With all this talk about the threatening situation for the shorts, perhaps institutions are catching on... About 315 million shares traded hands in Q1 (Source), and of those, one bank, the Bank of Montreal, purchased 4.3 million shares in one quarter, or 1.4% of all shares traded over 61 trading days, almost one day's worth of trading TSLA. They became the 4th largest holder of Tesla in just one quarter, and TSLA is their 9th largest position as of 3/31 (Source). That's some crazy accumulation.
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Ulmo
Active Member
So in other words, the reason for Roadster was to say "we (society/companies (in particular Tesla)) can", and Model S was to say "you (albeit you have to be wealthy) can" since it is nice and looks like a regular car (even fake grill), and the Model X is "Model S but even better" (even has EV grill). These all at high prices. They used fancy looking good car as the selling points for Model S & X. But the reason for the Model 3 is "everyone (eventually) can". So even though they're carrying over some good looks (and performance) intelligence & knowledge from Model S & X (they should), the Model 3's whole reason of existence is no longer "hey look at what we can do and some of you can afford" but now "hey get one of these they're pretty good", so the entire motivation behind Model 3 is a totally different angle (mass production) than Model S&X (mass appeal), therefore, the comment (from Elon) that Tesla is going to become "the best manufacturer" is the point on hand. Whether they become the best or not doesn't matter to stock price (it helps), but that they become good enough, to actually ship the Model 3 in anything approaching the scale of the amount of demand it already seems to have. And instead of Model 3 being a proof of concept car or proof of marketability car (Roadster, Model S&X), it is a mass manufacturing car, and the focus will be on manufacturing to an extent it never was with Model S & X (and therefore they ought to be able to achieve it since that will be their main focus, and that's what Elon was saying). I think that's the point you were sort of trying to make, Johan.
I agree. I think the Model 3 isn't as much about wow factor of a $100,000 (+/- ... mostly +) car, but of an actually shipping $35,000+ car (mostly +). Cutting the price in half and then some makes a huge difference, and more people can afford it. People like me that wouldn't mind parting with $35,000 to get an "ok" electric from Tesla wouldn't mind eschewing the super performance varieties, and would only want that awesome air filter (if available), and stretch stretch stretch to get to the actual price tag as delivered. $100,000 Model S? Why buy it if it's not fully loaded? Suddenly becomes over an eighth of a million dollars! Model 3? It's meant to be affordable. I'll get the bare bones model with JUST the stuff I really want and can afford. Huge difference ... so Tesla isn't producing fancy in Model 3 any more -- they are producing many in Model 3. That's their entire focus.
This is albeit still up-market from cheaper models ... but that's compensated for by the brand value and actual interest in reservations placed. There's risks they could lose a lot of that (to competition and loss of brand interest), but the idea is to catch enough of the huge market of cars being made to keep enough of it to do well. My personal bet is that I think they can.
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OK. One last try to help you (and possibly other readers) understand what is being reported and why you are misinterpreting it. We agree the relevant language is:
"In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, we deemed to be outstanding all shares of common stock subject to options or other convertible securities held by that person or entity that are currently exercisable or exercisable within 60 days of December 31, 2015. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person." (My emphasis)
Note: the antecedent for the last quoted sentence is singular not a class of people as you assert. The purpose of the proxy's table is to show investors the approximate ownership share of the officers and directors. It has to be approximate because it has a time cut off and some O&Ds may exercise some of their vested options and others may not. So it uses the shares outstanding as of the cut-off date (12/31/15) as the denominator in all percentage calculations and each individual O&D's shares and exercisable (within 6 months) options as the numerator for that individual's ownership percentage approximation.
