Short-Term TSLA Price Movements - 2016

[vgrinshpun]

After a brief glance at 10-Q, Tesla started to break-down revenues and cost of revenues for the Services and Other line item, that includes TE products. Unfortunately the current shareholder letter/10-Q do not have information on Powerwall/PowerPack sales, so we can't draw concusions on ASP/kWh or cost, but at least they start to list the revenue and cost information.

As I expected (but hoped for a better outcome) TE products did not bring any profit yet. The QoQ increase in TE revenues in Q3 was $21.9M vs. increase in cost of $23.3M. So GAAP margin was negative 6.4%. Looking at 9-month increase over the same period of last year, increase in TE revenues was $47M vs. increase in cost of $48.4M. The GAAP margin was negative 3%. Hopefully as they transition from the manual assembly of TE products and ramp production, margins will improve in Q4. One thing that is not clear is what portion of the TE deliveries was sales vs. potentially providing products for customer testing as part of promotion or some other type of agreement, like payment for the installed TE products from the savings from it's use.

Adding transparency for the TE financials is a welcome change. I have a feeling that we probably see good positive margins in Q4, otherwise I doubt they would start to break this information out.

Another interesting item that showed up in the Services and Other break down was $10M worth in sales of electric vehicle powertrain components and systems to other manufacturers. This is surprising as I am not aware of Tesla disclosing that they are working with any manufacturers. Would definitely like to hear more on this!

 

[drinkerofkoolaid]

One of the most significant reasons for the merger is the establishint of one single legal entity. Also, there are no laws preventing Tesla showrooms from selling Solar Panels.

SolarCity's ASSETS will become Tesla assets.

The Dakota pipeline should get people engaged in fighting against big oil.


Here is a great video that deserves to have 10-20 million views. I suspect YouTube is down ranking this video because the video has 30million + views on Facebook.

 

[Fallenone]

After a brief glance at 10-Q, Tesla started to break-down revenues and cost of revenues for the Services and Other line item, that includes TE products. Unfortunately the current shareholder letter/10-Q do not have information on Powerwall/PowerPack sales, so we can't draw concusions on ASP/kWh or cost, but at least they start to list the revenue and cost information.

As I expected (but hoped for a better outcome) TE products did not bring any profit yet. The QoQ increase in TE revenues in Q3 was $21.9M vs. increase in cost of $23.3M. So GAAP margin was negative 6.4%. Looking at 9-month increase over the same period of last year, increase in TE revenues was $47M vs. increase in cost of $48.4M. The GAAP margin was negative 3%. Hopefully as they transition from the manual assembly of TE products and ramp production, margins will improve in Q4. One thing that is not clear is what portion of the TE deliveries was sales vs. potentially providing products for customer testing as part of promotion or some other type of agreement, like payment for the installed TE products from the savings from it's use.

Adding transparency for the TE financials is a welcome change. I have a feeling that we probably see good positive margins in Q4, otherwise I doubt they would start to break this information out.

Another interesting item that showed up in the Services and Other break down was $10M worth in sales of electric vehicle powertrain components and systems to other manufacturers. This is surprising as I am not aware of Tesla disclosing that they are working with any manufacturers. Would definitely like to hear more on this!

I thought you were expecting 30% gross margin on TE? Sorry if I mixed up

 

[FredTMC]

Three items:

(1) Having reviewed the available information, I have voted online FOR the merger of Tesla and SolarCity. The product ecosystem of solar generation, stationary storage, and electric vehicles makes a lot of sense. The stronger financial position of Tesla and SolarCity reduces some of my prior concerns about SolarCity's debts. I am trusting Elon and Jason Wheeler on this, but if I didn't trust them, I would have exited my holdings in Tesla long ago.

(2) I do not expect to participate in this thread going forward, although I will stay around the forum generally, but mostly in the background. In the past, I used this thread to get a jump on Tesla news, but the quality of reporting from sites like Electrek.co means that I can usually get the latest without having the wade through posts here. Frankly, the level of discourse in this thread over the past year has been appalling, and it is now impractical for me to sort through the morass of cheerleading, trolling, and FUD spreading here.

(3) Parting words: Don't invest (or gamble) more than you can afford to lose, as TSLA can be extremely unpredictable in the short term, regardless of events or macro conditions. I don't risk my retirement funds on TSLA, and I don't believe most people should either. I believe that Tesla likely has a bright future ahead, but I have no idea if/when TSLA will exit the current plateau and head upwards. This is a stock that I believe must be held for years or even more than a decade in order to realize its highest potential. Finally, I'd encourage people to have some fun with this once in awhile, by which I mean for anyone who hasn't, buy a Tesla, or test drive one if you can't afford it yet. There is something pretty inspiring about the Tesla family of vehicles, which is really only apparent from behind the steering wheel. A Tesla automobile is something I look forward to eventually owning, whether it is a Model 3 or Model Y.

I'll be around.

You'll be missed!

TMC "improvement" suggestion:

Please restore the "Reputation Points" (green light dots) prominently

This made it easy for me to see INSTANTLY (visually) whether a given post was worth reading.

