Serious green side strength on the 200 number. Maybe the shorts really are running out of motivation to keep it below $200.
I sure hope Elon's got the hurt cannon as loaded as I think he does for the ER next week.
I think ZEV alone is prepped for a big surprise nobody but a few of us here seem to be expecting. Tesla sold a little less than twice as many ZEV credits this year as in any year previous. Last year, TSLA earned ~$180M selling credits. So far in the preceding 3 quarters (the ZEV credit reporting window is a quarter out of sync with TSLA's fiscal year), we've sold ~$65M.
There is a lot of ways to calculate it, but:
Option A) We sold all those credits in the previous quarters for $65M and we got nothing this quarter for them much like 2Q16. $65M / 80,227 credits sold = $810/credit. This is a hard floor on what we could have gotten for the credits. In the middle of 2Q16 the rules changed for ZEV credits, meaning the number required by other automakers in 2017 and 2018 is reduced from what it was. This may have reduced the value of ZEV credits starting in 2Q16.
Option B) The credits sold in 4Q15 and 1Q16 were sold at around about the then going rate of $3500-4000, we sold hardly any in.2Q16, and the remainder were sold in 3Q16 for some lower amount. I expect this is what happened, as prior to the 2Q16 changes, there was no reason for the value of a ZEV credit on the open market to be any different. Lets assume we sold those 4Q15 and 1Q16 credits for $3750. $65M / $3750 = 17,333 credits sold. 80,227 - 17,333 = 62,894 credits left to sell in 3Q16. If we managed to still get the $3750 for them, that would be $235.8M of juice to the bottom line in 3Q16. Even if we got 50c on the dollar to what we used to get, that still be ~$118M of juice. With 149.8M outstanding shares, $118M of juice represents +$0.787 EPS on top of whatever we otherwise would have earned assuming $0 from ZEVs. We know for a fact that we sold them for at least $810/credit.
I believe the near-term loosening of the CARB restrictions (because its back with a vengeance in 2019, and its still unclear if the big automakers will be able to generate enough credits on their own to comply then, so they're gonna want to stockpile credits in this lull) may have reduced the market value of a ZEV credit somewhat, but I don't think that effect will be very big. I expect we will see around $1.20 EPS worth of juice from ZEVs this quarter.
That, coupled with the fact we sold 24,500 cars, which should improve margins (by distributing the fixed costs over more cars) and the temporary belt tightening on the expenditures (holding back on opening new stores, etc). I expect we may have been positive EPS before considering ZEV credits.
EDIT: Additionally, CARB was mulling over the idea of restricting a ZEV net producer like Tesla's ability to sell credits to a certain limit. That may have provided Tesla some extra motivation to accept a bit less for them right now than it otherwise would have by holding on to them until 2019 when others might clamber to buy them, in order to keep Tesla's inventory of credits it doesn't need low, rather than get stuck with a pile of credits you're forbidden to sell.
Tesla retorted that to restrict credit transfers in such a way is ridiculous, and unfairly punishes those doing the most to achieve CARBs goal of widespread adoption of ZEVs. I tend to agree.
