconnected, and outdoing Toyota has never been and will never be a precondition for Tesla to thrive. Despite this being pointed out repeatedly, you keep saying it as if it had any relevance. That's why people dislike your posts, because what we have here is a failure to communicate.

 

[jesselivenomore]

While I agree they need to know which supplier would be up to task, why would they need to do so by ER? Can't it be done by directly contacting the suppliers, which actually should have been going on for a few weeks?

Not saying they need to do it on ER. That was just their first opportunity to announce it publicly, I don't think they saw a need to hide it either. I think announcing the plans helps with recruitment overall, not just for suppliers. They basically said so on CC calling for manufacturing talent.

 

[The Blue Owl]

It is not very intuitive , but it is exactly how it works.

First, there is a distinction between the outstanding shares and shares in circulation. For example if there are 132M outstanding shares and 30M of them are sold short, the shares that are sold short are owned by the original owners that lent them the short sellers, but also the same shares are owned by those who bought them from the short sellers. The result of this is that there are 132M outstanding shares, but 162M shares in circulation.

Going back to my math, note that negative 420K shares, as noted there, are without accounting for shares sold short. In reality the actual quantity of shares owned by retail holders is current short interest minus the 420K.

You're right, of course, I was under the mistaken impression that you conflated all shares under the category of "outstanding", but you did draw an explicit distinction, which I missed.

However, the figure for institutional shares that you quote cannot be separated from the shares sold short, since those shares were bought on the open market. We don't know how many of them were bought from shorts. That's why I don't see how we can draw any conclusion about the -420K. I don't know what I'm missing (or if).

Edit: Nevermind, I get it. You're right.

 

[vgrinshpun]

You're right, of course, I was under the mistaken impression that you conflated all shares under the category of "outstanding", but you did draw an explicit distinction, which I missed.

However, the figure for institutional shares that you quote cannot be separated from the shares sold short, since those shares were bought on the open market. We don't know how many of them were bought from shorts. That's why I don't see how we can draw any conclusion about the -420K. I don't know what I'm missing (or if).

The conclusion is simply that insiders and institutions own more than 100% of outstanding shares. The significance is that these two types of shareholders are less likely to sell their shares on minor run-up, and these shares are not as readily available for short covering as shares owned by retail.

Another point, that I emphasized in the original post, is that at certain point it is in the interest of large institutional holders AND in their power to trigger the squeeze by increasing margin requirements and interest charged to short sellers. As negative 420K become negative MM, this certain point, IMO draws dangerously close.

So EM is, as usually, absolutely right. Selling short is "unwise"

 

[Rarity]

Anyhow, back on topic, this situation seems like a conflict of interest 101 to me. Just who is lending all these shares to the short sellers?? Right - the institutional holders that have big Brokerages - Fidelity and alike.

NB that Fidelity and others will lend out the retail investors shares as well and will pay you a cut of the rebate (looks like 2/3rds).

Now to the gist of my thought on this: what prevents a large brokerage house to change margin requirements and interest charged to short sellers? In fact, as above negative 420K shares grow to negative MM of shares it seems to be their fiduciary duty to do so!

Don't know about the other brokerages, but Fidelity can reset the rebate rate daily. The rebate is how much is paid to lend shares. In addition, I'm sure the brokerage adds some interest for the short seller. I don't know how the rebate rate is set, but it looks pretty ad hoc to me -- maybe as you say, it is set in some sense with the ultimate benefit of the brokerage in mind.

The rebate rate today for TSLA at Fidelity is 2.25% per annum. Of this, Fidelity pays the securities lender 1.50%. MikeC has reported in the Tracking Short Interest thread that Schwab is no longer offering the retail investor a cut of the rebate for TSLA, so maybe the rate is lower than 2.25% at Schwab. Or maybe Schwab just doesn't feel like giving a cut.

And this, IMO, is the huge factor that flies mostly under the radar - the short squeeze can be triggered seemingly independently from any big positive catalyst, just by change in margin requirements and interest is response to the reckless growth of short positions.

This has happened at SCTY this year. The rebate rate at Fidelity was over 100% for a very short period of time. Now, it is probably about 15%. The rebate rate doesn't seem to track the short interest slavishly, but honestly it's something of a mystery to me what goes in to it.

 

[jesselivenomore]

Ok so credibility is important, and credibility is being questioned right now. As far as production/deliveries guidance, Tesla has actually been pretty on point. As I said, they have achieved at least 90% of what they set out for. So that I am not too concerned over, even though that is the primary concern in the current narrative. However with free cash flow, they have been way off.

Thinking back to 2015 Q2 and Q3, guidance was given for cash flow positive in 2016 Q1 and close to positive in 2015 Q4. Now obviously the Model X's continued delays have affected that. I get that. But in Q1 after delivering 2400 Xs the operating cash flow was still -$250M, and free cash flow was -$466M even though they cut their capex in half. The planned capex for 2016 was $1.6B I believe, so with an average spend of $400M, Q1 free cash flow would have been over -$600M, no improvement over their worst quarters.

Is this all due to the Model X QC hit on margins?

So originally they expected the Model X ramp to begin in Q4 2015, a few thousand deliveries, and low margin I presume since it is the start of the ramp. From this they expected close to FCF breakeven. It seems we are now(Q1) at this stage(initial Model X ramp), but no where near FCF breakeven. Why? Even considering Model X QC issues, a $600M difference is too much.

 

[Fallenone]

Josh Spenser, manager of T.Rowe Price Global Technology Fund on "fantastic" company named Tesla Motors. (T.Rowe Price is the third largest institutional share owner of Tesla with total of 7,870,816 shares owned as of 12/31/2015)

Sorry Cramer, I love everything about Tesla: T Rowe Price manager

I caught a glimpse reading short interest is 22%. Is that right? Down from NASDAQ last report of around 31%

 

[Fallenone]

Ok so credibility is important, and credibility is being questioned right now. As far as production/deliveries guidance, Tesla has actually been pretty on point. As I said, they have achieved at least 90% of what they set out for. So that I am not too concerned over, even though that is the primary concern in the current narrative. However with free cash flow, they have been way off.

Thinking back to 2015 Q2 and Q3, guidance was given for cash flow positive in 2016 Q1 and close to positive in 2015 Q4. Now obviously the Model X's continued delays have affected that. I get that. But in Q1 after delivering 2400 Xs the operating cash flow was still -$250M, and free cash flow was -$466M even though they cut their capex in half. The planned capex for 2016 was $1.6B I believe, so with an average spend of $400M, Q1 free cash flow would have been over -$600M, no improvement over their worst quarters.

Is this all due to the Model X QC hit on margins?

So originally they expected the Model X ramp to begin in Q4 2015, a few thousand deliveries, and low margin I presume since it is the start of the ramp. From this they expected close to FCF breakeven. It seems we are now(Q1) at this stage(initial Model X ramp), but no where near FCF breakeven. Why? Even considering Model X QC issues, a $600M difference is too much.

First they gave up FCF positive as a goal and consider it "aspiration" in Q3 2015. In Q4 2015 ER they said don't expect Q1 FCF positive, but March could be. However, this is including their ABL of about $400M.

Second $1.6B capex was Q4 2015 guidance. They just raised it by 50%, but anticipate most of the increase would be in H2.

Third, Model X had about -4% gross margin (they gave the ASP for both, numbers sold for both, overall GM, using 26% GM for Model S, you get the GM for Model X), this resulted in about $125M unplanned loss conpared to if they achieved 26% GM on Model X too.

Lastly, TE contributed onel $10M revenue and maybe 1 or 2 M gross profit at most. I think this missed the mark too.