Take Elon as an example. The table show his contribution to the 38,711,940 shares you cite as being owned by O&Ds is 37,193,974 shares at 12/31/15. Agreed? As I pointed out earlier the footnote explains: "8,822,632 shares [are] issuable to Mr. Musk upon exercise of options exercisable within 60 days after December 31, 2015" i.e. are deemed outstanding
On 1/27/16, Elon filed a form 4, Tesla Motors - Statement of Changes of Beneficial Ownership, showing he had acquired an additional 532,000 shares by exercising some vested options, increasing his total from the 28,371,342 shares shown in the proxy footnote as owned by is revocable trust to 28,903,342 after the transaction. Note: If your interpretation were correct wouldn't his form 4 show 37,725, 974 post transaction???
The proxy shows the shares outstanding at 12/31/15 as 131,424,866. The 10k filed in February shows shares outstanding at 1/31/16 as 132,056,338 for a difference during the month of January of 631,472. Most of the increase in shares outstanding is from Elon's exercise during the month.
I hope the foregoing contributes to your understanding, but regardless have a nice day.
They keep repeating though they want most of the expansion to come from operational cash flow, was mentioned again in last ER. It is just very hard to believe. Maybe it is just something they say but if they go down that somewhat deceptive route why not play the game fully and not disclose the increased production goal until the share price is higher and then do the raise as many her believe would happen me included.
How can they achieve this great increase in cash flow and make this believable? There are some different conditions that might have changed that makes it possible:
GM quickly approaching 30% of S and X. For example new prices from key suppliers because of Model 3 future orders.
TE products starting to ship in volume at very good GM.
Slower SC and service center roll-out.
Partnership at the production level, for example with China and a new factory there.
It just seems impossible, 2.25B in capex they want to fund mostly from operational cash flow.
Ulmo
Active Member
I loved how Elon audibly rolled his eyes at TE during the CC and treated it as a bastard high-earning child that he didn't want to talk about because the margins and growth in that were (paraphrasing) "way too high to even compare to Model 3 production" and would interrupt the discussion too much. I've said a few times before that this upsets me, because the energy sector could use some real buffering capabilities for all this direct solar and direct wind harvesting, but what this tells me is that the outward statement (whether true or not) during this CC was that "we will succeed at Model 3 even if we don't make a killing that we could at TE since we will be all-hands-on for Model 3". This is de-risking a bit, too, since there's incredible political pressure against TE from dirty energy interests by the trillions of dollars, so having TE in their back pocket is always useful to say "hey let us make some (millions of) Model 3's, since you know we will anyway, and then when we're done with that, we can do TE, and how much we do TE is how much you bother us for the Model 3 -- if we don't make Model 3 as much because you are against it more, we'll have plenty of left over for TE to pump all over the world and ruin your old fashioned dirty energy models, so HANDS OFF our Model 3 -- let us succeed". Of course, that does a few things -- not only does Model 3 succeed and GF have TE capability, but then clean energy demand goes up and it gives time for dirty energy to "clean up" per se -- just look at Florida Power, Edison, and BH -- all of which are heavily invested in dirty energy and some of the biggest pushers of clean energy and own a lot of clean energy themselves. Then, by the time they're good and ready, after they let Tesla play ball on Model 3, they can come to Tesla and say "hey, we want some of those TE things ... have any?" and Elon can say yeah. So, piss me off, but get there all the same in the end, in good form, too.
My possible FUD is that TE is too expensive to slot into the marketplace beyond a bit of cream skimming, and therefore Tesla doesn't make the "killing" that it can, or that GF gets outside competition to TE cheaper that essentially zeroes out their TE marketplace. I think that in both those cases, then, TE is simply not as interesting, and the "high growth" potential for TE that Tesla is putting back-burner becomes less important, and the fact that GF can make the necessary components for Model 3 is the main relevant point. That's also de-risking to counter-force TE, since that means GF is for Model 3 and TE is just a little bit of margin, not all-in on TE. This probably is more sensible than my ramblings above; Panasonic and a dozen other battery producers can compete in TE, too. Value is created by timing, hard work, and money; other places can do hard work, too, and timing is already well known to everyone, and there's always someone else with money who might be or not be in your pocket.
