Short-Term TSLA Price Movements - 2016

[lango]

I couldn't disagree more.

For customers who must, in their minds, have a BEV mid-size crossover, there's no other option. However, Tesla's selling point is that the car, service, and overall experience are great. Some customers will just throw in the towel and buy or lease something else rather than deal with the hassle of continual delays and miscommunication. They may very well go to another manufacturer in a few years if alternative BEV crossovers become available. A lost completed sale today may not be a recoverable sale tomorrow.

As a shareholder, I see the past few months as damaging to Tesla's brand and reputation. Early adopters of the Roadster and Model S were willing to put up with delays. As Tesla gets a wider audience, that tolerance for delays begins to wear thin. The Roadster is obviously a sports car and the Model S was admittedly "guy centric" (due to lack of interior storage and amenities). General consumer soccer mom, even a wealthy one, is not going to want to sit around for months to get a new family hauler.

In Ashlee Vance's biography of Elon Musk, there's a story on Elon's thinking about SpaceX: Elon was telling employees that every day that went by with Falcon 1 being delayed was a lost day in the future where SpaceX would not be generating as much revenue as it could generate. I believe the same applies to Model X. Every day that goes by with the ramp stalled for whatever reason, is a day with lost revenue. From a business perspective, Model 3, completion of the Gigafactory, and addition of overseas vehicle manufacturing plants and/or additional Gigafactories is going to require more $, and the sooner Tesla gets that $ in hand, the better.

If Tesla can get this :cursing:show sorted out soon, and the financials begin to reflect strength of deliveries, TSLA will recover. Right now I interpret the current market conditions as reflecting a combination of macro fears and doubt that Tesla can get this situation under control soon. This is specifically dangerous to people playing with options, as nobody knows exactly when there will be a resolution to the Model X situation.

Under these conditions, I believe short term price movements are going to be too volatile for most (non-pro trader) people to make $ trading. I've seen amateur speculators crash and burn many times over the past 20 years. For most people, my advice continues to be the same: invest in TSLA only what you can afford to lose, and plan for holding until at least 2020-2021, which is when I expect that Model 3 and its crossover derivative will be shipping in the hundreds of thousands per year. Vanguard index mutual funds are a much better choice for those who cannot stomach the ups and downs (disclosure: a large % of my tax-advantaged retirement accounts are invested in Vanguard index funds).

I agree with what you said but I don't think there is any damage yet. The people that are waiting on X now put down a $40k deposit so they are not your average consumers and are more informed and follow the company. New customers of X are informed that they have to wait 6 months or more.

Sooner or later they have to abandon this beta launch approach, but I actually think they can do it for Model 3 too if the reservation deposit is high enough without any long term consequences.

 

[Fallenone]

I am aware of the fact they delivered 17k S in Q4 2015, I am also aware that was achieved by pushing out quite a few showroom/loaners/inventory/referral/Denmark tax rule related cars. Therefore 17k would fall back a bit in Q1 and maybe Q2. I don't think S will stop growing at all at 13-15k per quarter level. But I also don't think it can still grow 50% yoy at that level. That's what "demand ceiling" means to me, stop growing at least 50% yoy.

Fact check: Tesla delivered 17,192 Model S in Q4, pulling up around 2,000 orders from Q1, and still end up with the backlog indicated by the Tesla estimated delivery timeframe around the world per the table below, even though the beginning of the year is traditionally slow period for car sales.

Based on this *current* Model S demand plateau stands conservatively at 17 x 4 =68,000 units per year, or very healthy 70% higher than original as-designed output of the Tesla factory of 40,000 cars to satisfy global demand for Model S and Model X COMBINED. This originally projected 40K/year of combined MS/MX demand was incessantly assailed and ridiculed by Tesla bears.

Tesla will likely deliver at least 18,000 MS and MX in Q1.

Judging by the current freak-out quotient on this thread and sudden appearance of new theatrically aspiring members playing Jokers, we are at or close to the bottom. I've converted some of my long term shares held since the end of 2012 to January 2017 calls.

