Short-Term TSLA Price Movements - 2016

[FredTMC]

Correct me if I'm wrong, but my understanding is that the shares have essentially been sold to the underwriters, now it's their job to sell them to folks down market. As for who the biggest investors are, I guess you could keep tabs on the institutional ownership rankings or keep an eye out for any announcements buy the buyers or hedge fund notifications?

Thx

Yeah, it's unclear to me if all the shares have been sold or not.

If it works like an IPO, then yes, they shares are sold.

Also, Cramer mentioned today that the offering WAS oversubscribed. If that's the case, I assume that is why the $215 price was higher than earlier chatter around $208.

If it was oversubscribed, I wonder why more shares weren't sold. I thought underwriters had the option to sell more shares at their discretion. Maybe that would've dragged the offer price lower.

 

[techmaven]

We do know the waiting time, there is a whole thread dedicated to it. When you order a car you get a waiting time, lets not obfuscate things unnecessarily.

Ah, no, you don't. Yes, there's a thread devoted to it. And no, you still don't know the wait time because there isn't a single wait time, even within a region.

It's like saying you know the price of a shirts when you are given a quote that is manually updated on a random, at best weekly basis by someone giving you an optimistic view by glancing across a slew of different stores for stock of different colors and designs that are not price coordinated. You insist that some people got a certain price quote. Ok. And you insist you know the price. But you don't.

 

[Curt Renz]

Total guess time! I say we run up to $223 at some point today and close at $220. We should have a pool every Friday.

Max Pain today is $220. Today's options expiration is a monthly one, therefore with more open interest than most weeklies. That could make Max Pain more meaningful today.

 

[dandurston]

Lets say we have an apple shop that sells apples, we have a production of 10 apples per day from our apple supply tree. The waiting time for apples is 1 day (10 apples backlog). From this point if the demand is 10 apples the waiting time of 1 day will stay 1 day there is absolutely no way around this, it is simple logic. If the demand rises to 11 apples, the waiting time will rise by 0.1 day per day so after 10 days the backlog would have grown to 20 apples as they are 1 short of demand each day thereby increasing the wait to 2 days. If the demand falls to 9 apples per day then after 10 days you will be able to purchase apples without any wait. Come on guys this is some 2nd grade math.

Here's why this doesn't work:

Demand Exceeds Supply
Imagine the apple demand was 20 per day - well above the supply of 10. In no time the apple wait would become so long that buyers would lose interest. When the wait stretched out to a few weeks many people would stop ordering apples and the demand would drop until it reached 10, stabilizing the wait at whatever amount of time it took to create a strong enough disincentive. Here it would appear that demand equals supply at 10 apples and there's no justification for purchasing a second apple tree, but it's only because the demand has been reduced by the disincentive of the wait time. Instead of allowing wait times to grow, the apple seller could have raised the price as a disincentive instead. Both reduce demand but with the latter the seller makes more money. Do we see Tesla doing this? Yeah they just raised the price a few weeks ago. In the longer term the better solution is to purchase a second tree. Is Tesla doing this? For sure for the Model 3 and X, and sort of for the S.

Supply Exceeds Demand
Imagine apple demand was only 5. Supply would start piling up. This would expose more potential customers to the opportunity to buy an apple and simultaneously the vendor would probably lower the price to incentivize apple sales. Via some way or another, the vendor would probably find a way to sell 10 per day, (aka making demand rise to 10). Is Tesla doing this? Yeah, with their referral program and adding showrooms.

So just the raw fact that the vendor is selling their 10 apples (or Tesla is their selling cars with stable wait times) doesn't really tell us much about actual demand. Demand is an elastic thing shaped by incentives and disincentives. Right now we see obvious disincentives for the Model S (waits, price increase) and Model X (wait, low initial build quality). As these are reduced, or as Tesla adds incentives (more features, discounts) or as more people becomes aware of the product (advertising) the demand rises. How much higher it could rise is anyone's guess, but the Model 3 pre-orders show that many many people are interested at a lower price.

 

[mmd]

Thx

Yeah, it's unclear to me if all the shares have been sold or not.

If it works like an IPO, then yes, they shares are sold.

Also, Cramer mentioned today that the offering WAS oversubscribed. If that's the case, I assume that is why the $215 price was higher than earlier chatter around $208.

If it was oversubscribed, I wonder why more shares weren't sold. I thought underwriters had the option to sell more shares at their discretion. Maybe that would've dragged the offer price lower.

I am not seeing the increased share count in yahoo finance. Market cap($29.19B)/SP ($217.91) still shows 134M shares outstanding. When will the new share count of 143.6M show up on these sites?

 

[Perfectlogic]

Ah, no, you don't. Yes, there's a thread devoted to it. And no, you still don't know the wait time because there isn't a single wait time, even within a region.

