Short-Term TSLA Price Movements - 2016

[Papafox]

I came here looking for some insight about why the stock is down this morning. Thinking maybe I missed some news that happened last night, I went back to the posts as of 5:00pm EST yesterday. An hour later, after wading through a ton of drivel about AI and bickering about people's credentials, I have learned nothing about the short term value of the stock. @AudubonB - please get this thread back on track.

Looks like the timing of the Colin Rusch $12B cash needs statement was responsible for the big dip shortly after market opening. Musk has since given a tweet answer that Rusch's estimate is incorrect

TSLA has (until the past hour) been following the broader markets in trading but has recently gone a bit more negative.

 

[vgrinshpun]

I understand that humor is not for everyone.
Remember, he wants to build a $1T company. $14B raise may be needed for that

Were you joking when you said that you are data driven and then promptly proceeded to wrongly claim (without any data review) that Oberklasse segment in US had declining sales for years?

Because if you did, you definitely got me - you sounded pretty serious...

 

[techmaven]

If $12B is wrong, what have you modeled out for the capital requirements through 2018?

The issue is that about $9-10 billion of this amount is related to SolarCity with PPA's. It's simple. If they need this amount of capital, it means they're selling a crap ton of solar and/or stationary storage. That's great. The only issue then is the financial structure of the PPA's. If they cannot raise that kind of financing for these kinds of projects, then they will do less PPA's. In either case, I'm not sure why this is a big problem. Again, financial markets should be able to understand yieldco's. If they can raise this kind of financing then it means they're selling a crap ton of product and the banks/investors are happy about providing that kind of capital. If they aren't, then they won't have that amount of capex requirements. It isn't the case where they need the capex, but didn't sell the equipment or raise the financing. And if yieldco's doesn't make sense, it's simple for Tesla. They stop the PPA business then.

As for Tesla needing $2-3 billion or so through 2018, who has a problem with that? The Model 3 capex launch spend is already accounted for. Tesla already has the cash on hand to launch the Model 3. The 500,000 build capacity for 2018 and the 1,000,000 build capacity for 2020 possibly needs more capital. It might be as little as $0 additional capital necessary for the 500,000 build capacity for 2018. Tesla only needs the top end of the $2-3 billion through 2018 if the launch ramp of the Model 3 goes exceedingly well.

In both cases, the need for additional capital isn't to staunch losses, but to grow.

Fundamentally, there is a NPV for SolarCity's yieldco. Someone needs to choose a worst case valuation - it isn't a negative $5 billion. Even if renewal rates are lower than assumptions and interest rates increase, the NPV of the yieldco isn't negative.

 

[Value Ev]

Were you joking when you said that you are data driven and then promptly proceeded to wrongly claim (without any data review) that Oberklasse segment in US had declining sales for years?

Because if you did, you definitely got me - you sounded pretty serious...

Luxury Car Sales Are Plunging in America in Early 2016
Auto Sales - Markets Data Center - WSJ.com (down 12% in 2015)

 

[techmaven]

Luxury Car Sales Are Plunging in America in Early 2016
Auto Sales - Markets Data Center - WSJ.com (down 12% in 2015)

In that context, isn't Tesla's 77.6% YoY increase terrific? And the 28.4% increase YoY for the Model S bucking the trend? That's using the data from the 2nd link.

 

[Value Ev]

In both cases, the need for additional capital isn't to staunch losses, but to grow.

.

Isn't that what the analyst said?
There is nothing FUD about saying a company needs to raise $12B if it is to build out to sell 500k/cars a year, introduce new roof/solar combos, continually expand the largest battery factory, gear up for the Y, trucks, and other things in the master plan.
People here seem to have a knee-jerk reaction of thinking that if you say a company is raising money, it is FUD because the money would be used to stem losses.

 

[Value Ev]

In that context, isn't Tesla's 77.6% YoY increase terrific? And the 28.4% increase YoY for the Model S bucking the trend? That's using the data from the 2nd link.

it sure is!
But as mentioned previously, they seem to be taking more share from lower segments as people are spending more than they did on their previous cars to buy a Tesla.
It isn't as if the luxury segment was doing great during the recession and the slow recovery. LOL.

 

[techmaven]

Sure is.
But as mentioned previously, they seem to be taking more share from lower segments as people are spending more than they did on their previous cars to buy a Tesla.
It isn't as if the luxury segment was doing great during the recession and the slow recovery. LOL.

Tesla Keeps Poaching Prius Buyers, and It’s Not Slowing Down

Polk Automotive provided some stats for that older article (2014) which has the Prius as the #1 conquest sale at 15.51%, and Mercedes Benz and BMW at roughly 10% each.

