Short-Term TSLA Price Movements - 2016

[Krugerrand]

So you think employees will take over TMC's role for M3 feedback?

Of course they will. Employees are people too. They have to get to work on time, drive their kids to school, practice etc... They are also people who will take pride in owning a such a car and want to show it off, take it to cars and coffee etc...

 

[Lessmog]

And the best way to fight the FUD is to.......................Sorry to all who don't like the analogy.............bring on the STEAK!

.... burn coal? Nooo! Carcoal sorry charcoal

 

[3Victoria]

Of course they will. Employees are people too. They have to get to work on time, drive their kids to school, practice etc... They are also people who will take pride in owning a such a car and want to show it off, take it to cars and coffee etc...

... have inside knowledge of the car and take pride in producing an excellent product.

 

[FredTMC]

And we also know that employees will be receiving the first Model 3's. Logically we can assume any early production problems will thusly get caught by the employees before the Model 3 gets to customers. Therefore we can extrapolate that historic data is just that; history. Not the future.

Love it.

I can just hear employees on the model 3 assembly line:

"This is a Model 3, there are many like it but THIS one is mine..."

Employees will absolutely help get the initial bugs out

 

[Stretch2727]

Visited the Paramus NJ store today just get a feel for deliveries. A few comments.

-A lot of cars (Maybe 50 new) on the lot. The most I have ever seen. Some parked 2 deep.
-All but 2-3 were designated for customers. (Label in top right corner of windshield. )
-Almost all were manufactured in August. (The MSRP sticker and the label in the top right of windshield) Only 2-3 from earlier.
-There was one model X finished manufacturing 8/29 vin (159XX) and had already made it to the East coast in a week!
-Many used Tesla trades (25 or so) on the lot marked not for sale. They looked recently traded and needed a good going over.
-2-3 cars marked for inventory greatly reduced quantity from my last visit in early July.
-They were open (Labor Day) and a lot of people looking in the showroom.

My visit reinforced that they are going to have a great quarter. Clear the deliveries are moving very fast. No demand concerns as it does not appear they are building inventory cars.

 

[RobStark]

No, the media doesn't expect absolute perfection from Tesla.

They expect close to perfection and point out this flaws much more than comparable vehicles.

Did you know that according to Consumer Reports Mercedes S Class has more problems per vehicle than any other sold in the US?

Like most people probably not because you never hear it in the media.

But Mercedes packs their S Class with gadgets and motors for everything. More stuff to go wrong, they just really don't push the envelope with powertrains.

Aside from uber limited Mirai, Toyota does not push the envelope.

They make the same stuff over and over with just minor improvements. This is relatively easy to do.

Their last significant breakthrough was the Prius hybrid powertrain. That was 20 years ago.

 

[trentxintong]

Musk said Tesla is on "razor edge" of achieving a good Q3. can someone please explain to me what he means ? Is Tesla close to achieving a good Q3 or something else, I am not a native English speaker =)

 

[madodel]

They expect close to perfection and point out this flaws much more than comparable vehicles.

Did you know that according to Consumer Reports Mercedes S Class has more problems per vehicle than any other sold in the US?

Like most people probably not because you never hear it in the media.

But Mercedes packs their S Class with gadgets and motors for everything. More stuff to go wrong, they just really don't push the envelope with powertrains.

Aside from uber limited Mirai, Toyota does not push the envelope.

They make the same stuff over and over with just minor improvements. This is relatively easy to do.

Their last significant breakthrough was the Prius hybrid powertrain. That was 20 years ago.

And Toyota and Mercedes are huge advertisers in all media (except CR). So who do you think the media is going to focus on? Reminds me of the fire articles blaring because a handful of Teslas caught fire over several months in multiple situations, when MB's, Toyotas, BMWs, Audis, Chevys, Fords, Chryslers burn every single day. Were there ever follow ups noting that Tesla fixed those issues? Not much self-interest there I'm sure.

 

[Intl Professor]

Musk said Tesla is on "razor edge" of achieving a good Q3. can someone please explain to me what he means ? Is Tesla close to achieving a good Q3 or something else, I am not a native English speaker =)

Like a knife's cutting edge. A small tolerance can lead to a change. We hope it is good news, that is, a bit of extra effort will put things over the top, like a cash flow positive Q3.

