Short-Term TSLA Price Movements - 2016

[Johan]

Someone up thread mentioned the prediction of not being GAAP cash flow positive until 2020.

This got me wondering, does that push up to 2018 along with increased production ramp? I haven't had time to run any numbers yet, but Musk's justification was that they would be throwing off so much cash at that volume level that they wouldn't be able to spend enough on capex to keep up, hence FCF positive.

It is my assumption that spending for incremental volume on an existing product is much lower than spending on initial production for a new product, so capex on model 3 should decrease a lot as they ramp from 500k to 1M cars per year, the only major spending would be on model Y, the truck, bus, etc.

If TSLA would end up GAAP positive in 18 or early 19 and the market hadn't noticed yet, some here may be able to make a killing on LEAPS.

Good thoughts. Sort of like shifting the entire evolution curve to the left: grow quicker, reach higher product volume earlier, invest more earlier but as a result of all this also reach GAAP profitability earlier. This "concentration" of Tesla's evolution will be demanding execution wise, but if they can pull it off... Good things will result for investors.

 

[schonelucht]

So the 73% figure is off, the NA reservations as of second half of last year were actually 69%.

My bad on Canada. Wrt to China, I will believe the order rate is up there when I see it. Word of mouth has always been the best advertising for Tesla. For now I think the ability of US customers to actually experience the car in stores and through fellow friends is the strongest sales driver Tesla has. Therefore I still think the overwhelming majority of total reservations made till today is US based.

This paragraph in my original post was about situation with Model S production in 2013. I am pretty sure no "European customers received confirmation from Tesla that their Model X is already in production" back then...

Sure, but we are comparing model S ramp with model X ramp. I was saying we are actually further ahead in the worldwide ramp than the comparison you made with 2013. Your original point being that there is model X capacity now to produce US orders fast since they don't produce EU orders (as when you got your S). That's just not true. EU orders are on the line. There are just so few of them that there is capacity to delivery quickly.

Unrelated question : when you say TE is positioned to become more profitable than the TA in short order, what time frame are you thinking? 2017? And do you mean gross margin or free cash flow?

 

[electracity]

........
Tesla might need much less additional funding than many in the market assume. I am looking forward to hear about this at the annual shareholder meeting.

Mostly like the opposite is true. Tesla will probably need a capital raise at each growth phase. This is fine, except for the constant dilution of Elon's ownership.

Tesla isn't facebook, or even amazon. There is a capital "moat" that the major car manufacturers understand well, and most in this thread do not appreciate.

Interestingly, understanding only requires a glimpse at auto manufacturers balance sheet. And those balance sheet don't include sales, service, and fueling stations.

 

[sub]

Mostly like the opposite is true. Tesla will probably need a capital raise at each growth phase. This is fine, except for the constant dilution of Elon's ownership.

Tesla isn't facebook, or even amazon. There is a capital "moat" that the major car manufacturers understand well, and most in this thread do not appreciate.

Interestingly, understanding only requires a glimpse at auto manufacturers balance sheet. And those balance sheet don't include sales, service, and fueling stations.

or 20-30% GM.

 

[Johan]

Mostly like the opposite is true. Tesla will probably need a capital raise at each growth phase. This is fine, except for the constant dilution of Elon's ownership.

Tesla isn't facebook, or even amazon. There is a capital "moat" that the major car manufacturers understand well, and most in this thread do not appreciate.

Interestingly, understanding only requires a glimpse at auto manufacturers balance sheet. And those balance sheet don't include sales, service, and fueling stations.

So just to be clear, you're fine with it? Got me worried for a second there that you might find some bearish way of spinning it.

 

[Gerardf]

Mostly like the opposite is true. Tesla will probably need a capital raise at each growth phase. This is fine, except for the constant dilution of Elon's ownership.
.

Elon's ownership is not really diluting. It is actually increasing with every milestone that is reached.
That growth outpaces new shares.

And even if it would, he holds a very significant percentage anyway to keep full control.

 

[Irishjugg]

... very what??? The suspense is killing me here!

Also, what kind of you job do you have that allows you to invest in stock but not derivatives?

Bah, silly phone.. Very tempted to just make the trade and beg compliance's forgiveness based on how much money I'd make.

I work for a prop high frequency market making firm. I don't know why they have the no derivatives rule as it's definitely not standard in the industry. Abundance of caution I guess.

 

[Bgarret]

At the latest tally US model X orders were a full 73% of total reservations. Since then I believe it has become even more lopsided since interested US shoppers have actually had a lot more time to get acquainted with the car (drive events, some stores have them now, etc..) I believe the X reservations to date to be 75% US versus 25% elsewhere.



Several European customers received confirmation from Tesla that their Model X is already in production.

Which also makes China an interesting black box since a) Chinese reservation orders were able to configure before European and b) we don't have very solid info on reservations or deliveries.

May have contributed to early Q2 delays in US deliveries if Tesla was making and shipping Model X in any numbers to China.

 

[Johan]

Bah, silly phone.. Very tempted to just make the trade and beg compliance's forgiveness based on how much money I'd make.

I work for a prop high frequency market making firm. I don't know why they have the no derivatives rule as it's definitely not standard in the industry. Abundance of caution I guess.

Probably because in order to make a lot of money in absolute terms off of something illegal you'd be able to do that with a much smaller bet with high leverage. With a straight stock trade it'd stock out more because of the larger sum invested or shorted.