Then you look at something like this:

http://www.jdpower.com/sites/default/files/2011_WhitePaper_DeathofDemographics.pdf

And they argue that looking at the demographics... like male, 35-64, total household income $125k+, you might think would buy a lot of luxury models. But the top 5 vehicles are: Ford F-series, BMW 3 series, Chevrolet Silverado, Honda Accord, and Honda Civic. The BMW 5 series shows up at #17 and the Mercedes Benz E-class shows up at #18. For females of the same income and age, the top 5 are: Toyota Camry, Toyota Corolla, Honda CR-V, Honda Civic, and Honda Accord.

Clearly, people didn't necessary have compelling enough reasons to spend the kind of money for a luxury vehicle, even when their household incomes can easily support it. Just like the iPhone, where few found reasons to spend $500+ on a phone before 1997, the market dynamics have changed with Tesla BEVs. People that have the money and can spend the money are finding a compelling set of reasons to spend that kind of money on a Tesla. So the conquest sales of Prius and other "lower market" vehicles is interesting. This basically means that the traditional luxury car makers have done a poor job at making compelling luxury vehicles for those that can afford it. This is very true in California. Plenty of people bought Prius and equivalents for the HOV sticker and green image, turning away from other luxury and near luxury vehicles.

 

[electracity]

........

Fundamentally, there is a NPV for SolarCity's yieldco. Someone needs to choose a worst case valuation - it isn't a negative $5 billion. Even if renewal rates are lower than assumptions and interest rates increase, the NPV of the yieldco isn't negative.

I think there is a pretty good argument that the yieldco becomes negative at a cost of funds of 6 to 7%. The risk is the short term borrowing solarcity has been doing. Had they match the funding with PPA terms then they would have derisked those transactions.

But I do agree that large capital needs to fund increased sales or cars or solar is not necessarily a problem, and can even be viewed as a positive.

I'm curious to see how Tesla will clean up solarcity's finance to increase shareholder confidence. If their business is truly profitable, they should be able to sell off PPA contracts and show a GAAP profit. I assume they don't follow this course because solarcity is not actually profitable. That their marketing and expansion costs exceed the income of the yieldco.

 

[electracity]

it sure is!
But as mentioned previously, they seem to be taking more share from lower segments as people are spending more than they did on their previous cars to buy a Tesla.
It isn't as if the luxury segment was doing great during the recession and the slow recovery. LOL.

Which should be a leading indicator of tremendous model 3 demand. Three years ago Tesla's sales last quarter would have been thought impossible by probably all auto manufacturers.

 

[sinv]

Statistically (though with a low p value) Tesla's CURRENT autopilot offering is safer than human drivers. It is more safe for the general public with them using it than without, even though it isn't perfect yet.

EM compares the deadly accidents per mile for unassisted driving with the death per accumulated miles driven by the TSLA assistance system. Of course he knows that the conclusion he makes is inaccurate and probably wrong: how many times the human avoided an accident and did override the system is ignored by this approach. The relatively low death/autopilot mile would never have become reality without a human taking care.

 

[Value Ev]

it sure is!
But as mentioned previously, they seem to be taking more share from lower segments as people are spending more than they did on their previous cars to buy a Tesla.
It isn't as if the luxury segment was doing great during the recession and the slow recovery. LOL.

LOL
@esk8mw dislikes a post in which I state that Tesla's growth sure is a good thing.

Must mean they think it is a big thing that Tesla is growing vs. the luxury segment which is not. Must be a short.

 

[vgrinshpun]

If Model S buyers were just previous Prius owners, the other luxury brands wouldn't see such steep declines in their sales. Tesla is getting both the Prius buyer and the Mercedes buyer.

1. That segment has been seeing declines over the years, especially with the shift to cross-overs.
2. I never the buyers were "just" previous Prius owners - but those were the largest groups. They took sales from plenty of other cars, especially in the pricing segment that is way below the existing Tesla price point.

Luxury Car Sales Are Plunging in America in Early 2016
Auto Sales - Markets Data Center - WSJ.com (down 12% in 2015)

You can't be serious.

As seen above you dismissed connection between the decline in sales of Oberklasse segment while Tesla contemporaneously were growing deliveries of Model S by saying that these sales were declining for years. As I showed here, the sales of Oberklasse were actually growing for years (2009-2014) until Tesla Model S began taking toll on their sales starting in 2014. So the trend in Oberklasse sales did not continue with the increase in deliveries of Model S, on the contrary the trend reversed in 2014. More over, the declines in unit sales of Oberklasse numerically almost exactly equal to the gains in deliveries of Model S.

The above proves that your claim was just plain wrong.

The links you offered refer to sales of ALL luxury cars, not just Oberklasse segment, and even ignoring the fact that you are attempting to compare apples and oranges, still contradicts your contention that luxury sales were declining even before Model S sucked air out of this segment sales.

It looks like your idea of being data driven does not include requirement of data being relevant to the subject at hand.

 

[vgrinshpun]

it sure is!
But as mentioned previously, they seem to be taking more share from lower segments as people are spending more than they did on their previous cars to buy a Tesla.
It isn't as if the luxury segment was doing great during the recession and the slow recovery. LOL.

