Short-Term TSLA Price Movements - 2016

[ev-enthusiast]

If deliveries are a dissapointment this year, what are some realistic short term catalysts we can look to? How can SP hold/do well through end of year? I'm definitely excited for next year when they things get real with Model 3.

I feel like there's a pretty low liklihood Tesla hits 50k deliveries for the second half this year. Just listening to Elon speak in the conference call, he didn't seem very excited when talking demand and 'about 2k/week' for the remainder of the year.

Currently I feel like it is difficult to take a decision to exit or enter a position in TSLA stock. Too few official data reported by Tesla and too few rumors that might come true soon. Looks like Tesla IR does currently not care much about the retail investor, they do not release data frequently that might help to decide to stay with the company. It would be easy to give updates like what run rate Fremont is currently running, mix of vehicles, relation to suppliers, demand in different countries, expansion plans for stores, service centers, SuperChargers and so on and so on. I have the impression that this only makes the perma-bull against perma-bear battle worse as it is increasingly difficult to agree on at least some facts

 

[maoing]

Once Tesla Q3 delivery is less than supposed production capability (24K), then the Q4 delivery will be capped in similar level because it's constrained by demand. That being said, if Q3 ends up with ~20K, then the full year number could be well below 80K.

Tesla is really aggressively pushing the inventories this quarter like they did in December of 2015. And it better works, because otherwise they will struggle to make 21k cars this quarter and I can't see the market believing they will deliver 29k in Q4. Well, it's time to start tracking inventory sizes too to get the full picture on sales. At is stands right now it has the possibility to swing the deliveries by as much as 500 units, quite significant.

 

[drinkerofkoolaid]

Currently I feel like it is difficult to take a decision to exit or enter a position in TSLA stock. Too few official data reported by Tesla and too few rumors that might come true soon. Looks like Tesla IR does currently not care much about the retail investor, they do not release data frequently that might help to decide to stay with the company. It would be easy to give updates like what run rate Fremont is currently running, mix of vehicles, relation to suppliers, demand in different countries, expansion plans for stores, service centers, SuperChargers and so on and so on. I have the impression that this only makes the perma-bull against perma-bear battle worse at it is increasingly difficult to agree on at least some facts

Tesa is providing more than enough info for any investor who is aware of the things, such as strategic partnerships, that have been confirmed but not highlighted, that don't typically get widely covered, such as partnerships with new home builders and towns that have announced plans to have a Powerwall in every house.

Also, the outcome for Tesla is binary. Either Tesla will be very successful or Tesla will fail. The long term goal is all that matters.

 

[austinEV]

Well, Schwab just personally called me to try to sell me on lending my Tesla shares. (I said no). I also asked, since I have been unclear on this, the rate quoted will go up and down arbitrarily, you can't lock in some nice rate. If I could lock something in for a few years I might well be tempted...

 

[techmaven]

Back on the demand thing... this is a quote from the Q2 Tesla letter:

Despite not having the refreshed Model S in stores for the full quarter, and not until June for international markets, Model S orders increased year over year. With the addition of Model X orders, total Q2 net new vehicle orders rose 67% from a year ago.

New vehicle orders rose 67% from a year ago. The problem is, we don't have new vehicle orders from a year ago. We know they delivered 11,532 vehicles in Q2, 11,603 vehicles in Q3, and 17,478 in Q4. Smoothing out that data, we're looking at 13,500 or so order level last year. So 67% increase on that number is 22,500 or so. A more normal finished goods inventory level is about $500 million dollars at these production levels, so that's about $200 million in extra overhang. That's an extra 2,000 vehicles, or a total of 24,500 or so.

As for VIN counting, you might think it works and then it doesn't. One of the big problems is uneven regional counting and allocation, not to mention an occasionally arbitrary bursty rate of allocation. Using it for intra-quarter counting is fraught with problems.

 

[ev-enthusiast]

Tesa is providing more than enough info for any investor who is aware of the things, such as strategic partnerships, that have been confirmed but not highlighted, that don't typically get widely covered, such as partnerships with new home builders and towns that have announced plans to have a Powerwall in every house.

Also, the outcome for Tesla is binary. Either Tesla will be very successful or Tesla will fail. The long term goal is all that matters.