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I don't have an opinion one way or another about whether funding has been lined up but I doubt a Google-Tesla partnership is in the works, or that Google will be making a significant investment in Tesla. Assuming that Google is going to stick with the autonomy operating systems and is not planning to develop its own cars (which seems a good assumption at this point), it will likely want a self-driving system that it can market to many or most automakers ala the Android model. Tesla is investing in its own proprietary autopilot system that it controls, so unless Tesla is prepared to abandon automony as a competitive advantage (not gonna happen any time soon) I don't think their interests are aligned.
One advantage to accelerating the Model 3 ramp is Tesla will have a much bigger network of cars to gather data for autonomy. Tesla has a huge first mover advantage but once Google or others partner with traditional automakers and install their own data-gathering autopilot systems in millions of vehicles, they could rapidly catch up to and even surpass Tesla's trove of data collected from its smaller fleet. Getting 500,000+ cars per year on the road in short order would sure help.
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You make a good point about their OS's not aligning, but what about car play integration and simply access to Tesla's driving data? Self-learning AI is all about the quality of the training data you feed it. As Tesla's fleet grows, the value of their data grows along with it. Google could invest 5% for a board seat and access to the vehicle data?
Good evening, my first post here. I have been posting on seeking alpha for a week now and thought I will go to other sources as well.
I am trying to post a link on Seeking Alpha, but it keeps getting deleted. It seems to me that Anton Wahlman is their star clickbait and they want to avoid any embarrassment. I get that, but I thought it will help TSLA investors/traders here to know that Anton also wrote the following article on Cramer's website.
The case to split the United States into four countries for Trump, Cruz, Clinton and Sanders
Welcome to the United States of Four Countries
I am trying to post a link on Seeking Alpha, but it keeps getting deleted. It seems to me that Anton Wahlman is their star clickbait and they want to avoid any embarrassment. I get that, but I thought it will help TSLA investors/traders here to know that Anton also wrote the following article on Cramer's website.
The case to split the United States into four countries for Trump, Cruz, Clinton and Sanders
Welcome to the United States of Four Countries
I seriously doubt there will be any data sharing given how important the data is to competitiveness. Some sort of deal is already in the works between Google and Fiat/Chrysler on autonomy so I don't see Google and Tesla partnering on autonomy issues that are core to Tesla's business. Fiat Chrysler CEO: Unclear who owns self-driving cars' data
Depending on how things shake out on autonomy I suppose this could change in the future, but at least for now Tesla and Google seem to be on separate paths.
I stumbled across this Model 3 reservation counter today Tesla Model 3 Reservation Counter. It claims to be "The most accurate forecast available for your Model 3 delivery date". Right now it's at 455k reservations and provides an estimated final delivery date of July 2020 for reservations placed today.
Obviously it's not up to date with new production guidance yet. In the FAQ on the page it also assumes 115k Tesla owners and employees, which seems too high given the 93% of reservations holders are new to Tesla data point. Not sure how reliable this thing is but the 455k seems reasonable, perhaps a bit too high.
I also watched the page for about 15 minutes and it went up 25 reservations, which would over 2,000 per day rate. Might be faster than the average rate since it's a Saturday afternoon right now in North America.
Obviously it's not up to date with new production guidance yet. In the FAQ on the page it also assumes 115k Tesla owners and employees, which seems too high given the 93% of reservations holders are new to Tesla data point. Not sure how reliable this thing is but the 455k seems reasonable, perhaps a bit too high.
I also watched the page for about 15 minutes and it went up 25 reservations, which would over 2,000 per day rate. Might be faster than the average rate since it's a Saturday afternoon right now in North America.
jesselivenomore
Member
Thanks, this is helpful.
I had gotten the impression that when they said FCF+ in Q1, it would mean FCF+ going forward as well, as their operating leverage increases and scale up in deliveries. If the FCF+ was dependent on $100M in ZEV credits and a temporary decrease in Capex, it seems it would have been a one time deal. While technically that achieves their guidance, going forward would that have been enough to get to full year cash flow positive(this includes ABL?) that they guided for in Q4?(I know this has been abandoned now with Model 3 ramp, but hypothetically)
With Opex at over $500M a quarter, and a planned $1.5B in capex(stated in Q4 ER, I know this is 50% higher now), at what levels of gross margin and deliveries were they expected to generate the money needed?