It's like saying you know the price of a shirts when you are given a quote that is manually updated on a random, at best weekly basis by someone giving you an optimistic view by glancing across a slew of different stores for stock of different colors and designs that are not price coordinated. You insist that some people got a certain price quote. Ok. And you insist you know the price. But you don't.

Why are you talking about randomness? It has nothing to do with that. I feel like you are intentionally obfuscating the discussion so it's easier to just believe what makes you want the truth to be. We know the waiting time and it hasn't been jumping around like some random unpredictable number, it has been very steady. Following the pattern of the US going up near the end of the quarter and the overseas wait being the inverse to meet the quarterly guidance as well as possible. The trend over the past year for the US waiting time has been down and this can only mean one thing; that the backlog has been shrinking for the US market (Tesla's largest). In other words they are getting closer and closer to the point where they will be able to let an order go to production immediately which means that demand will be the constraint on deliveries.

 

[mmd]

Here's why this doesn't work:

Demand Exceeds Supply
Do we see Tesla doing this? Yeah they just raised the price a few weeks ago. In the longer term the better solution is to purchase a second tree. Is Tesla doing this? For sure for the Model 3 and X, and sort of for the S.

The price increase wasn't for the same apple (I mean, car) though. It was for a refreshed Model S. This is common pricing strategy; to introduce new features at a premium first so the most willing buyers pay more to get them first. Works the same way in every business.

Just curious, would you have said the opposite when Tesla introduced Model S70 at the same price as S60? Bear in mind, S70 is a much better product than S60.

These discussions on demand/production constrains are just wild goose chases. As I posted several times, these terms don't exist. Instead, demand elasticity and price elasticity are some terms that do exist. Look them up on investopedia.com. IMO, current Model S production is tracking demand, either stimulated or not. And sometimes leading to excess inventory.

 

[Bgarret]

Indeed, advertising or inventory cars may not be necessary for a long time. Again, I was simply pointing out to Perfectlogic possibilities he may not be considering in his analysis of the current demand situation.

I still don't see Teslas often, but admittedly I don't drive very much. During the eighties I lived in Palo Alto, California, and my friends there say they see them in driveways on every block. That's certainly not the case where I am now. In any event, I remain amazed by how many people here in Illinois have not heard of Tesla Motors or know very little about it. Almost everyday I have to educate people here about not only Tesla but also electric cars in general. If demand under the current marketing program ever slackens, advertising certainly would help to educate a larger portion of the public.

Very anecdotal, but I'm currently splitting time between Michigan and Brooklyn. From my office in Brooklyn, I overlook a busy street in Dumbo (neighborhood right across the Brooklyn Bridge from Manhattan). When we first came here 2 years ago, the only Tesla I would see is the Signature Red Model S that lives 2 buildings down. Now I see 2-3 random Tesla(s) a day transiting the neighborhood.

I just bought a CPO Model S and will be driving it back in Michigan when I'm there full time later this year. I know of 2 other Tesla(s) between the two 40,000 person communities where I live and work - I know both the owners. There may be more, but there is a lot of room to grow in Brooklyn & even more in Midwest.

 

[Perfectlogic]

Here's why this doesn't work:

Demand Exceeds Supply
Imagine the apple demand was 20 per day - well above the supply of 10. In no time the apple wait would become so long that buyers would lose interest. When the wait stretched out to a few weeks many people would stop ordering apples and the demand would drop until it reached 10, stabilizing the wait at whatever amount of time it took to create a strong enough disincentive. Here it would appear that demand equals supply at 10 apples and there's no justification for purchasing a second apple tree, but it's only because the demand has been reduced by the disincentive of the wait time. Instead of allowing wait times to grow, the apple seller could have raised the price as a disincentive instead. Both reduce demand but with the latter the seller makes more money. Do we see Tesla doing this? Yeah they just raised the price a few weeks ago. In the longer term the better solution is to purchase a second tree. Is Tesla doing this? For sure for the Model 3 and X, and sort of for the S.

Supply Exceeds Demand
Imagine apple demand was only 5. Supply would start piling up. This would expose more potential customers to the opportunity to buy an apple and simultaneously the vendor would probably lower the price to incentivize apple sales. Via some way or another, the vendor would probably find a way to sell 10 per day, (aka making demand rise to 10). Is Tesla doing this? Yeah, with their referral program and adding showrooms.

So just the raw fact that the vendor is selling their 10 apples (or Tesla is their selling cars with stable wait times) doesn't really tell us much about actual demand. Demand is an elastic thing shaped by incentives and disincentives. Right now we see obvious disincentives for the Model S (waits, price increase) and Model X (wait, low initial build quality). As these are reduced, or as Tesla adds incentives (more features, discounts) or as more people becomes aware of the product (advertising) the demand rises. How much higher it could rise is anyone's guess, but the Model 3 pre-orders show that many many people are interested at a lower price.