 

[CatB]

So you think employees will take over TMC's role for M3 feedback?
I have some doubts, as they're probably even bigger fan-boys & -girls than most here. And there is no anonimity talking about the car with your VIN.

Initially, yes. Every Tesla employee I have met is passionate about their mission and conscientious (and also smarter than the average bear - there's a reason everyone wants to work for Tesla, and Tesla can be/is selective - not perfect, but much, much better than average). So yes, if they're driving the car and notice something isn't quite right, I would expect them to report it and support problem determination and resolution better than the average customer.
Not sure what your point is about VIN and anonymity.

 

[SPadival]

Personally I still believe the biggest risk to the company is that Tesla will fail to expand service centers as necessary, and demand will crash because "I can't get my car repaired". I don't see any other serious risks in the 5-year timeframe, though I could be missing some.

Musk is actually not averse to 3rd party dealership and service center model once there is a sufficient number of Teslas on the road and there is a limit to how fast Tesla can move on the SC front. He said so on record when talking about regulations put by US states on company owned dealerships.

 

[MitchJi]

Musk is actually not averse to 3rd party dealership and service center model once there is a sufficient number of Teslas on the road and there is a limit to how fast Tesla can move on the SC front. He said so on record when talking about regulations put by US states on company owned dealerships.

I'm pretty sure he's changed his mind on that.

 

[Dennis Cargill]

I absolutely think Tesla will deliver a record number of vehicles in Q3. My model says 21,125 which beats the previous record of 17,400 in Q4 2015.

Based on Elon's email, I am concerned that he believes Q4 and future quarters will be weak or flat -- until the M3 ships in large quantities. His email says it was Tesla's last chance to show profitability. As a reader, this suggests to me that he thinks expenses will continue to grow ahead of revenue growth. Which makes a lot of sense since Tesla needs to ramp it's operating expenses in advance of the M3. To support 10x the number of vehicles being delivered per year, Tesla needs to invest an enormous amount of dollars into new service centers, more sales, more superchargers, and yes more admin. It also needs to ramp its spending on development to get the M3 to reality. Some of these costs can be capitalized, but many cannot. Thus I agree with Elon this is probably the last quarter Tesla could possibly show a non-GAAP profit, until M3 is shipping in large quantities which may not occur until sometime in mid-2018 (not talking about the first few deliveries to friends & founders).

What worries me more is: What if Elon believes Q3 DELIVERIES will actually be the high for the year? Is he concerned that Q4 deliveries will be LOWER than Q3? If so I'm worried. As someone rooting for the success of Tesla, I cannot understand why deliveries would be flattening or declining if the future is so bright. Hopefully I am just worried about nothing, but his email sounds like the words of a man that wants to sell billions on stock on good news (presumably Q3) before the bad news arrives (Q4).

Please help me see the bright side of this email. Previously I thought Q3 would be 20K and Q4 25K. Now I think Q3 is a little better (21K) but Q4 as low as 20K.

Totally separately, has anyone been following the Google sheets data? Q3 Model S deliveries look good. But mix looks to have shifted substantially to 60/60D. Doesn't this suggest that average pricing will be way down?

 

[30seconds]

What worries me more is: What if Elon believes Q3 DELIVERIES will actually be the high for the year? Is he concerned that Q4 deliveries will be LOWER than Q3? If so I'm worried. As someone rooting for the success of Tesla, I cannot understand why deliveries would be flattening or declining if the future is so bright. Hopefully I am just worried about nothing, but his email sounds like the words of a man that wants to sell billions on stock on good news (presumably Q3) before the bad news arrives (Q4).

Please help me see the bright side of this email. Previously I thought Q3 would be 20K and Q4 25K. Now I think Q3 is a little better (21K) but Q4 as low as 20K.

Totally separately, has anyone been following the Google sheets data? Q3 Model S deliveries look good. But mix looks to have shifted substantially to 60/60D. Doesn't this suggest that average pricing will be way down?

