Julian Cox
Banned
Tesla Motors, Inc. (TSLA) Pre-Market Trading
$250.51
*
20.74
9.03%
Read more: Tesla Motors, Inc. (TSLA) Pre-Market Trading
Good.
$250.51
*
20.74
9.03%
Read more: Tesla Motors, Inc. (TSLA) Pre-Market Trading
Good.
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NiceTesla Motors, Inc. (TSLA) Pre-Market Trading
$250.51
*
20.74
9.03%
Read more: Tesla Motors, Inc. (TSLA) Pre-Market Trading
Good.
That about sums it up why i have this big stupid grin on my face since Elon announced the 115k number.If ever there was going to be a Tsunami of Hurt 2.0---it should begin today. Tesla will need to follow this with reporting great Q1 delivery numbers then Q1 earnings. If they can nail the trifecta, we'll once again get to see the streets run red with the losses of the shorts.
Here's hoping.
We are simply awestruck by the demand surfacing for the Model 3. While we have disagreed with traditional OEMs (comments circa 2008/09) and various investors (comments circa 2012-16) both of whom have questioned whether "demand exists" for electric vehicles, we had no idea the reservation orders would be this strong for the Model 3. We are actually disappointed, having been at various Tesla store locations yesterday, that we chose to wait for online ordering later in the evening.
However, as we attempt to shake off enthusiasm and hunker down to do some fundamental analysis, our focus shifts to production. We originally launched coverage of TSLA with a Hold rating as we saw considerable obstacles, both financial and physical, with respect to battery and vehicle production. While the Model 3 will harness learnings from the Model S and X production lines, it will ultimately require an entirely new, high volume, manufacturing line. We do not know at this point whether the vehicle will incorporate greater use of steel vs. aluminum, nor do we have a sense of expected battery pack costs at the time of production, which provides a foundation for our Model 3 gross margin expectations over time (see our comments below for further details).
Our $325 target price is predicated on a model assuming 200k units produced annually in 2020, which is substantially lower than TSLA's guidance for 500k units annually. The initial Model 3 reservations reduce our concerns with respect to achieving management's guidance at some point in the next 5-7 years, but given the complexity associated with vehicle manufacturing and the fact that TSLA has little incentive (besides investor appetite for delivery growth and GAAP profitability) to accelerate production at the expense of quality, protecting against the risk of a major recall. However, we think reservations defend our belief that demand exists and the Model 3 is "miles ahead" of the "competition" on various fronts, reiterate Buy.
What, exactly, would you do this morning if you were working on an EV over at BMW, or Volkwagen, or Audi? Personally, after throwing up in the toilet, I'd rip up everything we'd been working on and start from scratch.
After Apple released iPhone, Nokia board had a meeting. Their conclusion was "don't worry, people will drop the iPhone to the ground and easily shatter the screen." I guess their brains indeed couldn't function at some moment. Now I think some car companies' management will think "not a big worry, 150k reservation is just 0.2% in the 80 million market." They will be missing three things:What, exactly, would you do this morning if you were working on an EV over at BMW, or Volkwagen, or Audi? Personally, after throwing up in the toilet, I'd rip up everything we'd been working on and start from scratch.
Ain't no way other car makers can produce Model 3's level of performance and functionality anywhere near this price level.
To all that have short term calls/lotto tickets/stock/leaps: This should be a good day.....and if we close over $250 today, there will be some margin calls Monday when EM will hopefully announce a beat on the 16K Q1 deliveries.