Thanks for your quick response.
Where can I find the information that Tesla is publishing?
Personally I think that Tesla could very well coexist with other car companies, be it traditional car companies or new ones currently working on EVs.
It just looks like the traditional car industry is still ignoring this disruption.

 

[Yonki]

Well, Schwab just personally called me to try to sell me on lending my Tesla shares. (I said no). I also asked, since I have been unclear on this, the rate quoted will go up and down arbitrarily, you can't lock in some nice rate. If I could lock something in for a few years I might well be tempted...

I look at it differently. Yes the rate's unpredictable, but for me it's basically: do I want to invest in TSLA.A (with no dividend) or TSLA.B (with an occasional, random but significant dividend), with a guarantee that the price of TSLA.A and TSLA.B will always be identical? I went for TSLA.B. Originally I was worried I might be enabling/helping shorts, but the reality is that while my position is significant to me, it's just noise when you look at the whole market. And I always have the option of recalling my shares if I want to have a small part in any potential future tsunami of pain...

Applies even more to SCTY (33% interest) than TSLA (a still-respectable 8.5%).

TL;DR: It's free money, man!

 

[FredTMC]

Back on the demand thing... this is a quote from the Q2 Tesla letter:



New vehicle orders rose 67% from a year ago. The problem is, we don't have new vehicle orders from a year ago. We know they delivered 11,532 vehicles in Q2, 11,603 vehicles in Q3, and 17,478 in Q4. Smoothing out that data, we're looking at 13,500 or so order level last year. So 67% increase on that number is 22,500 or so. A more normal finished goods inventory level is about $500 million dollars at these production levels, so that's about $200 million in extra overhang. That's an extra 2,000 vehicles, or a total of 24,500 or so.

As for VIN counting, you might think it works and then it doesn't. One of the big problems is uneven regional counting and allocation, not to mention an occasionally arbitrary bursty rate of allocation. Using it for intra-quarter counting is fraught with problems.

Nice analysis. 22,500 orders puts TM on a great run rate for 2nd half of year

 

[esk8mw]

Back on the demand thing... this is a quote from the Q2 Tesla letter:



New vehicle orders rose 67% from a year ago. The problem is, we don't have new vehicle orders from a year ago. We know they delivered 11,532 vehicles in Q2, 11,603 vehicles in Q3, and 17,478 in Q4. Smoothing out that data, we're looking at 13,500 or so order level last year. So 67% increase on that number is 22,500 or so. A more normal finished goods inventory level is about $500 million dollars at these production levels, so that's about $200 million in extra overhang. That's an extra 2,000 vehicles, or a total of 24,500 or so.

As for VIN counting, you might think it works and then it doesn't. One of the big problems is uneven regional counting and allocation, not to mention an occasionally arbitrary bursty rate of allocation. Using it for intra-quarter counting is fraught with problems.

FYI, if you'd rather look at VIN assignment numbers (rather than including the Q4 outlier w/ pipeline emptying) to get an idea on 2015 new orders:

Q1: 12,921
Q2: 12,171
Q3: 14,699
Q4: 13,273

The 67% increase doesn't look as good if applied just to the Q2 VIN assignment number. It looks better if you average with the other quarters, though. Tough to know how Tesla calculated the number.

 

[Zhelko Dimic]

Tesla could create S40 model for Ontario. No, no, hear me out.
Current price of Model S60 is $CAD86K, and give me $3K incentive.
If MRSP was $75K, incentive would be $13K. Yes, really, that's a cutoff where most of incentive is gone.

So imagine S40 model that Tesla can sell for $75K and charge $13K to unlock S60 And of course another whatever, $10K to get it to S75

 

[TMSE]

Tesla could create S40 model for Ontario. No, no, hear me out.
Current price of Model S60 is $CAD86K, and give me $3K incentive.
If MRSP was $75K, incentive would be $13K. Yes, really, that's a cutoff where most of incentive is gone.

So imagine S40 model that Tesla can sell for $75K and charge $13K to unlock S60 And of course another whatever, $10K to get it to S75

Haha, I think Tesla would consider it after exploring other demand levers. How long is that incentive? Any caveats?

Germany has a similar incentive program where the cutoff is a couple of thousand Euros below lowest S60 price.

