Short-Term TSLA Price Movements - 2016

[AlMc]

What do you estimate the open market value of your P85+?

I'm not so familiar with GRV, but it seems it will bring losses to Tesla, if they need to pay more than market value?

Open market value: Just under $50k. Realize this is RWD, has no sensors, no folding mirrors....We all call them 'classic Ss'

The GRV was devised early on in TMs history and has been discontinued IIRC.
EM initiated it and personally guaranteed it. It was initiated because there was concern about what the R esale value of the early Ss would be. So, he guaranteed that if you financed the car through one of TM's partner banks that he and TM would guarantee, in writing, a specific dollar amount that TM would pay you if you turned the car back in between 36-39 months after purchase.

They pegged the dollar amount based on the residual % of what a 3 year old MB would bring... % wise if the original purchase price.

 

[Gerardf]

That's a very good point. They set up an asset-backed loan (ABL) to cover this - it was discussed at some length during Q4 ER. So there will be a positive cash flow impact from the extra vehicles in transit after all!

That was indeed what I was refering to.

But It could also just mean they can get access to more credit based on these assets-in-transfer. I do not know if this can be counted as cash flow.

Maybe some other poster who is more knowledgeable can see all the factors that are involved in this and can comment on that.

 

[TSLADream]

Possibly. It could also just mean they can get access to more credit based on these assets-in-transfer.
Maybe some other poster who is more knowledgeable can see all the factors that are involved in this and can comment on that.

This makes me think that may be some of the demand is going to the CPO cars that are being returned to Tesla. As we move forward, customers who bought the car in 2014, 2015 will start to return their Model S cars soon. Some of the customers who cannot afford a new model S may just simply be happy with the used Model S. This partly explains the Model S situation. I believe Tesla will be able to sell all cars they can produce.

 

[Matias]

Open market value: Just under $50k. Realize this is RWD, has no sensors, no folding mirrors....We all call them 'classic Ss'

The GRV was devised early on in TMs history and has been discontinued IIRC.
EM initiated it and personally guaranteed it. It was initiated because there was concern about what the R esale value of the early Ss would be. So, he guaranteed that if you financed the car through one of TM's partner banks that he and TM would guarantee, in writing, a specific dollar amount that TM would pay you if you turned the car back in between 36-39 months after purchase.

They pegged the dollar amount based on the residual % of what a 3 year old MB would bring... % wise if the original purchase price.

So why would anyone who has this guarantee NOT to use it? If you can sell your old car to Tesla and immediately by similar car back and earn few thousand dollars? Sounds like really easy money...

First RVG cars reach 36 months time this fall? How many cars approximately have been sold with RVG?

 

[AlMc]

So why would anyone who has this guarantee NOT to use it? If you can sell your old car to Tesla and immediately by similar car back and earn few thousand dollars? Sounds like really easy money...

First RVG cars reach 36 months time this fall?

Not really easy money if you decided you just want to keep your classic S.

In my situation I really like the model 3 I saw at the reveal and feel that AP 2.0 will be available in it...as well as an option for AWD and a battery with the capability of going 300 miles that gives performance close to an S

The RWD S is very good in the snow but the AWD is better and has better acceleration/performance than RWD.

 

[30seconds]

That scandal happened a while ago, any effect would probably have played out by now. The bankruptcy of the VW group is an order of magnitude less likely than Tesla, the german government will bail them out almost certainly if the fines turn out to bankrupt them which I also find to be unlikely.

Edit; was a bit fast, I meant the chance of VW going out of existence is much less likely than Tesla, I don't know about the chances of going bankrupt, but any likelyhood of VW going bankrupt doesn't lessen the likelyhood of Tesla doing the same.

So OK wih you if the German government bails out VW

 

[eloder]

Actually, what I like about this quarter is that it really sets the stage for a killer Q3. You could have something like 28k deliveries in Q3 (2000/wk x 13wk + 2000 from Q2), making Tesla free cash flow positive and really upsetting the shorts.

I don't usually buy before end-of-quarter, but I will certainly consider it in Q3.

This argument has been used since Q4 2015, so forgive me for not believing it until it actually happens. Disclaimer: huge long-term bull, but long-term is being pushed further and further out every week it seems.

Tesla has a lot more to prove before I stop trading short and medium term profits as they come around. The thing that really worries me long-term now is that the combination of very poor short to medium term decisions (not having a solid financial quarter, SCTY debacle, greatly accelerated 3 ramp) is that there's a very good possibility a significant amount of cash (SCTY buy, unforseen 3 ramp issues) will be raised at significantly lower TSLA prices. A several-billion dollar dilution wouldn't be a huge deal at 280, but it will heavily slash valuation if the stock drops down to the mid-100s and heavy dilution then occurs--and I think this is a very real possibility due to shaken institutional investor faith and Elon valuing reckless growth above all else.

I think the recent secondary, and timing of the SCTY acquisition point to the "Elon bailing out SCTY from potential bankruptcy" theory, so SCTY possibly becoming part of TSLA greatly disrupts my long-term faith in the company.

I'm probably not buying unless TSLA dips below 150-160 without actual proof that things aren't running out of control at TSLA, and I may be looking into additional short or medium term exits before the next ER for my shares bought in the 190s. It'd suck to lose on a large upswing, sure, but better to lose some profits then to potentially have a lot of money locked away in a lowly-valued TSLA for a long time.

 

[Matias]

This argument has been used since Q4 2015...

Yep

 

[Gerardf]

See this thread: Model X inventory car purchase

Well, as I explained to you earlier.

