Short-Term TSLA Price Movements - 2016

[vgrinshpun]

I do not see general claims of "flat" waiting times for Model S and the corresponding conclusion that projected demand and deliveries in 2016 can't exceed 55K as accurate.

Since (as is usual in these cases) there were no discussion of the specific numbers that support these claims, I provided my projection, backed up by data here. I welcome any constructive discussion of the data over at the "Website Wait Time for Delivery" thread.

In future, it would be more productive if sweeping conclusions about demand (or lack of thereof) be supported by verifiable specific data. It would make the discussion less nebulous and more productive.

 

[sundaymorning]

I do not see general claims of "flat" waiting times for Model S and the corresponding conclusion that projected demand and deliveries in 2016 can't exceed 55K as accurate.

Since (as is usual in these cases) there were no discussion of the specific numbers that support these claims, I provided my projection, backed up by data here. I welcome any constructive discussion of the data over at the "Website Wait Time for Delivery" thread.

In future, it would be more productive if sweeping conclusions about demand (or lack of thereof) be supported by verifiable specific data. It would make the discussion less nebulous and more productive.

Mic drop.

 

[Papafox]

Regarding the conversation with perfectlogic, I do wish that there was some type of a "sub-thread" function on this forum where one could choose to follow a conversation or not. Perfectlogic puts forward a devil's-advocate sort of argument and if you are in the mood you may indeed find value in engaging in a back and forth with him, but if you are not interested in that particular topic or if you're not enthralled by some other aspect of the discussion, it'd be nice to be able to skip it. I don't expect such a discussion to immediately jump to a newly-formed thread, because likely the discussion would die for lack of participants, but wading through two pages of a discussion ranging from demand to depreciation considerations can be painfully time-consuming if you're really trying to make decisions about your TSLA trading the next day. I don't see a really good answer here, other than to perhaps suggest a move to a new thread if the conversation stretches for more than a page and the conversation is not likely to appeal a majority of thread visitors.

Maybe the discussion would have been better carried on in the long-term TSLA trading thread once it became apparent that the topic was more suited to that thread.

 

[DrJohnM]

If the waiting time is steady then demand equals production, that is just logic 101. The waiting time was steady last year and has been going down a bit this year. If they really had infinite demand or whatever you are suggesting then they would raise prices, it makes no sense to leave money on the table if the demand really is much higher than capacity, especially when they are raising capital every 3rd quarter.

It's fine that we disagree on how close Tesla is to profitability, or whether the Model S is profitable or not at 50k/per sales, it is impossible to prove anything with 100% certainty I guess. I just think the huge equity burn every quarter is very hard to explain if you think operations are profitable. What they spend on PP&E gets listed as assets so this isn't the reason, even if you cut R&D to 0 they would still lose equity.

But the waiting time is now getting longer as noted in this thread a day ago or so, even though output is increasing. Tesla does no advertising, in effect, suppressing demand due to being production constrained. They also do raise prices, even though they are getting better (read cheaper) at manufacturing and battery prices (a substantial part of the cost) is constantly going down.

So I think that answers all of your FUD.

 

[GoTslaGo]

Just saw this on Reuters. Suppliers not sure if they can meet deadline for model 3:

Exclusive: Suppliers question Tesla's goals for Model 3 output

 

[techmaven]

Let's see... pre-markets show green for the U.S. for Friday right now, with NASDAQ mini futures up 16.
Asia is currently green (Nikkei, Shanghai, HSI)
Oil is also up
Max pain is $220, higher than the last closing price and higher than the after hours price.
After hours price ($218.61) is higher than close ($215.21)
4-traders is showing that the next major resistance line is $226.89.
20 day moving average is $225.16
50 day moving average is $232.82

So I'm thinking we should have a pretty solidly green day tomorrow barring major macro event(s).
Stock price could go down in the premarket on low volume, I'm not worried if that is the case.
I'm trying to decide if we will see a dip to shake out weak longs into selling, or we just go up if all else holds. I will be watching oil and NASDAQ to see the macro environment and watch the early morning action.