 

[NOLA_Mike]

It sounds like if you want to get on CNBC all you have to do is get on your twitter account, announce that you've been in an accident in a Tesla, claim that it was "Autopilot's" fault and, viola, you're golden!

 

[austinEV]

I look at it differently. Yes the rate's unpredictable, but for me it's basically: do I want to invest in TSLA.A (with no dividend) or TSLA.B (with an occasional, random but significant dividend), with a guarantee that the price of TSLA.A and TSLA.B will always be identical? I went for TSLA.B. Originally I was worried I might be enabling/helping shorts, but the reality is that while my position is significant to me, it's just noise when you look at the whole market. And I always have the option of recalling my shares if I want to have a small part in any potential future tsunami of pain...

Applies even more to SCTY (33% interest) than TSLA (a still-respectable 8.5%).

TL;DR: It's free money, man!

TSLA.B share are dirty, dirty, soiled no good I did it once for about a week a few years ago and couldn't sleep at night.

 

[jhm]

I look at it differently. Yes the rate's unpredictable, but for me it's basically: do I want to invest in TSLA.A (with no dividend) or TSLA.B (with an occasional, random but significant dividend), with a guarantee that the price of TSLA.A and TSLA.B will always be identical? I went for TSLA.B. Originally I was worried I might be enabling/helping shorts, but the reality is that while my position is significant to me, it's just noise when you look at the whole market. And I always have the option of recalling my shares if I want to have a small part in any potential future tsunami of pain...

Applies even more to SCTY (33% interest) than TSLA (a still-respectable 8.5%).

TL;DR: It's free money, man!

Actually, after the merger, Tesla could issue preferred stock where the dividend is based on the residual income of solar power contracts. This would essentially monetize what SolarCity calls its "PowerCo". This could raise upwards of $2.2B in capital. That is, the NPV of this residual cash flow is $2.2B assuming a 6% discount rate. These preferred shares would be attractive to income investors, while common shares of Tesla would remain more attractive to growth investors.

 

[Zhelko Dimic]

hmm, end of day surge. this seems like a typical 'I don't want to be short overnight' of sellers that have shorted stock today.

 

[davecolene0606]

Here goes dude from CLSA on CNBC claiming Tesla is marketing an "autonomous" car.
No bother to mention driver wasn't paying attention and knew to hold the wheel but didn't. And really? A friggin fender bender in China makes international news?

and.... Break to,the "lousy" track record and M3 will be the same as MX....

gotta smush that afternoon momentum eh?

 

[tander]

Here goes dude from CLSA on CNBC claiming Tesla is marketing an "autonomous" car.
No bother to mention driver wasn't paying attention and knew to hold the wheel but didn't. And really? A friggin fender bender in China makes international news?

and.... Break to,the "lousy" track record and M3 will be the same as MX....

gotta smush that afternoon momentum eh?

This is interesting to see all the negative slant, I guess whatever catches peoples' attention. I wonder if the NHSTA will publish their findings after the investigation? It seems like they will have to come to the conclusion that it's safer with AP than without.

 

[schonelucht]

As for VIN counting, you might think it works and then it doesn't. One of the big problems is uneven regional counting and allocation, not to mention an occasionally arbitrary bursty rate of allocation. Using it for intra-quarter counting is fraught with problems.

For the Model S there is no uneven regional counting nor allocation. Order confirmed = VIN assigned with the exception of those who order for a postponed delivery but those orders are far en few between. Bursting happens and we are getting better at picking them out. Despite that, VIN tracking provides a useful upper bound. It is no coincidence that @bonaire has a pretty good track record in estimating deliveries.

 

[tander]

Does anyone know about the merger timeframe? My understanding was the 45 day go shop period had already started, then they should do the votes. But someone said they need to have SEC approval first? Anybody have more clarity on the process? Maybe I need to dive into the 10Q.

 

[adiggs]

hmm, end of day surge. this seems like a typical 'I don't want to be short overnight' of sellers that have shorted stock today.

Oooh - this could be my first weekend of earning interest from loaning out my shares. I hope they don't get returned.

I'm with Yonki - take the free money. Heck - buy a few more shares with the free money, which of course promptly get lent out.

I'm ok with highly variable (changes daily) interest rate - I can't plan on it to buy the groceries or pay the utility bill, but maybe as a vacation fund ...