Why would you think Q4 would be less than Q3? There is plenty of demand and the X production efficiency is still ramping. The yearly guidance is still the same so there will need to be substantial productions and deliveries in Q4. What will be ramping faster is the investments in M3 which will challenge any hope in profitability for the next few quarters

 

[neroden]

Initially, yes. Every Tesla employee I have met is passionate about their mission and conscientious (and also smarter than the average bear - there's a reason everyone wants to work for Tesla, and Tesla can be/is selective - not perfect, but much, much better than average). So yes, if they're driving the car and notice something isn't quite right, I would expect them to report it and support problem determination and resolution better than the average customer.

Only problem is that the employees are geographically concentrated. If there's a problem which only shows up in Manitoba weather...

...well, it would be good to have a Manitoba service center with Manitoba employees driving their Model 3s.

 

[Cattledog]

7 months ago we hit 142 intraday amid the world-wide meltdown at the beginning of the year and the hyperbolic reaction to everything that was going on with Tesla (mostly doubt around Model X delays and no credit whatsoever being given yet to the Model 3, which TRUE BELIEVERS knew would be a hit, and so it was.) So I posted this:

https://teslamotorsclub.com/tmc/posts/1362622/

Two months later we were at 265. It's been below 195 only between 2/1 and 3/3. The last time it was below 180 ish was February 2014.

Here we are again, you can read all the good postings here appealing to the rational side, which are many and significant. And, if you've been around here for awhile, you can sense Elon beginning to summon the 'A' game for 2017 - Model 3, Gigafactory, Model Y unveil, 100,000 Model S and X deliveries, Autopilot 2.0 and more breakthroughs, Mobility Services, Solar/Storage integration. Holy *sugar*! How much more do we know now than 2.5 years ago!?! Everything I just typed above was either unknown or severe speculation at the time (OK, some of it is sort of speculation now (100K Model S+X next year is a guess)).

What do we think TSLA will bring in the next 2.5 years THAT WE DON'T EVEN KNOW ABOUT YET. With all the stuff above it feels like this thing should be worth more than it was 2.5 years ago. With even 1/2 the innovation of the last 2.5 years, in the next 2.5, a lot more.

People are simply wary of whether they can pull it all off. The main reason I own TSLA is because they see the future better than anyone else, and the last 5 years makes me believe they can execute. I'm betting they can, again. Tomorrow.

 

[BobSk]

Based on Elon's email, I am concerned that he believes Q4 and future quarters will be weak or flat -- until the M3 ships in large quantities. His email says it was Tesla's last chance to show profitability. As a reader, this suggests to me that he thinks expenses will continue to grow ahead of revenue growth.

Based on Bloomberg, what Elon said is, it would be his last chance to show improved financial numbers before he tries to raise more money. You removed the last few words, then it reads differently.

 

[Papafox]

I absolutely think Tesla will deliver a record number of vehicles in Q3. My model says 21,125 which beats the previous record of 17,400 in Q4 2015.

Based on Elon's email, I am concerned that he believes Q4 and future quarters will be weak or flat -- until the M3 ships in large quantities. His email says it was Tesla's last chance to show profitability. As a reader, this suggests to me that he thinks expenses will continue to grow ahead of revenue growth. Which makes a lot of sense since Tesla needs to ramp it's operating expenses in advance of the M3. To support 10x the number of vehicles being delivered per year, Tesla needs to invest an enormous amount of dollars into new service centers, more sales, more superchargers, and yes more admin. It also needs to ramp its spending on development to get the M3 to reality. Some of these costs can be capitalized, but many cannot. Thus I agree with Elon this is probably the last quarter Tesla could possibly show a non-GAAP profit, until M3 is shipping in large quantities which may not occur until sometime in mid-2018 (not talking about the first few deliveries to friends & founders).

What worries me more is: What if Elon believes Q3 DELIVERIES will actually be the high for the year? Is he concerned that Q4 deliveries will be LOWER than Q3? If so I'm worried. As someone rooting for the success of Tesla, I cannot understand why deliveries would be flattening or declining if the future is so bright. Hopefully I am just worried about nothing, but his email sounds like the words of a man that wants to sell billions on stock on good news (presumably Q3) before the bad news arrives (Q4).

Please help me see the bright side of this email. Previously I thought Q3 would be 20K and Q4 25K. Now I think Q3 is a little better (21K) but Q4 as low as 20K.

Totally separately, has anyone been following the Google sheets data? Q3 Model S deliveries look good. But mix looks to have shifted substantially to 60/60D. Doesn't this suggest that average pricing will be way down?