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[lango]

I am aware of the fact they delivered 17k S in Q4 2015, I am also aware that was achieved by pushing out quite a few showroom/loaners/inventory/referral/Denmark tax rule related cars. Therefore 17k would fall back a bit in Q1 and maybe Q2. I don't think S will stop growing at all at 13-15k per quarter level. But I also don't think it can still grow 50% yoy at that level. That's what "demand ceiling" means to me, stop growing at least 50% yoy.

20% is also significant growth so the term "demand ceiling" is misleading and in terms of unit growth 20% now is close to what 50% was a while back.
Tesla is still quite small in Europe and in Asia so I think there is more growth to be had, also for Model S.

 

[Fallenone]

I totally agree 20% yoy growth is great. It's just after the consecutive 50%+ yoy growths, 20% would seem a bit of a lackluster. Everyone knows nothing can grow 50% each year for every year, but when that day finally comes, people can't help but feel a bit disappointed, and the bears would roar higher than ever.

20% is also significant growth so the term "demand ceiling" is misleading and in terms of unit growth 20% now is close to what 50% was a while back.
Tesla is still quite small in Europe and in Asia so I think there is more growth to be had, also for Model S.

 

[lango]

I totally agree 20% yoy growth is great. It's just after the consecutive 50%+ yoy growths, 20% would seem a bit of a lackluster. Everyone knows nothing can grow 50% each year for every year, but when that day finally comes, people can't help but feel a bit disappointed, and the bears would roar higher than ever.

Yeah well, the idea is of course that Model X and TE would push it up to a total of 50% until 2018 when Model 3 hits

 

[vgrinshpun]

I am aware of the fact they delivered 17k S in Q4 2015, I am also aware that was achieved by pushing out quite a few showroom/loaners/inventory/referral/Denmark tax rule related cars. Therefore 17k would fall back a bit in Q1 and maybe Q2. I don't think S will stop growing at all at 13-15k per quarter level. But I also don't think it can still grow 50% yoy at that level. That's what "demand ceiling" means to me, stop growing at least 50% yoy.

My point is that demand - the rate of incoming orders in Q1 is at least equal to the rate at which cars were delivered in Q4, i.e. 17,192 cars, as evidenced by the backlog.

The current steady state production capability for MS is above 1200 cars/week, totaling 15,000 cars per quarter.

Given that rate of incoming orders is at least 17K per quarter, current production capacity allocated to MS is about 15K cars per quarter, there will be about 15K MS produced in Q1. Since Tesla aspiration is to be FCF positive in Q4 I expect them to repeat what they did in Q4 and pull up about 2K deliveries from Q2 (partially emptying the pipeline). So in Q1 they will likely deliver 17K of MS, similar to Q4. I estimate Model X deliveries to be conservatively at 1,000, for a total of about 18K of MS/MX in Q1.

Regarding the growth, Tesla surely can not accommodate growth of MS at 50% going forward, the combined MS/MX deliveries in 2016, however, will likely result in more than 50% YOY growth.

However, once again, to keep things in perspective, short three years ago Tesla projected demand for MS was almost 3.5 times lower that the current rate of incoming orders, so I would not necessarily rule out robust growth of MS demand going forward.

 

[Fallenone]

I'm really not confident they can pull off another 17k Model S deliveries in Q1. Q4 was not just pulling from Q1 but also a lot of tricks to temporarily spur demand and hurts profit. This will not help much on the FCF goal for Q1. 15k S is more likely in my opinion. We'll see. When it comes to total deliveries 50% yoy, no problem.

My point is that demand - the rate of incoming orders in Q1 is at least equal to the rate at which cars were delivered in Q4, i.e. 17,192 cars, as evidenced by the backlog.

The current steady state production capability for MS is above 1200 cars/week, totaling 15,000 cars per quarter.

