Short-Term TSLA Price Movements - 2016

[The Blue Owl]

Graeter's Ice Cream

www.graeters.com

Not in Canada, unfortunately.

 

[AlMc]

OK, we've covered American Ice Cream and post lengths. How about some comment on the snowstorm next?

Back on topic, TSLA hopefully improves its customer communication going forward or the upcoming events like the Q4 ER and the Model 3 reveal are going to be overshadowed by all the complaints and articles about clueless customer service. Why does this hi-technology company have no means of tracking a vehicle's status other than rare vague statements that say nothing? This is going to be a disaster when they really start ramping up especially for the Model 3. I know that is 2 or 3 years off, but it's been months since they started production of the X and they still can't tell people what is going on with their cars.

This is an interesting topic and it's been brought up a number of times before. Honestly, I don't think the communication thingy will affect Model 3 at all. First of all, there will always be people who complain simply because they like being negative and making everyone else around them as miserable as they are. Some of the complainers fall into that category. (If the shoe doesn't fit, don't try and jam it on your foot.)

But for discussion's sake let's pretend the customer is always gracious, reasonable, positive and right. And let's pretend Tesla doesn't improve in this area (and frankly what are the odds considering it's been a complaint for a number of years?). As a comparison, people have complained about dealerships for decades, but they still buy cars from dealerships by the truckload. They've complained about mechanics ripping them off, but they still take their cars in to be fixed hoping they'll get one of the honest ones. They've complained about politicians being corrupt, but people still choose to vote even when their choice is bad and really bad. They complain about Tesla communication, but they love the car and often really like Tesla employees so they keep buying. I could go on and on and on. Point being, people adapt, they give concessions, and sometimes they just grin and bear it. It's part of life - accepting that nothing and nobody is ever perfect and *we* always think *they* should do a better job, because surely *we* could do a better job and *we* expect it but interestingly rarely get it.

Companies are groups of people and people aren't perfect. Tesla is a car company in Silicon Valley. WTH?! That gives it both strengths and weakness, advantages and disadvantages. The company culture and the general personalities and traits (and median age?) of the employees is quite different than a century old car company in Detroit. Additionally, the world is going through a big communication transition because of the Internet, social media, cellphones/texting etc... I just saw a FB posting today that basically suggested we're headed back to the days of hieroglyphics for communication.

Communication issues have been discussed many times before and I believe we all agree that it could, and should, be better. EM has stated that he wants the delivery experience to be 'fantastic' (my word, but his sentiment). The Roadster, S and X have been, for the most part, purchased by early adopters that *probably* will put up with poorer communication than we would expect the model3 buyer to put up with.
Suggestions that people should *accept* poor communication because that is what we get from ICE dealerships and mechanics..really? Is that our standard now?

Several people have suggested, and I agree, that a high tech company should be able to track production, transport and delivery of their products once a VIN is assigned. Not only would this make it easier for the customer but for the DSs as well. Many DSs are put in the position of wanting to give out info and either give out incorrect info in their efforts to *try* to help or don't give out info/return emails/phone calls because they don't know the answer and can't access the info.

A tracking system should not be hard to develop. Great assignment for one of the interns.

I have yet to come in contact with anyone in TM management, sales, delivery or service that is not courteous so I do not believe it is a *people problem*. It is a company problem that needs to be addressed IMO.

 

[tinm]

I'd gladly sell my home and move from New Mexico to Silicon Valley to join Tesla and own the project to improve intra-company and customer-facing communications challenges. It'd be an awesome project. I would love nothing more than to see the problem fixed.

But, there is a separate topic for the communications stuff.

Meanwhile, I am trying to figure out how TSLA climbs out of these doldrums and gets back to 240, 250, and northwards. Earnings report and conf call only 3 wks away. Does stock linger until then?

 

[Zhelko Dimic]

As to the comments about poor communication, people and companies don't change unless it is a necessity for survival, or maybe they see the light and feel motivated. In the case of Tesla, good or bad, the company probably doesn't see that their communications have affected the company negatively. When it does, and it becomes clear changes are required, I am sure they will recognize the need to put in place the structure and personnel to address those concerns.

Wasn't Jerome pushed on the side? Perhaps there was some disappointment with slow pace of fixing CS? I have no data, just a theory.

