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.
I can understand the negative sentiment from some on this board. All I can do is share some of my perspective. I was fairly bearish on the Model X ramp and delays. I felt like it gave a bad precedence. Also, I don't think Elon was being completely transparent during the delays (ie., 2nd half of 2015). He made it seem like they had no significant issues, but in retrospect they did. This hurts credibility, along with guidance for X continuously being missed.
As a result, I didn't purchase any options or LEAPs during the entire 2015 or early 2016 due to my short-term neutral-bearish stance (but held 99%+ of my shares because of my long-term bull stance).
But as much as the Model X ramp bothered me (and I even ranted about the delays and communication mishaps on another post), in my perspective so much was riding on the Model 3 reveal and how many reservations they would take in. The Model 3 was better than expected (especially after getting a test ride myself) and reservation count was beyond my highest expectations. What this does is provides the ultimate evidence/proof that there is enough demand to fuel Model 3 growth. This, IMHO, is the most important issue, namely will people buy the Model 3 or not? And if so, how many? Now, with the early reservation count, that question seemed to have an answer (at least for now). And it's a resounding yes... with yearly demand probably being 500k-1M cars/year for just the Model 3. And they haven't even released the Model Y, yet.
So, now that Tesla has answered the most important question in their existence, the company's future is majorly de-risked.
Now, I know the stock price is down after the ER and people are saying how the increased targets increase execution risk, etc. But I don't think they increase risk much at all. In fact, ramping production only will solidify Tesla's position earlier and give them a greater competitive advantage. Yes, ramping production will take more capital but it's possible, and probably likely, that Tesla can do so in a very efficient manner. It looks like the impending capital raise will be to boost Fremont and GF #1 production. (Next raise next year might fund new factories.) So, yes they need to spend more money but I think it'll be reasonable. I think they'll likely try to raise around $2B very soon, perhaps half equity and half convertible debt (but I'm just guessing). With that money, they'll be fine ramping up production to volume production (ie., 100k Model 3s) in late 2017 and into 2018. They'll likely have to raise more money in summer/late 2017 to fund their 2019 production targets though.
Before the Model 3 reveal, I was hoping that Tesla would raise another round right after the reveal if the stock price was at $250 or higher. It's too bad that they didn't do that. But, whether Tesla raises $2B at $25B, $30B, or $35B market cap, I'm not really too concerned since the bigger question (of Model 3 demand has been answered). I also personally didn't buy into the theories that Elon was trying to orchestrate a short squeeze before raising funds. I think Elon is way too busy doing other things than to spend time figuring out how to squeeze shorts. And I wouldn't want him to be wasting time on that anyway. His time should be going into making awesome products and leading his companies to make awesome products.
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.
Overall, Tesla is doing great. I can't wait to see the Model 3 next year. Tesla will raise the money they need. And I have no major complaints.
