Short-Term TSLA Price Movements - 2016

[ludicrousspeed]

Yep. I think it's more likely to see a Q1 or Q2 non gap profit rather than 2H of year. Tesla can/will likely defer CapEx RAMP UP till 2H.

Agreed. I think the best opportunity to shock the market in the short-term is to beat 17K deliveries in Q2 by a meaningful margin, hold off on CapEx until July, and possibly become profitable on a non-GAAP basis or FCF+ for this quarter. Thinking that they will do this in the 2nd half of the year or for 2016 as a whole is wishful thinking IMO. I do believe, however, that the market will be surprised at how fast and how much TE will contribute to top line growth at the end of the year.

 

[The Blue Owl]

Capital Expenditures are often included in Depreciation and Amortization, which is included in the income statement, which affects profitability. Highly capital intensive businesses, like Tesla, will see huge differences in EBITDA and EBIT. The former doesn't include CapEx, while the latter does.

But the depreciation doesn't kick-in all at once, right? Does the depreciation for freshly acquired productive assets have a big effect the same quarter the capex is incurred?

Edit: what Fallenone and SBenson said.

 

[Julian Cox]

You absolutely can ask the market for more money when you have a good use for it (rapid growth). That's the whole point of being a publicly traded company. You do not need to be at ATH or even above your last round, but that helps. Maximizing share value is not Tesla's goal.

Maximizing shareholder value (in the long run at least) is the fiduciary duty of a Chairman, a CEO, an Executive and a Board of Directors.

It is entirely fine for any company to absorb shareholder value while progressing towards profitability. Whether that is three weeks, three to five years (more typical) or twenty. If the shareholders broadly agree that a twenty year project to go from Zero to major auto maker and energy storage supplier and a global autonomous transportation service provider is a good way to make money in the end. All good. If profitable at any point along the way, so much the better.

 

[FredTMC]

Fred, This was addressed repeatedly in this thread. Capex doesn't impact EPS (or your word 'profit'), it impacts cash-flow. Opex impacts both EPS and cash-flow.

Only if you are expecting opex to go through the roof your argument holds. Opex include Sales, Administration, R&D. Are you thinking that these will go through the roof that they will overwhelm increased revenues AND increased margins on those revenues?

Personally I don't think so. Non-gaap positive eps is very much in the cards for Q3/Q4. FCF+ maybe not.

Yep. My bad doh. Only FCF+ Directly affected by CapEx not EPS.

 

[Fallenone]

Agreed. I think the best opportunity to shock the market in the short-term is to beat 17K deliveries in Q2 by a meaningful margin, hold off on CapEx until July, and possibly become profitable on a non-GAAP basis or FCF+ for this quarter. Thinking that they will do this in the 2nd half of the year or for 2016 as a whole is wishful thinking IMO. I do believe, however, that the market will be surprised at how fast and how much TE will contribute to top line growth at the end of the year.

I agree FCF+ for whole year is not possible. But non-GAAP profitability is within range. Q1 OpEX was about $400M. Assuming it increases to $500M in Q3 and Q4 and an overall of 25% gross margin on Model S and Model X. With an ASP of $110k for S and X, they need to deliver 36.3k to cover the $1B OpEx. Even with 20% gross margin, and $100k ASP, 50k deliveries would cover it. In their recent 10-Q, they guided 50k deliveries in H2. Adding the ZEV contribution, there would be at least another ~$100M pure income to help. And there's TE which could contribute in a meaningful way too.

 

[Drax7]

NC

 

[Intl Professor]

No factory experience here, electracity, but when Tesla multiplies the number of robots several times over to achieve a doubling of estimated run capacity, I take it that this is a needed change, rather than something done just for show.

There's little reason for carrying on this demand debate as long as Tesla has a quiver full of unused demand levers. When Tesla runs out of demand levers, I invite you to restart the discussion, but that's going to be quite a ways in the future.

Most of us are really, really tired of a topic that is irrelevant for the upcoming year and a half and has been beaten to death. I have no wish to be someone who facilitates discussion of this topic any longer.