90k total deliveries
54k Model S ASP $100k GM 25% GP = $1.35B
36k Model X ASP $115k GM 20% GP = $828M
Total GP = $2.18B
plus $1B in ABL = $3.18B
Opex $2B + $1.5B capex = $3.5B
So that is about $300M short of cash flow positive to be made up by TE, service and ZEV? Is that about right?
OpEx may not be that much. I think it would be closer to $450M a quarter. And the ZEV for 2016 may be as high as $200-300M alone.
And I do think they were really trying to push for one quarter of operating profit and FCF+, in order to raise capital, and then adjust guidance of full year FCF+, push for Model 3 volume production in 2015. Later on in early 2016 when macro fear dominated the market, they introduced the ABL to give a big buffer to whole year FCF+ guidance.
jesselivenomore
Member
But had to abandon those plans due to Model X delays/issues. So now they have to raise capital in a less friendly environment, but cannot delay because things need to be set in motion now in order to hit their Model 3 goals. So they raise $2B at 215 instead of 300. Sell 9.3M shares instead of 6.7M. Really not a big deal. So that is the real cost of the Model X delays, 6.7% dilution instead of 5%.
Johan
Ex got M3 in the divorce, waiting for EU Model Y!
Yes I believe the X "failed" early ramp was unexpected or rather the optimistic prediction model, the one requiring them to raise capital in 2016 (after confirming mega demand for Model 3), didn't allow for a failed early X ramp. So in the optimistic model, the one where they raise in 2016, the X produced in greater numbers and with a higher exit rate, with less warranty work + recall, which would mean in this model they are FCF+.
So this is why we find ourselves in this slightly awkward situation of great prospects for the future (Model 3, TEXAS) and a great track record (Model S, GF, TEXAS), except for the most recent step (X).
This is likely also why Elon takes the X issues so seriously and is restocking the manufacturing team, talking about DFM etc. (DFM: Designed For Manufacturing)
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ludicrousspeed
Member
Something tells me there will be some short-term catalysts to move the stock price up before an equity offering. Remember that Musk has always raised equity at higher valuations each round, for all of his companies, ever.
First off, the way they came out and blatantly said they were going to raise a combination of debt/equity is a little odd. Last time they raised equity in August at $242, they were much more discrete about it and didn't give it away at the Q2 CC just a week or two before. This shows that they're very confident about the financing and makes me believe that they have already locked in a deal, probably some sort of loan, to get the M3 ramp started. Receiving a loan to begin the financing could be a big catalyst because it will likely have amazing terms (who wouldn't want to finance a product with $15B+ in pre-orders) and it de-risks the company as a whole.
Secondly, there is more room to surprise the market. They plan to announce some seemingly big additions to the management team in the next few weeks, something that was completely overlooked by the two departures and the ER overall. These have potential to turn around the sentiment and cause a momentum swing. They set the bar low (IMO) by guiding for 17K deliveries in Q2 and completely giving up on FCF for this and next year. Now there are no positive expectations. If they can hold off CapEx and M3 spending for 10 more weeks, they could truly shock everybody (even TMC members) with Q2 financials. On the delivery front I think they're setting the bar low so that "a win can feel like a win" again, while gaining the credibility that they're seriously lacking from the market. I think delivering 17.5-18k or more vehicles in Q2 is definitely doable. Once the market has more faith in their projections, the SP will finally reflect the new production goals.
Johan
Ex got M3 in the divorce, waiting for EU Model Y!
A big loan with great terms certainly would buy them time and derisk them. Both Elon and Wheeler did talk very warmly about their use of the ABL. This sort of communicated a positive attitude toward the use of traditional loans to "finance" growth as an alternative to some kind of offering.
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