More likely, confusion around Model X is because Tesla prioritizes investors vs. customers. Tesla depends on the stock price to grow to became behemoth that it could be. They're trying to manage Model X roll-out to best sooth markets and preserve some semblance of execution. Tesla took seats in-house and changed door supplier last minute, and there is QC chaos related to retooling, maybe missing components. So Tesla prioritizes output and make decisions on the fly, shift people to close process holes etc, there are bottlenecks, and batches of cars that wait for a particular fix/component.
It's not a steady state operation yet (process is likely still being developed), but one full of manual interventions. This makes it impossible for DS to offer reliable information. Instead, DSs are likely instructed to say nothing, and offer no promise. With good reason, as dealing with customer that is in dark is still easier than with customer whose expectation has been mismanaged and promise unfulfilled (e.g. promised car on particular day and fail to delivery with wide margin).

I approve of this choice. X-ers are early adopters and will overlook it, markets are merciless.

However, process needs to be much more streamlined for Model 3 roll-out, all eyes will be on Tesla, and customer demographics less forgiving.

Damn, this was supposed to be short post, I apologize, I'm just not great writer...

 

[Causalien]

Wasn't Jerome pushed on the side? Perhaps there was some disappointment with slow pace of fixing CS? I have no data, just a theory.

More likely, confusion around Model X is because Tesla prioritizes investors vs. customers. Tesla depends on the stock price to grow to became behemoth that it could be. They're trying to manage Model X roll-out to best sooth markets and preserve some semblance of execution. Tesla took seats in-house and changed door supplier last minute, and there is QC chaos related to retooling, maybe missing components. So Tesla prioritizes output and make decisions on the fly, shift people to close people etc, and this makes it impossible for CS people to offer reliable information. Instead, CSs are likely told to say nothing. With good reasons, as dealing with customer that is in dark is still easier than with customer whose expectation has been mismanaged and promise unfulfilled (e.g. promised car on particular day and fail to delivery with wide margin).

I approve of this choice. X-ers are early adopters and will overlook it, but markets are merciless.

However, process needs to be much more streamlined for Model 3 roll-out, all eyes will be on Tesla, and customer demographics less inclined to overlook issues.

Damn, this was supposed to be short post, I apologize, I'm just not great writer...

From my point of view. TSLA service was one of the bright side of the business. It started going down once Jerome was put on a 1 year leave. Usually companies don't put people on a 1 year leave and lay them off if they are underperforming. So the most likely scenario is Jerome feeling burnt out and want to leave, but Elon wants him to reconsider. If I was in Jerome's shoes and see the clusterf**k that is to come that is ModelX service, I'd reconsider too. With Model 3 on the horizon, the workload will probably increase by 10x. I am all for working to your death, but I am hesitant about working to your death 10x faster.

 

[AlMc]

I'd gladly sell my home and move from New Mexico to Silicon Valley to join Tesla and own the project to improve intra-company and customer-facing communications challenges. It'd be an awesome project. I would love nothing more than to see the problem fixed.

But, there is a separate topic for the communications stuff.

Meanwhile, I am trying to figure out how TSLA climbs out of these doldrums and gets back to 240, 250, and northwards. Earnings report and conf call only 3 wks away. Does stock linger until then?

We get to those TSLA prices with some positive analysts' reports (probably none till after Q4ER and 2016 guidance) and/or Q4ER positive cash flow (unlikely) and/or some solid information about progress on the GF/Model 3/weekly production numbers. I think the market is not going to allow a TSLA 'pop' with positive guidance from EM at the ER. It will need some concrete evidence.

my 'more steak/less sizzle' mantra.

 

[FURY]

This is making ICE Scream... Actually Thrifty Drug Store chain in So Cal has some of the "richest" ice scream and the one tracking parameter that validates taste testing is the fat content... TSLA doesn't share that, in even the most remote sniff.

The snowstorm in the Eastern US is, however, the issue of the moment and, if memory serves, the last, significant Eastern US snowstorm, delayed deliveries, resulting in a net delivery miss for that month/quarter. This is a lesson learned, I hope, and the net deliveries, after crop (weather) forecasting have been shunted to be spot on.

Thnak you very much

Fury

 

[ggies07]

The snowstorm in the Eastern US is, however, the issue of the moment and, if memory serves, the last, significant Eastern US snowstorm, delayed deliveries, resulting in a net delivery miss for that month/quarter. This is a lesson learned, I hope, and the net deliveries, after crop (weather) forecasting have been shunted to be spot on.