LOL indeed.

The Oberklasse sales enjoyed steady increases 2009-20014 as shown below (details and data in my post up-thread). You are just dead wrong.

 

[Value Ev]

Tesla Keeps Poaching Prius Buyers, and It’s Not Slowing Down

Polk Automotive provided some stats for that older article (2014) which has the Prius as the #1 conquest sale at 15.51%, and Mercedes Benz and BMW at roughly 10% each.

Then you look at something like this:

http://www.jdpower.com/sites/default/files/2011_WhitePaper_DeathofDemographics.pdf

And they argue that looking at the demographics... like male, 35-64, total household income $125k+, you might think would buy a lot of luxury models. But the top 5 vehicles are: Ford F-series, BMW 3 series, Chevrolet Silverado, Honda Accord, and Honda Civic. The BMW 5 series shows up at #17 and the Mercedes Benz E-class shows up at #18. For females of the same income and age, the top 5 are: Toyota Camry, Toyota Corolla, Honda CR-V, Honda Civic, and Honda Accord.

Clearly, people didn't necessary have compelling enough reasons to spend the kind of money for a luxury vehicle, even when their household incomes can easily support it. Just like the iPhone, where few found reasons to spend $500+ on a phone before 1997, the market dynamics have changed with Tesla BEVs. People that have the money and can spend the money are finding a compelling set of reasons to spend that kind of money on a Tesla. So the conquest sales of Prius and other "lower market" vehicles is interesting. This basically means that the traditional luxury car makers have done a poor job at making compelling luxury vehicles for those that can afford it. This is very true in California. Plenty of people bought Prius and equivalents for the HOV sticker and green image, turning away from other luxury and near luxury vehicles.

Excellent points.

Here Tesla's are referred to as the "Silicon Valley Camry" - hearkening back to the early days of the Camry when everyone seemed to have one.
Since the recession, the slow recovery, housing crisis, etc, it appears that luxury spending has taken a hit. In light of that Mercedes spends a ton for the E class, focus a lot on the C class (with that odd AMG-lite version too) to continue to move down market. "Value" is the battle ground, not ostentatious "luxury".
Tesla slots in very well to that with the original $500 lease, the savings from not waiting at the gas station, the 60...oh and besides the savings/value, the environmental benefits, the 0-60 and the HOV stickers.
I think it was a genius move to say "Premium" vs. "Luxury" because it is pulling buyers from a much bigger pool.

 

[racer26]

Which should be a leading indicator of tremendous model 3 demand. Three years ago Tesla's sales last quarter would have been thought impossible by probably all auto manufacturers.

Yup. MS and MX are stealing buyers from price ranges 30-40k lower in addition to soundly thrashing it's Oberklasse brethren in terms of market share.

What is going to happen when M3 joins the club and is only priced at 35k? Hint: there is a reason Elon said he doesn't think there is a need for Tesla to build a cheaper model.

I am still completely convinced that Model3 will be production constrained for quite some time. Until at least GF3 is online.

 

[ev-enthusiast]

I do not see any reason to a close in the red today. Should turn green later.

 

[vgrinshpun]

Excellent points.

Here Tesla's are referred to as the "Silicon Valley Camry" - hearkening back to the early days of the Camry when everyone seemed to have one.
Since the recession, the slow recovery, housing crisis, etc, it appears that luxury spending has taken a hit. In light of that Mercedes spends a ton for the E class, focus a lot on the C class (with that odd AMG-lite version too) to continue to move down market. "Value" is the battle ground, not ostentatious "luxury".
Tesla slots in very well to that with the original $500 lease, the savings from not waiting at the gas station, the 60...oh and besides the savings/value, the environmental benefits, the 0-60 and the HOV stickers.
I think it was a genius move to say "Premium" vs. "Luxury" because it is pulling buyers from a much bigger pool.

Except sales of Oberklasse segment were steadily increasing 2009-2014 as shown here.

YOU
ARE
WRONG

 

[Value Ev]

You can't be serious.

As I showed here, .

You are adding a premium car (Tesla) into the luxury segment while selectively adding other luxury brands in order to argue the luxury segment has been growing? Now that is funny. Let me Laugh out Loud (LOL).

 

[esk8mw]

For the record, I'm disliking basically everything Value EV says because, just like his prior (banned) moniker Dr Valueseeker), he is spamming the thread nonstop and making it unreadable. I don't care who the poster is, you should not have 5+ responses on every page in this thread. Same goes for myusername, who apparently can't keep his own promise to post once per hour.

It also doesn't help that these 2 bring up the same tired and debunked arguments that have been rehashed 400 times. Like any internet forum, our members (myself included) have a very hard like letting BS and horrific logic go unchecked, so we end up with a broken shell of a once great thread as we try to talk sense into members who are not interested in logic or sense in any form as it relates to TSLA.

Daily reminder, let's stop responding to these members. And try not to quote them out of respect to our members trying to ignore such noise.