All I have been commenting on is current demand, under current parameters, and that figure is easy to figure out as we have all the data needed. Now you are saying that demand will increase when people can get their car a week earlier, I acknowledge that this is indeed a positive on the demand side, but as the waiting time already is quite low at least for their biggest market, the US, I don't believe this to be that big of a factor. At least not until, if they even choose to, start filling lots with cars available for instant purchase like Curt has mentioned. I'm sure this would stimulate demand significantly but would also come with an added cost for Tesla.

It is always possible to stimulate demand for a product by either advertisement, lowering the price or bettering the quality of the product, but all these things pressure the gross margin which is already very thin if not negative when accounting for cost not part included in the COGS but still relevant to current sales.

 

[MartinAustin]

Demand must be increasing... as is evidenced by the increasing delivery of cars every quarter. That's all I care about personally.

I still come across people every day who have not even heard of Tesla, and others who have heard of the brand but never been around the car before. There is certainly room for increased demand in the USA, and I would assume all the other countries of the world where Tesla isn't shipping yet.

Speaking of TSLA... it's slowly drifting upwards, opposite direction of the NASDAQ. Could finish above $218 this week.

 

[JamesTSLA]

Demand must be increasing... as is evidenced by the increasing delivery of cars every quarter. That's all I care about personally.

Show the proof for Model S?

 

[The Blue Owl]

Bob Lutz will be on "Power Lunch" on CNBC shortly to talk about electric cars. He will undoubtedly harp on how Tesla's targets are impossible.

 

[PaulusdB]

On advertising:

I admit this would be very useful.
Just don't think Tesla would do it while production constrained. Other car companies will spend more and more on that in the next year or two also. Tesla gets by pretty well with the younger generation with their viral YouTube videos I think.

I know it's not within the realm of Tesla's thoughts, but an evil mind could strike a deal with the media e.g. CNBC. The channel could provide substantial airtime for free, if Tesla were to make an over-the-top compelling commercial.
The pressure on the other car companies to counteract will raise the volume and GRP price of their airtime (both to the benefit of CNBC).

 

[Bgarret]

Agreed. It's IQ issues for some fanboys in this forum who can't see it. Tesla and Elon Musk just fooled investors too much.

Wow...so glad you could join us, James. What an insightful first post....no walking around in sheep's clothes for you, just come out right away swinging and letting your tone and your wisdom shine like a beacon in this dark cave. Please feel free to continue to enlighten any of the people here who didn't immediately block you....in other words, have fun in the echo chamber you create with MMD, TFTF.

Cheers, and be sure to have a great day!

 

[ludicrousspeed]

I am not seeing the increased share count in yahoo finance. Market cap($29.19B)/SP ($217.91) still shows 134M shares outstanding. When will the new share count of 143.6M show up on these sites?

Will happen slowly over the next few weeks - does not happen all at once.

Show the proof for Model S?

MS deliveries have increased each of the past two years by over 50%, and continue to grow year over year. This won't continue, but demand/deliveries still growing at a large clip, as evidenced by Q1'16 MS deliveries being up over 23.8% from Q1'15. If each quarter grows by an average of just 20% from the previous year, they will deliver over 60k MS this year - higher than most are projecting.

 

[JamesTSLA]

MS deliveries have increased each of the past two years by over 50%, and continue to grow year over year. This won't continue, but demand/deliveries still growing at a large clip, as evidenced by Q1'16 MS deliveries being up over 23.8% from Q1'15. If each quarter grows by an average of just 20% from the previous year, they will deliver over 60k MS this year - higher than most are projecting.

I think I was replying to Short-Term TSLA Price Movements - 2016 which claims Model S delivery growing every quarter. Please show the proof if you have.

 

[mejojo]

I think you are one of the retarded fanboys. Don't reply to me anymore, block you.

BLOCK ME! BLOCK ME! I think you're a troll, too!! BLOCK ME!

 

[ludicrousspeed]

I think I was replying to Short-Term TSLA Price Movements - 2016 which claims Model S delivery growing every quarter. Please show the proof if you have.

I know what you were replying to, and I stand firm with my claim that Tesla increased Model S deliveries, year over year, in each individual quarter since the car was released. When looking at deliveries, you must look at them year over year (comparing this year's quarterly data with last year's data from the same quarter). Tesla has a history of decreasing deliveries from Q4 to Q1, so it's no surprise that it happened again going into 2016.

 

[sunhelm]

I think you are one of the retarded fanboys. Don't reply to me anymore, block you.

You can go ahead and block me too. Queue Oprah "Block for you, and you, and you. BLOCK for everyone!!!!

 

[EinSV]

Acronym of the day: DFTT(s)