Fury

True, but then on the flip side if we continue to have strong storms like these year after year, it should help the Tesla Energy area of the company. Hopefully in ten years most people won't be losing power during these storms due to having battery backups.

 

[Zhelko Dimic]

We get to those TSLA prices with some positive analysts' reports (probably none till after Q4ER and 2016 guidance) and/or Q4ER positive cash flow (unlikely) and/or some solid information about progress on the GF/Model 3/weekly production numbers. I think the market is not going to allow a TSLA 'pop' with positive guidance from EM at the ER. It will need some concrete evidence.

my 'more steak/less sizzle' mantra.

I think there is tremendeous pressure due to perceived slow Model X ramp. Honestly, I initially thought Xs will start rolling second or third week of October. And yet, there is still just a trickle of information.

However, I trust Elon will walk into conference call with something positive, like 400-500 weekly X production at that moment, maybe reasonably close to FCF, or it would've been FCF if they didn't have to take on retooling/seats, and another bombshell or two. He's seen this movie before. I expect some shorts start slowly covering sometime next week, exhibiting upward pressure on the stock. Walking into conference call naked short is high-risk event, and there are foolish ones to do it, but some will be smart enough to get out. I agree with Julian that less shorts get out, there is higher chance of fireworks

 

[AlMc]

I think there is tremendeous pressure due to perceived slow Model X ramp. Honestly, I initially thought Xs will start rolling second or third week of October. And yet, there is still just a trickle of information.

However, I trust Elon will walk into conference call with something positive, like 400-500 weekly X production at that moment, maybe reasonably close to FCF, or it would've been FCF if they didn't have to take on retooling/seats, and another bombshell or two. He's seen this movie before. I expect some shorts start slowly covering sometime next week, exhibiting upward pressure on the stock. Walking into conference call naked short is high-risk event, and there are foolish ones to do it, but some will be smart enough to get out. I agree with Julian that less shorts get out, there is higher chance of fireworks

With a couple other high profile company ERs coming up next week it will also be interesting to see how the market responds to them. Even a 'good ER' by TM may see the stock change as neutral. If shorts of TSLA start to cover prior to ER it will be because the market seems to be 'happy' with Apple and Facebook ERs and the shorts won't want to chance a 'happy' market response to the TM ER>

edit: If we go into the ER in the 200-210 range I will sit on my stock and LEAPS; If we get a run up to 220-30 prior to ER I will add some protective puts; If we are 190-200 I will probably buy a couple short term calls if the price on those calls is right.

 

[Zhelko Dimic]

With a couple other high profile company ERs coming up next week it will also be interesting to see how the market responds to them. Even a 'good ER' by TM may see the stock change as neutral. If shorts of TSLA start to cover prior to ER it will be because the market seems to be 'happy' with Apple and Facebook ERs and the shorts won't want to chance a 'happy' market response to the TM ER>

This is all true. However, I actually agree with Julian that Elon is likely preparing BBQ, and is collecting charcoal at the moment. His active participation changes things in direction of more likely 'happy' moments.

Elon, I hope you hear us! C'mon, do one BBQ for your fans!

 

[AlMc]

This is all true. However, I actually agree with Julian that Elon is likely preparing BBQ, and is collecting charcoal at the moment. His active participation changes things in direction of more likely 'happy' moments.

Only time will tell. IF we get another short squeeze (and I am not convinced we will) I don't see it till model3 reveal. I have been wrong before and accept I will be wrong in the future. I just hope I am right more often than wrong. My investing mantra: Educated Dumb luck

 

[Krugerrand]

... purchased by early adopters that *probably* will put up with poorer communication than we would expect the model3 buyer to put up with.

I don't agree. Have no evidence to the contrary and really don't want to get into the discussion of why I don't agree since it'll surely raise the hackles of some.

Suggestions that people should *accept* poor communication because that is what we get from ICE dealerships and mechanics..really? Is that our standard now?

That's not what I said. What I said was we *do* accept via our own actions. 'Should' and 'do' are TWO VERY DIFFERENT things. But yes, *our* standards are typically a whole lot lower than they probably *should* be given thousands of examples throughout every day life of what we *do* accept.