 

[GoTslaGo]

I'm betting up. Morningstar upgraded TSLA to buy. 4 stars from 3. More positive sentiments.

SnP still says sell. Merrill has pulled their rating.

edit:

Merrill's prev rating was underperform (sell). Curious to see what new one will be.

 

[Runarbt]

New stocks were priced at $215

Tesla raises $1.46 billion in stock sale: IFR | Reuters

Thats a bit higher than expected.

 

[techmaven]

Just saw this on Reuters. Suppliers not sure if they can meet deadline for model 3:

Exclusive: Suppliers question Tesla's goals for Model 3 output

Very interesting quote:

In the past three months, Tesla (TSLA.O) has told suppliers the company was doubling its original production projections to 100,000 Model 3s in 2017 and 400,000 in 2018, several supplier industry executives familiar with the plans told Reuters.

The original plan was for 50,000 in 2017 and 200,000 in 2018? Hmmm...

So, another article that conflates sources. Looking through it, I'm looking for commentary from Tesla's suppliers. Not other company's suppliers, but Tesla suppliers. The one I quoted is the only one I've found. The only other quote of a supplier at all is a generic quote that there is high demand for automotive manufacturing equipment from other automakers right now. All the other commentary is from "industry experts" who apparently have little clue about Tesla, especially this one:

Jeff Schuster of industry forecaster LMC Automotive said the goals were "implausible," in part because Tesla's battery factory in Reno, Nevada, was unfinished.

Yeah... maybe Mr. Schuster of LMC Automotive should find another line of work.

We have been seeing a slew of attacks on Tesla by Detroit based new reporters, writers, suppliers, and so forth. I've noticed quite a few feel... upset somehow and they often have a Detroit address.

 

[dennis]

First of all they currently don't have a quarterly demand for 7.5k Model X.

Are you sure about that statement? Yesterday new Model X orders for delivery to the US moved out from June to July, with 6 weeks still left in the quarter. We know they can build and deliver to the US in less than 6 weeks. So that means they are sold out of Q2 Model X production.

 

[mrdoubleb]

Very interesting quote:



The original plan was for 50,000 in 2017 and 200,000 in 2018? Hmmm...

So, another article that conflate DX s sources. Looking through it, I'm looking for commentary from Tesla's suppliers. Not other company's suppliers, but Tesla suppliers. The one I quoted is the only one I've found. The only other quote of a supplier at all is a generic quote that there is high demand for automotive manufacturing equipment from other automakers right now. All the other commentary is from "industry experts" who apparently have little clue about Tesla, especially this one:



Yeah... maybe Mr. Schuster of LMC Automotive should find another line of work.

We have been seeing a slew of attacks on Tesla by Detroit based new reporters, writers, suppliers, and so forth. I've noticed quite a few feel... upset somehow and they often have a Detroit address.

Thanks for saving me from typing this up in detail on the metro on my phone.

What a clickbait article! It references "industry sources familiar with plans" once and then quotes Detroit research firms... Please.

I mean I am sure some suppliers are nervous, they have been put under tremendous pressure, but they know they are investing into their future by joining the auto industry equivalent of the Moon program.

 

[JBRR]

Related to suppliers:
Panasonic says it can move up investment for Tesla battery plant if asked

Premarket is at 221 currently. Macro and news for CR@215 only?

 

[hoang51]

If the recent TSLA capital raise is anything like the one in August 2015, TSLA will rise for a while before dropping back down. I might jump in for a short term hold. Premarket is now at about $219.

 

[Hogfighter]

The capital raise was less than what the market was anticipating. That takes away uncertainty, which always is a positive catalyst.

X production ramp seems to be going well, finally. More revenue=higher stock price.

Negativity scale just went down to a 6.

 

[Renaud]

Quite impressive premarket activity!
Very high volume and from 221 to less than 213, and then going back up...Maybe will settle around 215, the offering price?
It's going to be an interesting day again!

 

[Irishjugg]

I appreciate the posts perfectlogic. While I disagree with most of it and especially the demand concerns lots of useful info on how to think about the financials, things to watch for, and some signals to pay attention to on demand.