That thread is about ONE car. I can think of several reasons that the car was not delivered to its initial purchaser and now ended up at another lucky Model-X owner without a long waiting time.

Can you please stop spreading this FUD, at least until you find real proof about a SIGNIFICANT number of cars. And no, 5 or even 10 cars would NOT be significant.

If you keep repeating this non-issue this without offering very much better proof you run the risk of being accused of trolling.

 

[anticitizen13.7]

Before Model 3 S was the cheapest Tesla. Many here have posted, that Model S was by far the most expensive car they had ever bought. Now some of those people will wait for Model 3.

The people who were willing to be an early adopter and splurge on a Model S have already done so if Model S is available in their market. If they were waiting for Model 3, they wouldn't have bought the S in the first place.

I've watched the automobile marketplace for a long time. People buy cars that are an extension of themselves. Someone who wants the gravitas and/or perceived safety of a larger car like a Mercedes S-class doesn't typically go for a nimble BMW M2 or M3. The Model S is a pretty big car, while the Model 3 is small and nimble.

 

[Matias]

What about cash flow positive quarter? It always moves one quarter forward..

 

[electracity]

Yes. Tesla has mined the affluent customers and is now looking for those willing to stretch their budget. Many of those willing to wait for the Model 3. Or buy used. The RVG is off and used Model S's are not meeting previous RVG, so good deals in the used car market.

Unfortunately the hesitation likely gets worse as the announced model 3 release date gets closer. Hopefully the next autopilot release stays on track. That should boost sales nicely.

I'm sure they don't want to bring the model S too far down market.

 

[Perfectlogic]

So OK wih you if the German government bails out VW

Of course I am, it would be good for the German people so why wouldn't they? Just like the american manufacturers who got bailed out after the crisis, it just makes sense to do as the loan will most likely be repaid (profitable businesses), and it safes a ton of domestic jobs.

The people who were willing to be an early adopter and splurge on a Model S have already done so if Model S is available in their market. If they were waiting for Model 3, they wouldn't have bought the S in the first place.

I've watched the automobile marketplace for a long time. People buy cars that are an extension of themselves. Someone who wants the gravitas and/or perceived safety of a larger car like a Mercedes S-class doesn't typically go for a nimble BMW M2 or M3. The Model S is a pretty big car, while the Model 3 is small and nimble.

AIMc has just posted on the previous page that he is selling his S and will buy the 3 instead. Of course there is an Osbourne effect, the only question is how large. The Model S has pretty much been the only electric car with a proper range and charging network so far, that is probabyl why many chose to spend a lot more getting the S than they usually pay for their car, with the 3 available people will have 2 options.

 

[hockeythug]

As long as quality control keeps up with the ramp I have no concerns with small misses due to vehicles in transit.

 

[snellenr]

After reading all of this hand-wringing, I've concluded that a leading indicator for Tesla's looming bankruptcy would be an advertising campaign... "OMG, demand has collapsed!!!"

 

[anticitizen13.7]

AIMc has just posted on the previous page that he is selling his S and will buy the 3 instead. Of course there is an Osbourne effect, the only question is how large. The Model S has pretty much been the only electric car with a proper range and charging network so far, that is probabyl why many chose to spend a lot more getting the S than they usually pay for their car, with the 3 available people will have 2 options.

Tesla already got his $.

Now, it is a fair point that some 2nd time buyers may find that the Model 3 better suits their needs, and that Model S was the only long range EV at the time of the 1st purchase. But there are others, like me, who would never have bought Model S the 1st time because it is just too big.

The other thing to consider is that there is a long line for a Model 3, and a much shorter line for Model S. People considering a luxury car now could easily not want to wait.

 

[NicoV]

So OK wih you if the German government bails out VW

I think VW will go bankrupt, but a bail out will not be needed. VW as a legal entity responsible for the damage will be first use up their money reserves (while still making money this may take a while). Eventually they will sell Audi and Porsche. If that is now enough they can split in a good VW and a bad VW company, and let the bad VW go bankrupt.

The current damage in brand name is not that big (at least what I see in Belgium). The general public doesn't care about pollution, only about their financial situation. This means they will buy a new VW if offered cheap enough. And if they already have one, they will probably join the consumer group representing VW owners purely in expectation to get some money.

 

[Perfectlogic]

Tesla already got his $.

Now, it is a fair point that some 2nd time buyers may find that the Model 3 better suits their needs, and that Model S was the only long range EV at the time of the 1st purchase. But there are others, like me, who would never have bought Model S the 1st time because it is just too big.

The other thing to consider is that there is a long line for a Model 3, and a much shorter line for Model S. People considering a luxury car now could easily not want to wait.

Perhaps AIMc could chime in and clear everything up, but I think it is pretty clear from his posts that for him the 3 is the best option, which means he would have opted for the 3 back then too if he had the option. Clearly there are some who just wants the 3 and wouldn't consider the S and vice versa, those are the majority, noone is saying the demand will drop more than 50%. But if there are just 20% of Model S buyers who would have chosen the 3 instead if they had the choice then that's a serious drop in demand as we get closer to the 3. And I don't think 20% is far fetched at all.

If that is now enough they can split in a good VW and a bad VW company, and let the bad VW go bankrupt.

You can't do that, obviously.

 

[anticitizen13.7]

After reading all of this hand-wringing, I've concluded that a leading indicator for Tesla's looming bankruptcy would be an advertising campaign... "OMG, demand has collapsed!!!"

I expect a lot more hand wringing between now and 2018, because the road to Model 3 is steep and full of uncertainty.

 

[NicoV]

You can't do that, obviously.

It has been done with GM.