I have yet to come in contact with anyone in TM management, sales, delivery or service that is not courteous so I do not believe it is a *people problem*. It is a company problem that needs to be addressed IMO.

Of course it's a people problem. A DS that gives out incorrect information to 'try' is making a mistake. A DS who doesn't return a phone call/e-mail because they don't have the info. or access to the info. is making a mistake. The person/people who oversee the education/training of DS's/service/etc... is clearly making mistakes.

You can't separate people from the company. The people ARE the company. The company is not some AI entity.

 

[mmccord]

Is Haagen-Dazs not considered good ice cream by the standards of ice cream connoisseurs? 'Cause I love it, and I'd like to know what else I can buy in a Canadian store that is significantly better.

Pretty much everything you need to know about a particular ice cream can be found in the ingredients list & fat content. Here is Haagen-Dazs Vanilla:
http://www.haagendazs.us/Products/Product/2473

cream, skim milk, sugar, egg yolks, vanilla extract
17g of fat per half cup

This is a fine recipe with a good amount of cream.

Here is turkey-hill all natural:

Vanilla Bean All Natural Recipe | Turkey Hill Dairy

NONFAT MILK, CREAM, SUGAR, VANILLA, VANILLA BEAN.
9g of fat per half cup

The bad: they use less cream, resulting in a lower fat content. The good: it's about 1/4 the price by volume.

Here is a typical ingredient list of 'normal' ice cream sold in stores:

Breyers® - Original - Homemade Vanilla

MILK, CREAM, SUGAR, CORN SYRUP, WHEY, EGG YOLKS, CAROB BEAN GUM, MONO AND DIGLYCERIDES, SALT, NATURAL FLAVOR, VANILLA EXTRACT, ANNATTO (FOR COLOR), GUAR GUM, TARA GUM
7g of fat per half cup

and they call that 'homemade', lol

 

[valuationmatters]

Question for longs and shorts alike. Why have we not seen any independent reviews of the Model X by Road and Track, Consumer Reports, Motor Trend, Car and Driver, Edmunds, etc.? Isn't it normal to allow these "experts" to review the car as soon as it is being sold? I would think independent reviews would be a good thing. Thoughts?

 

[AlMc]

I don't agree. Have no evidence to the contrary and really don't want to get into the discussion of why I don't agree since it'll surely raise the hackles of some. Neither of us have any evidence either way....We can disagree. We are entitled to opinions.:wink:



That's not what I said. What I said was we *do* accept via our own actions. 'Should' and 'do' are TWO VERY DIFFERENT things. But yes, *our* standards are typically a whole lot lower than they probably *should* be given thousands of examples throughout every day life of what we *do* accept. But IIRC has EM not stated that he wants it to be an 'exceptional' ( my words, his intent) buying experience?



Of course it's a people problem. A DS that gives out incorrect information to 'try' is making a mistake. A DS who doesn't return a phone call/e-mail because they don't have the info. or access to the info. is making a mistake. The person/people who oversee the education/training of DS's/service/etc... is clearly making mistakes.

You can't separate people from the company. The people ARE the company. The company is not some AI entity.

The policy and direction for good communication comes from upper management. Yes, they are people, but they set the direction of the company. So, IMO, it is a company issue that needs to be improved. If the staff does not implement or follow the policies put in place then it is a people problem and those people should be replaced.

 

[Krugerrand]

Question for longs and shorts alike. Why have we not seen any independent reviews of the Model X by Road and Track, Consumer Reports, Motor Trend, Car and Driver, Edmunds, etc.? Isn't it normal to allow these "experts" to review the car as soon as it is being sold? I would think independent reviews would be a good thing. Thoughts?

They haven't been given a car to review or can't yet get a car to review.

- - - Updated - - -

The policy and direction for good communication comes from upper management. Yes, they are people, but they set the direction of the company. So, IMO, it is a company issue that needs to be improved.

 

[Ocelot]

This is all true. However, I actually agree with Julian that Elon is likely preparing BBQ, and is collecting charcoal at the moment. His active participation changes things in direction of more likely 'happy' moments.

Elon, I hope you hear us! C'mon, do one BBQ for your fans!