I agree we need more well reasoned bear-like discussion and I think your arguments were certainly among the best we have seen in some time and with good data behind them, though obviously I disagree on several assumptions

 

[SPadival]

Just saw this on Reuters. Suppliers not sure if they can meet deadline for model 3:

Exclusive: Suppliers question Tesla's goals for Model 3 output

The article quotes 2 "supply sales executives", one management consultant and two industry forecasters. *cough* Hit piece clickbait *cough*

And CNBC runs with it..

Tesla Motors (TSLA) Videos

and so does SA..

Tesla Motors gives suppliers aggressive Model 3 targets

With the benefit of hindsight, I think Elon Musk's reveal of July 2017 as an aggressive internal target was a masterful move.

 

[Perfectlogic]

I do not see general claims of "flat" waiting times for Model S and the corresponding conclusion that projected demand and deliveries in 2016 can't exceed 55K as accurate.

Since (as is usual in these cases) there were no discussion of the specific numbers that support these claims, I provided my projection, backed up by data here. I welcome any constructive discussion of the data over at the "Website Wait Time for Delivery" thread.

In future, it would be more productive if sweeping conclusions about demand (or lack of thereof) be supported by verifiable specific data. It would make the discussion less nebulous and more productive.

Actually as you can see on Schonelucht's graph a few posts down the clear trend is downwards for the waiting time. The one to watch I think is the US, it has the largest volume and the lowest shipping time. Shipping takes a long time for EU and China, how long exactly which might also depend on how much they do to the car when it gets there is hard to say. The US wait dropped below 4 weeks for the first time ever in May, and again just recently. I'm not sure how long the waiting time would be if there was no queue, but I'm sure it's at least a week or 2 so we must be getting very close. With the capacity going from something like 1.2k/week to 2k/week by the end of this quarter and the waiting time down this short I think Tesla is about to be demand constrained for the first time, unless a miracle happens.

 

[Perfectlogic]

Leaving out the entire depreciation is to examine what are the costs for sales and supporting superchargers, as you mentioned. Throw in their RND of about $10k per car (Q1 Q2 2015 were higher due to luanching X), the OpEx besides of depreciation is about $18k per car, or 18% of the ASP. I agree some of the depreciation should be attributed to the current sales of cars, but IMO it is quite less than 50%, more like 30%, which translates to about $3k per car, or 3% of ASP (and in the meanwhile, we should set aside part of the RND to be more precise, but let's just use 100% of RND on what they are selling now, which is a conservative assumption). Adding this to the RND and sales, that's 21% of ASP. With gross margin above 25%, I don't see them being not profitable, if they have not been heavily investing in future growth.

Stock compensation is for GAAP accounting. They are far from GAAP profitability and I think even the hyper bulls here acknowledge this. Besides, the market cares more about non-GAAP so shall we keep it non-GAAP in the discussion?

I think the depreciation should be higher, I'm probably around 25% on cost outside COGS and that is before stock comp, so that would put them breakeven a few quarters ago and losing money recently due to the X ramp hurting margins. But when thinking about profitability I like to include the very real cost of stock comp (just as real as cash wages as they could have sold the shares to investors and had the money on their books), I don't care much about what is included in GAAP, I go by what makes sense. So with the stock comp included they have further to go before being profitable from S+X operations, I believe I read stock comp to be $80M last quarter but not sure about that figure at all. If half of that is relevant to S+X that is like 3% extra margin they need to make up for.

 

[Curt Renz]

...With the capacity going from something like 1.2k/week to 2k/week by the end of this quarter and the waiting time down this short I think Tesla is about to be demand constrained for the first time, unless a miracle happens.

With the fresh cash Tesla can afford to finally start advertising. Tesla is relatively unknown here in Illinois compared with California. Its competitors are massive advertisers, and they are already quite well known. An initial burst of advertising would greatly accelerate demand for the great products from a rather young company.

And Tesla could finally start placing inventory in store lots. That would inspire many potential buyers who don't want to wait for new cars when problems develop with their current ones. They may be the most common type of car buyers.