I think you're reading more into Musk's statement than actually exists. He told employees that 3Q would be the last possible quarter to be slightly cashflow positive AND profitable before the M3 ramp-up. Here's the quote:

"The third quarter will be our last chance to show investors that Tesla can be at least slightly positive cash flow and profitable before the Model 3 reaches full production."

. Surely with the huge leap in Cap Ex spending in Q4 and beyond, Tesla will not be cashflow positive in a few subsequent quarters. As employees are hired to staff the M3 lines, gigafactory, and new stores and service centers, production costs and depreciation both increase. Nonetheless, you might see Q4 profitable as well if we see a jump in car deliveries from the good numbers we're likely to see in Q3, because the Cap Ex spending doesn't immediately translate into lots of depreciation, it's more of an accumulated increase over time as additional CapEx spending takes place and new facilities come online. Thus, it's already pretty much assured that Q4 will not be cashflow positive even if deliveries are recordsetting and Tesla shows a small profit in Q4, but I see no evidence that this information supposes that Q4 deliveries will be less than Q3. Rather, the changes will be on the outflow of cash side, not the revenue side.

Edit: BobSk's point is also valid. Musk phrased the situation in two different ways.
"The simple reality of it is that we will be in a far better position to convince potential investors to bet on us if the headline is not 'Tesla loses Money Again,' but rather 'Tesla Defies All Expectations and Achieves Profitability.' That would be amazing!"

 

[vgrinshpun]

I absolutely think Tesla will deliver a record number of vehicles in Q3. My model says 21,125 which beats the previous record of 17,400 in Q4 2015.

Based on Elon's email, I am concerned that he believes Q4 and future quarters will be weak or flat -- until the M3 ships in large quantities. His email says it was Tesla's last chance to show profitability. As a reader, this suggests to me that he thinks expenses will continue to grow ahead of revenue growth. Which makes a lot of sense since Tesla needs to ramp it's operating expenses in advance of the M3. To support 10x the number of vehicles being delivered per year, Tesla needs to invest an enormous amount of dollars into new service centers, more sales, more superchargers, and yes more admin. It also needs to ramp its spending on development to get the M3 to reality. Some of these costs can be capitalized, but many cannot. Thus I agree with Elon this is probably the last quarter Tesla could possibly show a non-GAAP profit, until M3 is shipping in large quantities which may not occur until sometime in mid-2018 (not talking about the first few deliveries to friends & founders).

What worries me more is: What if Elon believes Q3 DELIVERIES will actually be the high for the year? Is he concerned that Q4 deliveries will be LOWER than Q3? If so I'm worried. As someone rooting for the success of Tesla, I cannot understand why deliveries would be flattening or declining if the future is so bright. Hopefully I am just worried about nothing, but his email sounds like the words of a man that wants to sell billions on stock on good news (presumably Q3) before the bad news arrives (Q4).

Please help me see the bright side of this email. Previously I thought Q3 would be 20K and Q4 25K. Now I think Q3 is a little better (21K) but Q4 as low as 20K.

Totally separately, has anyone been following the Google sheets data? Q3 Model S deliveries look good. But mix looks to have shifted substantially to 60/60D. Doesn't this suggest that average pricing will be way down?

But it is NOT what the e-mail said. Here is the quote: “The third quarter will be our last chance to show investors that Tesla can be at least slightly positive cash flow AND profitable before the Model 3 reaches full production.”

The key is that he does not see a chance to be BOTH cash flow positive AND profitable before M3 reaches full production. So he does see positive cash flow unlikely before M3 ramps (which BTW could be as early as 2018), but this does not mean that they can't be non-GAAP profitable. See my post up-thread for thoughts on questions that you've raised.

 

[Dennis Cargill]

But it is NOT what the e-mail said. Here is the quote: “The third quarter will be our last chance to show investors that Tesla can be at least slightly positive cash flow AND profitable before the Model 3 reaches full production.”

The key is that he does not see a chance to be BOTH cash flow positive AND profitable before M3 reaches full production. So he does see positive cash flow unlikely before M3 ramps (which BTW could be as early as 2018), but this does not mean that they can't be non-GAAP profitable. See my post up-thread for thoughts on questions that you've raised.

Hope you are right and that I am reading into his email something which is not there.