 

[Ghostman]

Hi Everyone,
JB gave a keynote at a tech conference in Toronto yesterday and 1/2 of the keynote was on the TE business. A few things he mentioned:

TE is much simpler to scale.
Manufacturing is a technical problem and it is challenging.
Tesla needs more engineers and technical people. The non-technical labor can be ramped up quickly.
Software team is the same size as their mechanical engineering team.
They are working on a 50MW project in Hawaii. Will be the biggest battery project in NA.
In the internal pools for Model 3 pre-orders, his guess was 250k.
AI, sensors, and data will be key for autonomous and that is what they are focusing on.
Renewables + Battery systems is already more cost effective without subsidies than traditional fossil fuel sources in some areas, particularly island nations. Expects that to continually shift over time as every region has a different cost structure.
Mentioned some larger utilities have been more conservative to look at new tech, whereas smaller ones have been very proactive. Then said that the longer the larger ones wait, the bigger the impact will be when change happens (like big auto? ;p)
Gigafactory already has some capacity to recycle used lithium batteries. JB believes recycling tech will be important as in the future, recycled batteries will be the cheapest source of materials for new batteries.

I tried to record the keynote, but seems my phone camera crashed in between and I lost a 15min segment. The rest of backing up to my PC and if I have time, I'll post up what I have. The keynote was recorded by media and should eventually become available. The conference was the Ontario Centre of Excellence Discovery Symposium.

 

[Gerardf]

Defrauding shareholders by hiding basic material information from them, acting as a conman while company is near bankruptcy and concocting new terms for accounting to create the illusion of FCF+ are much bigger crimes. .

These are big words some (many ?!) would regard libel.
Feel free to use them at other forums like SA or Yahoo, but please not here.

Edit: On second thought... do not post them there either.

 

[motobaleno]

I found the article interesting and robustly based

http://seekingalpha.com/article/397...ets?li_source=LI&li_medium=liftigniter-widget

 

[Julian Cox]

Probably because in order to make a lot of money in absolute terms off of something illegal you'd be able to do that with a much smaller bet with high leverage. With a straight stock trade it'd stock out more because of the larger sum invested or shorted.

As far as I understand it, new GAAP rules go into effect on Jan 1 2017 which would allow Tesla to put an end to under-declaring GAAP revenues and profits due to the current GAAP lease accounting.

The current rules cannot distinguish between a normal real lease where the seller owns the car and the customer has not yet agreed to buy the car at the end of the lease term - and has only just started making lease payments. This is how GAAP treats aTesla sale that is 100% bought and paid for by the customer but when maybe the customer could sell it back three years later due to the Residual Value Guarantee. Which is obviously stupid (unless you are a TSLA bear in which case this would seem like common sense). Anyway the FASB are not deranged Tesla shorts so they have fixed this error in the revised rules that go into effect next year.

All Tesla has to do under the new rules (as I understand it) is to log an asset value of the car to balance out the RVG liability so it no longer has to pretend it is buying its own cars at a loss instead of selling them at a profit every time it sells a car with an RVG.

 

[Lessmog]

Telling lies using innuendo is not a felony either ... Just sayin'

 

[tanner]

Who thinks we'll hit new lows today? Does anyone have a good theory/idea for determining where bottom is? Thanks

 

[electracity]

Which also makes China an interesting black box since a) Chinese reservation orders were able to configure before European and b) we don't have very solid info on reservations or deliveries.

May have contributed to early Q2 delays in US deliveries if Tesla was making and shipping Model X in any numbers to China.

Not really a black box with China forecasted by Tesla.

 

[nienco2]

The original "concern" posted by nienco2 was not a genuine concern but FUD.

Seriously do you think someone would post anything on a site like this thinking they could influence the stock price? I've given up on the X with no long list of reasons or attempts to influence anyone else. I do however see some reckless optimism here that should be tempered or a lot of innocents may get hurt. The shortened delivery window is a fact, people can interpret as they like. I don't feel a need to trumpet how I trade because I would hate for some one to follow me and get burned, as I often do, but you seem interested so I will admit to being long up until April expiration

 

[tanner]

Seriously do you think someone would post anything on a site like this thinking they could influence the stock price? I've given up on the X with no long list of reasons or attempts to influence anyone else. I do however see some reckless optimism here that should be tempered or a lot of innocents may get hurt. The shortened delivery window is a fact, people can interpret as they like. I don't feel a need to trumpet how I trade because I would hate for some one to follow me and get burned, as I often do, but you seem interested so I will admit to being long up until April expiration

Given up on the X? You do know they're now scaling it quicker than MS and the last few batches have been flawless, right?

 

[Gerardf]

Who thinks we'll hit new lows today? Does anyone have a good theory/idea for determining where bottom is? Thanks

Well, at the very least we hit a 'new low' in this thread today with the most recent post of "Dr. valueseeker".
Combined with the level of activity of some others that defend the short thesis, I would say that is a sign we might well be close to bottom of the SP as well.

 

[electracity]

Seriously do you think someone would post anything on a site like this thinking they could influence the stock price? I've given up on the X with no long list of reasons or attempts to influence anyone else. I do however see some reckless optimism here that should be tempered or a lot of innocents may get hurt. The shortened delivery window is a fact, people can interpret as they like. I don't feel a need to trumpet how I trade because I would hate for some one to follow me and get burned, as I often do, but you seem interested so I will admit to being long up until April expiration

The X will be fine. Although I doubt there is consumer demand for 80-90K S/X without china. The X will likely have a surge in demand with the car in showrooms and buyer confidence in quality increases. But I do agree that the current short delivery window should be concern for investors.

The X likely has truly improved drive components due to all the effort they had to make fixing the S DU. Tesla capability to respond to X issues is likely much greater than when fixing the original model S problems.

Traditional sales of the X should seem less critical once you realize that Tesla actually designed the Model X as a black car service vehicle.