Short-Term TSLA Price Movements - 2016

[yesla]

I think all these 'negative news' stories are actually great advertising for Tesla. They draw a lot of attention, and anyone serious enough to spend $100,000 on a car is probably going to look deep enough into these stories to realize that among all the other benefits, teslas are actually among the safest cars on the road and autopilot is a great feature as long as it's used properly.

I think the problem with negative press is that it can affect the "image" of a brand. Never underestimate a small group of really loud idiots in their ability to persuade cultural perceptions and laws.

Where is the EV/PV organized movement? How do I sign up?

 

[farzyness]

I understanding Tesla introducing the X 60, but I don't understand why they are so freely disclosing that it's a software limited 75. This is causing a lot of people who are on the fence to go with the 60, and then they may or may not upgrade later. If I was buying an X I'd want the 90 but probably go 75 because finances are tight, but wait the 60 can be upgraded so why not buy that and then upgrade later if needed.

Instead, 2 years from now Tesla could make an announcement that 60 owners can upgrade. Yeah us Tesla geeks would probably figure this out before long but the general public wouldn't know.

It incentivizes people that are looking for a Tesla but want to save $ to buy a Tesla today, and then add the range later. It's bring revenue forward.

 

[Papafox]

X Yes?, Today has been a gift to the shorts. Through non-stop FUD and undoubtedly some shorts buying back in today, TSLA has dropped a mere $2. Rather than haunting this forum, wouldn't it be better to close your short position now and ride the stock up through 3rd and 4th quarters? Undoubtedly the stock will get ahead of itself at some point north of ATM, and you can switch back to shorting at that point (and probably make some money on it, too). There's a reason the smart shorts have already exited TSLA, it is because they see lots of upside potential for the stock as production (and deliveries) move from 14,xxx/quarter to 24,000+ per quarter. My suggestion? Stop wasting your time being the perpetual naysayer. Ride the up escalator until it is smart to get off, and then ride the down escalator. If you time it right, you make money in both directions. It is silly to pound away at the Teslaholics (myself included) on this forum when you get little to no results for your efforts when you could instead be making some money. Consider it. If you don't believe Tesla is going to deliver 24,000+ vehicles in the 3rd quarter, maybe that would be a worthwhile conversation. Don't invest out of emotions, for goodness sakes, look at the evidence.

Perhaps someone could chime in with your best estimate of what 24,000+ deliveries in 3rd quarter will do to GM and to cash-flow. We can subtract something for the 60s entering the production line to come up with a net increase.

 

[yesla]

Very confused about why anyone thinks Elon would want to merge SpaceX with SolarCity and Tesla. The Tesla-SolarCity merger makes financial and logical sense. Even Elon has been clear he is nervous about SpaceX going public due to the stock market being too short sighted. The long term value of SpaceX is probably almost impossible to quantify today. If SpaceX ever goes public, I expect it to be one of the most volatile stocks in history.

We have come a long way since the day that the offer was announced.

SpaceX will not go public until people start travelling between planets like we do between countries.

 

[X Yes?]

258 posts in 70 days. It's almost like a job? Is it like a job? Do you blog about Tesla elsewhere, or provide financial advice or lobbying services in some other venue?

I'm retired. Many interesting opinions on this forum. I have an interest in autos and will likely buy a Model 3 at some point. At my age, I don't confuse the product, with the valuation of the stock.

 

[Johan]

I understanding Tesla introducing the X 60, but I don't understand why they are so freely disclosing that it's a software limited 75. This is causing a lot of people who are on the fence to go with the 60, and then they may or may not upgrade later. If I was buying an X I'd want the 90 but probably go 75 because finances are tight, but wait the 60 can be upgraded so why not buy that and then upgrade later if needed.

Instead, 2 years from now Tesla could make an announcement that 60 owners can upgrade. Yeah us Tesla geeks would probably figure this out before long but the general public wouldn't know.

We've been over this before, when the Model S "60" came to market. Basically it's delyed revenue in a trade with increased demand. Look, every "60" car ever sold ("every" as in for all practical intents and purposes every) will be unlocked to a 75, either by an owner (which creates increased revenue seeing as how the unlock costs more than the price difference between a 60 and 75) OR by Tesla as they trade in the car and resell it as a CPO car. I guarantee we will not see one single S or X "60" sold as CPO. It costs Tesla nothing to unlock these cars. As I said; they just delay that part of the revenue in exchange for keeping the factory boiling and getting cars out the door.