Should these discussions be moved by mods to Long-Range discussion list?

 

[CButterK]

So, it has been publically stated by Musk/Tesla that they would optimize the 200,000th delivery in the US to maximize the Fed Credit for as much customers as possible. I'm convinced that they are serious about this, and this could explain some of the activities that may appear counterintuitive to production constraint. So I'm trying to validate my own little theory and need some help. Do we know the US cumulative delivery of all Teslas to date? And can we get a close estimate to what the 2016 exit number for US will be? Once I have these numbers, I maybe able to connect the dots and figure out their capacity planning strategy to share if interested.

[/QUOTE]

 

[Intl Professor]

Sometimes the bears attack each other for no reason too.

It's also about sex or the fear of lack of prowess. For natural bears, that is.

 

[Fallenone]

So, it has been publically stated by Musk/Tesla that they would optimize the 200,000th delivery in the US to maximize the Fed Credit for as much customers as possible. I'm convinced that they are serious about this, and this could explain some of the activities that may appear counterintuitive to production constraint. So I'm trying to validate my own little theory and need some help. Do we know the US cumulative delivery of all Teslas to date? And can we get a close estimate to what the 2016 exit number for US will be? Once I have these numbers, I maybe able to connect the dots and figure out their capacity planning strategy to share if interested.

[/QUOTE]
About 50% of total deliveries is US.

 

[Intl Professor]

The canard is that his success is due to his salesmanship. That doesn't mean he can't be a good or great salesman.

His style is certainly not slick, but that hasn't stopped him from being effective. His stuttering delivery is endearing to many and comes across as genuine, which is a breath of fresh air in a communications world ruled by PR-speak. The most effective salesman is the one that sells the truth.

And delivers the best product.

 

[vgrinshpun]

Although majority around here frown upon technical analysis (mainly due to dislike of unicorns and various tea sets), TSLA had a nice inverted hammer on a daily chart yesterday. Closing above yesterday close ($208.96) today might signify reversal of the downward trend...

 

[Irishjugg]

About $10B in market cap. Otherwise, no difference. /grumble. I don't buy the "it motivates the team" argument. I think people are completely comfortable with the concept of internal vs public goals, and the fun of beating public goals.



(coffee spit take) Really? We are accepting the canard that Elon is a great salesman? Elon is a below average salesman. He has trouble staying on message, he isn't a good speaker, and frequently doesn't really regard the views of the audience-- favoring his own. If he successfully sells products and ideas, it is because those products and ideas are SO GOOD that they transcend his poor presentation. Elon is many things, but "Salesman" is not one of them.

I think we just have a semantic difference here. What you are referring to as "salesman" is in my opinion a bit of an old way of doing things. Younger generations don't really care about the presentation as much as they care about quality and usefulness of product, authenticity, and responsiveness. Elons use of social media and YouTube and the like are a master class in how sales should work in today's day and age. The presentations he gives aren't as much sales presentations as they are an opportunity to show customers what he had already sold them. Regarding the views of the audience isn't as important as building and providing what the audience actually wants, their views are kind of irrelevant and often incorrect.

The reliance on a strong presentation to sell things is an old model that will gradually be replaced in my opinion. The generations that grew up with the sum of human knowledge and information available in seconds already know what brands are selling. The new marketing is making them aware of these things so they will find out what is being sold, rather than selling them directly. The old model of market to sell people on the product is becoming less effective because it's harder to bullshit and hide the truth of a product.

Look at that ghastly Bolt ad as about why wait for a Tesla when you can have the bolt now. Nearly every comment on articles about it was "why would I want that, ugly car, higher price, less range, no charging stations" Well, that our "government funded toys for rich people" nonsense generally from older, less well informed people.

Obviously my opinions here, but I'm very certain I'm on the right track.

Results speak for themselves, the largest pre sale by dollars ever, that alone corroborates "best salesman ever" status.