Given that rate of incoming orders is at least 17K per quarter, current production capacity allocated to MS is about 15K cars per quarter, there will be about 15K MS produced in Q1. Since Tesla aspiration is to be FCF positive in Q4 I expect them to repeat what they did in Q4 and pull up about 2K deliveries from Q2 (partially emptying the pipeline). So in Q1 they will likely deliver 17K of MS, similar to Q4. I estimate Model X deliveries to be conservatively at 1,000, for a total of about 18K of MS/MX in Q1.

Regarding the growth, Tesla surely can not accommodate growth of MS at 50% going forward, the combined MS/MX deliveries in 2016, however, will likely result in more than 50% YOY growth.

 

[Zhelko Dimic]

I'm really not confident they can pull off another 17k Model S deliveries in Q1. Q4 was not just pulling from Q1 but also a lot of tricks to temporarily spur demand and hurts profit. This will not help much on the FCF goal for Q1. 15k S is more likely in my opinion. We'll see. When it comes to total deliveries 50% yoy, no problem.

Even 15K cumulative in Q1 will all but assure 75K+ year.
Projecting from last year Q1 11K/50.6*75~16K(Q1) is what they need to follow in footsteps of the last year.
We all know they will sell any and every X they can produce this year, so once they've ramped it, curve should be generally steeper than last year. With second line in place, presumably most of the hard work on scaling is done, so majority of 2016 should be cruise, compared to 2015

BTW, I don't remember hearing anything about Model X as much easier sell than Model S. I'm anti-SUV in general, but one must recognize this is _MUCH_ bigger market than Model S. I don't know precise numbers, but it's easily 2X, 3X, maybe more.

 

[vgrinshpun]

I'm really not confident they can pull off another 17k Model S deliveries in Q1. Q4 was not just pulling from Q1 but also a lot of tricks to temporarily spur demand and hurts profit. This will not help much on the FCF goal for Q1. 15k S is more likely in my opinion. We'll see. When it comes to total deliveries 50% yoy, no problem.

Well, once again, regardless the "tricks" that were employed in Q4, the current rate of incoming orders is obviously healthy enough in order not to deplete the backlog, in spite of pulling up to 2K orders from Q1 to 2015 Q4, and delivering 17K of cars in Q4. So they clearly have enough orders to pull of 17K deliveries in Q1 as well. The limiting factor will be production and execution of deliveries, not demand.

 

[bh1783]

My point is that demand - the rate of incoming orders in Q1 is at least equal to the rate at which cars were delivered in Q4, i.e. 17,192 cars, as evidenced by the backlog.

The current steady state production capability for MS is above 1200 cars/week, totaling 15,000 cars per quarter.

Given that rate of incoming orders is at least 17K per quarter, current production capacity allocated to MS is about 15K cars per quarter, there will be about 15K MS produced in Q1. Since Tesla aspiration is to be FCF positive in Q4 I expect them to repeat what they did in Q4 and pull up about 2K deliveries from Q2 (partially emptying the pipeline). So in Q1 they will likely deliver 17K of MS, similar to Q4. I estimate Model X deliveries to be conservatively at 1,000, for a total of about 18K of MS/MX in Q1.

Regarding the growth, Tesla surely can not accommodate growth of MS at 50% going forward, the combined MS/MX deliveries in 2016, however, will likely result in more than 50% YOY growth.

However, once again, to keep things in perspective, short three years ago Tesla projected demand for MS was almost 3.5 times lower that the current rate of incoming orders, so I would not necessarily rule out robust growth of MS demand going forward.

Why wouldn't Tesla be able to continue growing Model S demand? They aren't even in many of the largest markets for luxury cars. There's a bunch of Model X's being shipped to the Middle East currently, so there's a lot of demand in places like the UAE. Also Tesla is opening stores in Mexico and Korea this year. Tesla's global footprint is still relatively small and is missing a lot of major markets.