 

[racer26]

Are you assuming all 60 sales are taking away from 75 sales? If these are new sales, there is no 9k loss. If all 60 sales were assumed to be 75 buyers, it would be a 9k sales loss for TSLA. If 80% of 60 sales are due to market expansion, what is the margin impact? Loss of 9k for 20% of 60 buyers, but 85K sales gain for 40% of sales in the quarter? Seems like a good trade, but that depends on fixed costs and price of new sales. Seeing how the math is being done and plugging and seeing how the numbers interact would be very interesting.
Good estimates of fixed costs, as well as marginal costs broken out by the rate they change per unit of sales, and then an understanding how the lower cost product affects new sales. If S is 80% new sales, and are making up over 50% of sales, we might interpret sales as rising by almost 100% for the quarter. That would be a good explanation of a X60, but that is conjecture at this point. On the other hand, if 20% of S60 sales are new sales and 80% downgrades from 75 purchases, the X60 is a bad sign.

Could be a good discussion point in the Model 60 delivery thread, maybe worthy of a poll by some motivated TMC member

Someone earlier estimated the market for cars gets 50% larger for every 10k you chop off the price. For simplicity, lets assume that 9k = 10k, and then suggest we expect the distribution of MX's to be:

P90D
90D = 2.25 x P90D
75D = 1.5 x 90D
60D = 1.5 x 75D

Total MX = P90D + 2.25 P90D + 3.375 P90D + 5.0625 P90D =11.6875 P90D. The number of MX's sold should be roughly, that for every 1 P90D, you sell 2.25 90D's, 3.375 75D's and 5.0625 60D's.

If we assume 50/50 split for S/X on the 80k guidance number, that would be 40k MX's with this distribution:

3422 P90D
7701 90D
11551 75D
17326 60D

Some fraction of 60D buyers will later unlock the 75, for 9k directly to margin. COGS on this action is essentially zero. I would expect between 10 and 30% do this.

So the real question is: how many of those 17326 wouldn't have bought a 75D absent the 60D option, and of those, how many later end up paying to upgrade? Its a tough question to answer.

 

[NOLA_Mike]

We've been over this before, when the Model S "60" came to market. Basically it's delyed revenue in a trade with increased demand. Look, every "60" car ever sold ("every" as in for all practical intents and purposes every) will be unlocked to a 75, either by an owner (which creates increased revenue seeing as how the unlock costs more than the price difference between a 60 and 75) OR by Tesla as they trade in the car and resell it as a CPO car. I guarantee we will not see one single S or X "60" sold as CPO. It costs Tesla nothing to unlock these cars. As I said; they just delay that part of the revenue in exchange for keeping the factory boiling and getting cars out the door.

Not to mention there's a good chance "60" buyers will use some or all of the price difference buying additional options. So, in the long run Tesla gets to sell more high margin options now and still collect the 60 --> 75 money later.

Mike

 

[Johan]

One more note regarding "60" cars: the market, analysts and to some extent Tesla themselves have become extremely hung up on one variable: the number of cars sold. As in "Tesla failed to deliver 18k cars last quarter" or "We are aiming to exit 2016 with a 100k yearly run rate". But this is partly silly, since another just as important variable (financially more important IMO) is: the $$$ value of cars sold, the $$$ revenue, the $$$ profit. A fully loaded P90DL can cost twice that of a bare bone 60. Yet they both count as "1" car produced/sold/delivered... Go figure.

 

[X Yes?]

ride the stock up through 3rd and 4th quarters?

Papa, I don't see that happening. The lack of demand has been revealed in both products, today. Something bad for the business is revealed everyday. The SolarCity bailout is coming along with the Earnings Release.

Colin Langan has a "sell" rating and $160 price target on the stock. I think that it is generous. There will be a much better entry point soon. I'll predict another downward revision from Tesla's biggest fan Adam Jonas.

I know many are looking forward to Elon Musk's top secret blog this week. It may be that he's now got the "Bio defense"
mode to work on Mars. I don't see much credible news to move the stock up. Your opinion may vary.

 

[schonelucht]

Are you assuming all 60 sales are taking away from 75 sales?

Yes. When guidance on the FY was made, I was assuming those 80-90 000 cars would have been 75'er or 90'ers. Were you not?

 

[TMSE]

Yes. When guidance on the FY was made, I was assuming those 80-90 000 cars would have been 75'er or 90'ers. Were you not?

Tesla is releasing X60D as per plan laid out last year. I am confident their margin guidance already accounts for this introduction. Wait a few more weeks, it will all be clarified in the earnings call.

 

[drinkerofkoolaid]

We have come a long way since the day that the offer was announced.

SpaceX will not go public until people start travelling between planets like we do between countries.

I don't usually do this, but I'll make a one time exception. I've been saying a Tesla-SolarCity merger of some sort would be a good idea for the past year and have been very vocal about the merger being an excellent idea only to be met with crickets and people saying they don't understand SolarCity's business model.

 

[X Yes?]

Perhaps someone could chime in with your best estimate of what 24,000+ deliveries in 3rd quarter will do to GM and to cash-flow. We can subtract something for the 60s entering the production line to come up with a net increase.

I see you are in agreement with the 50K previous guidance through the balance of the year. A couple of problems:

1. Even if the lower margin Models stimulate demand now, doesn't that pull demand forward form Q3 and 4?

2. We heard that production was at 2K/week at the end of Q1. That was not true. The Model X remains very difficult to build, are you banking on the new forecast?