 

[Fallenone]

Although majority around here frown upon technical analysis (mainly due to dislike of unicorns and various tea sets), TSLA had a nice inverted hammer on a daily chart yesterday. Closing above yesterday close ($208.96) today might signify reversal of the downward trend...

Yesterday was a tombstone, today looks like a hammer. But volume is low and decreases the credibility of the reversal.

 

[windgrins]

About $10B in market cap. Otherwise, no difference. /grumble. I don't buy the "it motivates the team" argument. I think people are completely comfortable with the concept of internal vs public goals, and the fun of beating public goals.



(coffee spit take) Really? We are accepting the canard that Elon is a great salesman? Elon is a below average salesman. He has trouble staying on message, he isn't a good speaker, and frequently doesn't really regard the views of the audience-- favoring his own. If he successfully sells products and ideas, it is because those products and ideas are SO GOOD that they transcend his poor presentation. Elon is many things, but "Salesman" is not one of them.

Actually having been in sales for a few years, Elon has what it takes to make any salesperson great--that is a great product that the customer easily understands why it is very beneficial to them and a very real faith that the product is what the customer truly needs (it's difficult to fake sincerity over the sales process). The ability to communicate the concept so that a person comes away wanting to purchase the product if they can, is basically what it takes. The rest is secondary.

 

[austinEV]

Actually having been in sales for a few years, Elon has what it takes to make any salesperson great--that is a great product that the customer easily understands why it is very beneficial to them and a very real faith that the product is what the customer truly needs (it's difficult to fake sincerity over the sales process). The ability to communicate the concept so that a person comes away wanting to purchase the product if they can, is basically what it takes. The rest is secondary.

When Bears say "Elon is a great Salesman" they mean he is using his mind-control skills to sell fools a bad product. I agree Elon is a good salesman in the sense that he uses his role to sell good products, so in the end he is effective at sales.

 

[Papafox]

Max-pain for TSLA is sitting at 215 for this Friday, and so we might see the tractor-beam help the stock a small bit in tomorrow's afternoon hours. Add the tendency of TSLA to show signs of a wanna-be breakout such as yesterday, plus anticipation of the typical Monday-morning buying streak when some optimism is in the air, and we might see a climb on Friday (if the broader markets and FUD-slingers behave themselves).

 

[Irishjugg]

We might as well throw this throw this thread into trashcan then. Now we all agree that Tesla wont do anything to protect the stock price, even when it is in it's best interests to do so. So whats the point of any discussion in the "short term" thread? And why are we all wasting our time here? An interesting thing to ponder.

I think the lack of give a *sugar* about stock price actually makes this thread much more useful and interesting as it causes more volatility and that's great for many short term strategies. I feel like your concern is more of a problem for middle term long strategies.

 

[electracity]

Manufacturing and selling model X matters a great deal to the stock price .
It gives investors confidence . Confidence influences a stock price based
On far out goals. Confidence is required to raise money .

Consider who actually owns the stock, I'm not even sure that actual investors typically move the price much. It is mostly just traders guessing momentum.

 

[FANGO]

While it's undeniable that Tesla is taking existing premium car drivers from the big German brands (we were one), what is the longer term hurt is that Tesla is becoming the aspirational brand for people coming from more mainstream manufacturers. That interrupts the pipeline to future buyers in a far more impactful way than stealing a few current ones. Advantage Tesla.

Speaking of aspirational brands, as my social circle's resident Tesla expert, this morning alone I have been contacted by not one but two young people who want to work at Tesla and want to ask me how they can go about doing that. One is 14, the son of a small but influential coachbuilder in LA, and wants to be an engineer; the other is 18, just graduating high school, and wants to sell Teslas.

Tesla is THE brand which holds the interest of young people, at least here in California, but I'm pretty sure everywhere else too. Obviously this is a long-term thing, but it becomes less and less long-term with each passing day - and with the coming release of Model 3. Just about everyone in their mid-late 20s and 30s wants a Model 3, to the point where it's going to start getting boring with everyone having the same damn car as each other.