 

[vgrinshpun]

Even 15K cumulative in Q1 will all but assure 75K+ year.
Projecting from last year Q1 11K/50.6*75~16K(Q1) is what they need to follow in footsteps of the last year.
We all know they will sell any and every X they can produce this year, so once they've ramped it, curve should be generally steeper than last year. With second line in place, presumably most of the hard work on scaling is done, so majority of 2016 should be cruise, compared to 2015

BTW, I don't remember hearing anything about Model X as much easier sell than Model S. I'm anti-SUV in general, but one must recognize this is _MUCH_ bigger market than Model S. I don't know precise numbers, but it's easily 2X, 3X, maybe more.

I am cautiously optimistic as well, but have to warn against using words like "cruise" in describing 2016 .:smile: They have to do a lot of heavy lifting, and general market conditions will remain choppy for some time, so I am cautious about SP short term.

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Why wouldn't Tesla be able to continue growing Model S demand? They aren't even in many of the largest markets for luxury cars. There's a bunch of Model X's being shipped to the Middle East currently, so there's a lot of demand in places like the UAE. Also Tesla is opening stores in Mexico and Korea this year. Tesla's global footprint is still relatively small and is missing a lot of major markets.

I did not say that MS demand will stagnate, just that it is not likely to hit 50% YoY growth level.

 

[bh1783]

I am cautiously optimistic as well, but have to warn against using words like "cruise" in describing 2016 .:smile: They have to do a lot of heavy lifting, and general market conditions will remain choppy for some time, so I am cautious about SP short term.

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I did not say that MS demand will stagnate, just that it is not likely to hit 50% YoY growth level.

I would disagree. I think that if they continue their international expansion they will have no problem reaching 50% YoY growth. They probably won't get 50% YoY growth in existing markets, but they still have a tiny global footprint. I think they slowed their international expansion because they have had enough demand in their existing markets. There are still some huge markets opening up this year that will produce great growth for the Model S.

 

[McMuggets]

Fwiw, I was at the Tesla store in Calgary today. Dead mall traffic yet good stream of people visiting the store (some it seemed for the second or third time). Sales associate said Model S has been selling well and they even sold a demo car to people who wanted the car right away and didn't want to wait. Driving today I saw a nice new ocean blue 90D, and have seen a big increase in the overall number of Model S's on the road. This, in economic oil price crash Calgary Alberta. If they can sell electric cars in Calgary to oil loving people during a oil crash, I am almost certain they won't have a "demand problem" for a very very long time. The addressable market is just too huge and Teslas market penetration is just starting.

 

[Spidy]

Fact check: Tesla delivered 17,192 Model S in Q4, pulling up around 2,000 orders from Q1, and still end up with the backlog indicated by the Tesla estimated delivery timeframe around the world per the table below, even though the beginning of the year is traditionally slow period for car sales.

Based on this *current* Model S demand plateau stands conservatively at 17 x 4 =68,000 units per year, or very healthy 70% higher than original as-designed output of the Tesla factory of 40,000 cars to satisfy global demand for Model S and Model X COMBINED. This originally projected 40K/year of combined MS/MX demand was incessantly assailed and ridiculed by Tesla bears.

Tesla will likely deliver at least 18,000 MS and MX in Q1.

Judging by the current freak-out quotient on this thread and sudden appearance of new theatrically aspiring members playing Jokers, we are at or close to the bottom. I've converted some of my long term shares held since the end of 2012 to January 2017 calls.

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I don't think it's such a big backlog. Tesla is just going back to the old pushing quarter numbers. Europe just moved up a few days ago from March, when they reached the point that the deliveries would not longer make it in Q1. Now Tesla will produce for the US market until early March, because those cars can be delivered in Q1. Then they will start building cars for Europe again in late March and those will then have late April/June deliveries.