I feel there will be nearly no movement with the unveil of model 3. If anything, it could hurt, (albeit minorly), the stock price if it appears radically new or different (note I did not say weird). IF there are a "ton" of reservations, we might get a blip upwards, but it could be short-lived. I feel the stock is going to be stuck with the macro environment for the next six months maybe longer. I hope (for my calls sake) I am wrong. TSLA will drift up with the macro, and down with the macro. I think it is extremely unlikely at this point we will test all time highs, until either tesla power gives out guidance or revenue, or model 3 is in production.

As for Elon preparing BBQ...I think Elon is now playing the long game. While outspoken about shorts and stock prices previously, I think he is focusing on bigger things currently. Anyone build a house here, and remember how many 'issues' arose, with solutions needed. Now imagine a gigafactory. Personally I feel thats where all great companies leader should focus, on the product, not the by-product (stock price). I worked at an Easter Seal Camp a long time ago, and I remember one particularly challenging day where my buddy turned to me and said "look after the camper, and everything else will sort itself out". This piece of advice has helped me immensely. Look after the task at hand, and things like stock price will follow.

 

[Papafox]

I feel there will be nearly no movement with the unveil of model 3. If anything, it could hurt, (albeit minorly), the stock price if it appears radically new or different (note I did not say weird). IF there are a "ton" of reservations, we might get a blip upwards, but it could be short-lived. I feel the stock is going to be stuck with the macro environment for the next six months maybe longer. I hope (for my calls sake) I am wrong. TSLA will drift up with the macro, and down with the macro. I think it is extremely unlikely at this point we will test all time highs, until either tesla power gives out guidance or revenue, or model 3 is in production.

As for Elon preparing BBQ...I think Elon is now playing the long game. While outspoken about shorts and stock prices previously, I think he is focusing on bigger things currently. Anyone build a house here, and remember how many 'issues' arose, with solutions needed. Now imagine a gigafactory. Personally I feel thats where all great companies leader should focus, on the product, not the by-product (stock price). I worked at an Easter Seal Camp a long time ago, and I remember one particularly challenging day where my buddy turned to me and said "look after the camper, and everything else will sort itself out". This piece of advice has helped me immensely. Look after the task at hand, and things like stock price will follow.

I'm more optimistic on TSLA's potential stock price and here's why. Even if the macro world is funky in 2016, fund managers need a place to park their money. TSLA looks more attractive than most other companies because:
1) Even though TSLA spends tons on R & D right now, it is a company with high gross margins which are likely to stay high, even in a weak economy, because of a lack of meaningful competition
2) Tesla is production constrained, not demand constrained. A reduction of demand for Tesla products may not affect production and delivery levels in 2016
3) For battery production, Tesla can shift resources between Tesla Energy and Tesla Motors, if needed.
4) Tesla going free cash flow positive in 2016 is just too big an upward move for the market to shrug off
5) If Model 3 receives 200,000 or more reservations, the bear argument of lower oil prices = fewer Tesla sales is debunked
6) Model X transitions from production underperformer to darling of the luxury SUV market this year
7) As Julian pointed out, R & D will decline in 2016 while S, X, and Tesla Energy all produce lots of revenue during the year

 

[woof]

Several people have suggested, and I agree, that a high tech company should be able to track production, transport and delivery of their products once a VIN is assigned. Not only would this make it easier for the customer but for the DSs as well. Many DSs are put in the position of wanting to give out info and either give out incorrect info in their efforts to *try* to help or don't give out info/return emails/phone calls because they don't know the answer and can't access the info.

A tracking system should not be hard to develop. Great assignment for one of the interns.

Perhaps they they already do but choose not to share. I don't think Tesla should give out any information about where in the process a given car is. Why? Because then people start to obsess about stupid things. For example, someone will start tracking how long cars spend in the paint shop. The'll do all sorts of statistical analysis showing the average time in the shop. Then, one one persons car takes longer, that person will start to feel something is wrong and obsess about poor quality paint, and why oh why did my car take an additional 2 hours? Then one one persons car takes shorter, that person will start to feel something is wrong and obsess about poor quality control and how could it possibly have gone through so fast and still be a quality job?

Don't believe me? Check out this thread:
VINs assigned way too early

I don't think any information about the car, including the VIN, should be given until the SC is ready to hand over ownership. Until that time, the car is owned by Tesla, and it's status is Tesla's proprietary information. Only when the car is scheduled for delivery should the VIN be given to the potential owner, for finance and insurance paperwork.