 

[Dwdnjck]

P

60kw should be just fine for people wanting a commuter car or a soccer taxi.

Not true. 60 works just fine for both local travel and supercharger trips. No range anxiety necessary with good planning and pace. This is and always has been about Model 3. Tesla wants to establish 200 miles of range as sufficient for 99.99% of usage. Tesla wants fo prove that 200 miles of range works. As an three year owner of a 60 with a range of 190-195 miles and 46000 miles of travel, I know that 200 miles will work quite well for most Model 3 buyers.

 

[yesla]

I don't usually do this, but I'll make a one time exception. I've been saying a Tesla-SolarCity merger of some sort would be a good idea for the past year and have been very vocal about the merger being an excellent idea only to be met with crickets and people saying they don't understand SolarCity's business model.

Of course you would, drinkerofkoolaid.
But who else recites the secret master plan ritualistically? XD

 

[brian45011]

However.... accounting wise, @SBenson 's question: Does this mean they can stop doing the horrible accounting that makes leased vehicles seem like losses in the present quarter?

The resale value guarantee lease accounting will continue to run off until about 39 months from 6/30/16. There will be no new non-GAAP adjustments for new resale guarantees, but the revenue recognition and depreciation from legacy resale value guarantees will continue until the last remaining option is either exercised or expires.

The non-GAAP quarterly adjustments will continue with respect to leases by Tesla's bank leasing partners who have residual values guaranteed by Tesla.

 

[srini]

Perhaps someone could chime in with your best estimate of what 24,000+ deliveries in 3rd quarter will do to GM and to cash-flow. We can subtract something for the 60s entering the production line to come up with a net increase.

It will add $9000 loss for 12000 cars. So roughly 108 mil loss extra over q2 losses.

I bet we see S40 and X40 during q3. Bigger referral bonuses coming?

 

[Papafox]

Papa, I don't see that happening. The lack of demand has been revealed in both products, today. Something bad for the business is revealed everyday. The SolarCity bailout is coming along with the Earnings Release.

Colin Langan has a "sell" rating and $160 price target on the stock. I think that it is generous. There will be a much better entry point soon. I'll predict another downward revision from Tesla's biggest fan Adam Jonas.

I know many are looking forward to Elon Musk's top secret blog this week. It may be that he's now got the "Bio defense"
mode to work on Mars. I don't see much credible news to move the stock up. Your opinion may vary.

X Yes?, let's dispense with the word play and instead look at the two components of 3Q and 4Q deliveries: production capability and demand. Assuming Tesla had over 5,000 vehicles in transit coming into Q3, we shouldn't see a transportation issue with 3Q deliveries, so it's just production capability and demand to consider. Tesla produced nearly 2,000 vehicles/week in June and so an average of "merely" 2,000 vehicles/week in 3Q and 4Q should be easy.

Now let's look at demand. Even before the 60 Model X was introduced, Tesla has already sold the production through late September and September marks the end of the 3rd quarter. So, 3Q demand is already sufficient to keep the production lines running at 2,000/week and maybe more. The introduction of the X 60 may by itself provide sufficient stimulus to demand so that 4Q can run at peak production, but one huge stimulus is coming soon: Autopilot 2.0 hardware. I know of LOTS of Tesla owners who are holding off their upgrades until Autopilot 2.0 hardware is released. Between the 60 X intro and Autopilot 2.0, Q4 is going to be at full production capacity. Oh, I forgot to mention the introduction of the 100kwh battery in both the S and X. There's another stimulus. Now let's look at 2017. You have more markets opening up, Taiwan and South Korea, among others. You have a big stimulus as we approach the launch of Model 3, which is the eventual phasing down of the U.S. federal $7500 tax credit. You will have continued updates on Autopilot and its ability to perform city driving with 2.0 hardware.

Please don't fall for that bear propaganda about falling demand. The 2Q delivery numbers were low, not because of a lack of demand, but because of a stop-and-start assembly line situation in April and May, caused by Model X ramp up issues. Model S is impacted by these teething problems because it shares the same final assembly line with X. If you point to 2Q as an example of falling demand, you don't understand the manufacturing process and that lack of understanding is going to cost you LOTS of money. Please rethink your position and make some money, instead of losing it with the other unfortunate shorts who are still in. You guys are canon fodder as far as Cory Johnson and that type of business journalist are concerned. You're serving a purpose in the war against Tesla's assault on traditional automakers and the petroleum industry. X Yes?, they could care less if you lose money. Don't you see that? The smart shorts are already out of TSLA. Join them and be a smart short yourself.

 

[drinkerofkoolaid]

Of course you would, drinkerofkoolaid.
But who else recites the secret master plan ritualistically? XD

A minimum of three times a day, every day.
I always make sure to face towards Freemont.