I also don't think NA deliveries moved to late March in the same way as NA numbers in Q4. For example it moved from January to February in just 4 days. March to late March also in 4 days. Tesla had 2015 December deliveries since 30.9 and first moved to late December on the 18.11. And then moved to January 1 month later. You could order a December car for 2.5 months (30.9-12.12). March delivery so far had 20 days to order, so the late March option would really have to remain an option for at least 1 month to get a similar amount of orders, which I doubt it will, especially considering how fast it moved from March to late March.

 

[mrdoubleb]

PSA: Upcoming interview with Elon on CNN's "Talking Asia" this week. (in Europe as early as tomorrow 9:30 CET i think)

 

[Fallenone]

Expanding internationally could be quite expensive. The sales/cost for the rest of the world Tesla has not penetrated will be lower and lower (otherwise they would have already been there). They need time to go to these other places, thus limiting the growth rate.

Why wouldn't Tesla be able to continue growing Model S demand? They aren't even in many of the largest markets for luxury cars. There's a bunch of Model X's being shipped to the Middle East currently, so there's a lot of demand in places like the UAE. Also Tesla is opening stores in Mexico and Korea this year. Tesla's global footprint is still relatively small and is missing a lot of major markets.

 

[demetri]

Just to be precise, are you given an exact delivery date? I'm only asking because several people posted in the X sub forum that the cars are being held up at SCs for weeks together. Many people were not even being given specific dates even though the cars are right there. Don't know if things have improved since I saw this.

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On a separate note people here are really mixing up long term, medium term, short term, and all terms. But I guess that's what this thread has evolved into. The confusion is what is leading to a lot of debate while many folks are probably on the same page (atleast in some of the time frames)

Was as told its in transit and that I should get ready for early to mid February delivery. Told to get financing, drivers license, insurance in order. Not sure if it will get delayed longer when it arrives at the SC. I'm hoping that they have worked out most issues before shipping to east coast. My friend picked his up at the factory about a week go after a one week delay. Was given a specific date but was cancelled and pushed out a week.
I'm assuming I will get it within a week or two, late February at the latest.
like I said earlier adding to my 200 June calls expecting good news in call. And if the call is not looked upon favorably the 3 reveal, 1q numbers and giga factory party in April will push the stock up. The general market decline is allowing shorts and analysts to push it down. Actual numbers will get it moving in positive direction, just like Google bucked the trend yesterday. Hoping market also bottoms out soon.

 

[schonelucht]

My point is that demand - the rate of incoming orders in Q1 is at least equal to the rate at which cars were delivered in Q4, i.e. 17,192 cars, as evidenced by the backlog.

American cars for the larger part are built in the same quarter that they are delivered and they are nearly half of the total production. Therefore it is not accurate to say that a steady backlog must mean that incoming order rate this quarter equals production rate of last quarter. Secondly, with every day passing the current steady backlog tells us more about the incoming rate of orders in Q2 versus production in Q1 rather than Q4/Q1 comparisons, especially for European/Asian cars. Therefore I would be very hesitant to state that incoming order rate for Q1 must at least match production in Q4' 15.

There are at least a few good reasons why production rate for Q1 on model S could be lower than Q4 last year : closure of the factory for one full week at the start of this quarter and increasingly mixing in model X on the same line that is used to produce model S. And even with production rate keeping up, that does not mean delivery rate does : there is a continuing need to expand the pipeline and increase the inventory of cars due to new Service Centers and Shops. Remember we need to expand that pipeline to account for the growth of 2 quarters since they flushed it out to meet guidance last year. And as icing on the cake : the company is (slowly) building and using model X's for marketing purposes.

Personally, I am trading on the assumption guidance for this quarter is lower than 15k total deliveries. If I am wrong, then I will have to congratulate those who think otherwise because they will reap the gains in a big ways since I believe the global market is on the same path as I am. And we all know that you don't make money short term by following the market.

 

[ev-enthusiast]

TSLA up a bit during early trading in Europe.
Small bounce today and continued sell off into ER?

 

[Ingenieur]

What do you think will happen to the stock if instead of 10 cent profit they post 30-40 cent loss?