Maybe there's a way to do this now, but it needs to be turned "on" by default.

 

[drinkerofkoolaid]

Another noteworthy SolarCity patent that was approved on October 27th.

Hybrid Inverter Power Control System For Pv String, Battery, Grid And Back-up Loads

 

[racer26]

You'll be missed!

TMC "improvement" suggestion:

Please restore the "Reputation Points" (green light dots) prominently

This made it easy for me to see INSTANTLY (visually) whether a given post was worth reading.

Maybe there's a way to do this now, but it needs to be turned "on" by default.

Having participated on forums before with the reputation dots they're a great way to be able to see quickly whose posts should be given more weight than others.

 

[Yggdrasill]

Another interesting item that showed up in the Services and Other break down was $10M worth in sales of electric vehicle powertrain components and systems to other manufacturers. This is surprising as I am not aware of Tesla disclosing that they are working with any manufacturers. Would definitely like to hear more on this!

The Mercedes B-class Electric Drive with Tesla drivetrain is still being sold. Not in huge numbers - maybe 1000 cars per quarter.

 

[Yggdrasill]

I thought you were expecting 30% gross margin on TE? Sorry if I mixed up

I don't think anyone has been expecting 30+% margins on Tesla Energy before it has scaled up.

 

[vgrinshpun]

I thought you were expecting 30% gross margin on TE? Sorry if I mixed up

Partially.

I had several exchanges with @schonelucht in which I mentioned that my expectation is for very high margins once production is changed from manual to automated and once it ramps up. This is similar to what we observed happening with automotive margins.

 

[Fallenone]

Partially.

I had several exchanges with @schonelucht in which I mentioned that my expectation is for very high margins once production is changed from manual to automated and once it ramps up. This is similar to what we observed happening with automotive margins.

I see. I think the reason for low margin now may be more about a small production bearing the whole depreciation of the big factory though.

 

[drinkerofkoolaid]

Around 100% of SolarCity customers willl buy a Tesla Powerwall. That's 300,000 units from existing customers.

A $6,000 Powerwall only costs ~$2,000-$3,000, depending on where you live, after the ITC.

A comparable gas generator costs $10,000-$25,000, excluding maintenance costs and the price for fuel, and is huge.

As of 2007, ~ 12 million gas generators were installed in the USA. That's 12 million people who are likely to consider buying a Powerwall.

 

[vgrinshpun]

Here is interesting overlay of the shares available to short at Fidelity (at 9:10am, 9:58am, and 10:35am) on the TSLA chart. For the skeptics out there, the drawdown of 800K shares all within 37 min of time is an example of short sellers activities compressed in time, focused on SP manipulation.

If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck...

 

[electracity]

I see. I think the reason for low margin now may be more about a small production bearing the whole depreciation of the big factory though.

Powerwall 1 certainly had a large negative margin. So will powerwall 2 until the new line is running smoothly.

 

[TMSE]

Around 100% of SolarCity customers willl buy a Tesla Powerwall. That's 300,000 units from existing customers.

A $6,000 Powerwall only costs ~$2,000-$3,000, depending on where you live, after the ITC.

A comparable gas generator costs $10,000-$25,000, excluding maintenance costs and the price for fuel, and is huge.

As of 2007, ~ 12 million gas generators were installed in the USA. That's 12 million people who are likely to consider buying a Powerwall.

Are those 12m gas generators residential? Or does it include industrial use too?

 

[drinkerofkoolaid]

Are those 12m gas generators residential? Or does it include industrial use too?

www.forbes.com/sites/williampentland/2013/04/15/backup-generators-are-the-bad-and-ugly-of-decentralized-energy/amp/

Note: This article is explains why gas generators are terribly inefficient.

Powerwall, unlike a Gas generator is always running, reduces electricity bill, and can power entire home when needed during a power failure.
Gas generators are typically idle until they are needed, have high maintenance costs, and are expensive. Also, it can act as a buffer for the grid.

Also, because gas generators are only used when needed, they don't always work when needed.

New York University's Langone Medical Center lost power during Hurricane Sandy, and ended up having to evacuate 215 patients when the generator that was supposed to keep its charges alive and its critical systems running failed to turn on.

Note: I almost always have a fully charged battery pack that can store enough energy to charge my iPhone up to 6 times. (~$50). I'm considering getting one of the new battery packs that will be available in a few months that is able to charge
my Mac ~2 times. (~$150)

Also:

SolarCity Launches Homebuilder Program on East Coast

SolarCity's current customers + Homebuilder program are likely a good part of the reason the merger makes a ton of sense.

SolarCity has deals with DOD, the contract for all government buildings, Walmart, and many other significant parties.

Every new home built over the next 10 years should have a Powerwall. Some states and countries are requiring that all new homes are equipped with Solar Panels.

Any company building a home that isn't built for the future will have a hard time selling the house for a good price. Solar+ Powerwall will increase the value of a new house by $10,000-25,000.

 

[vgrinshpun]

Powerwall 1 certainly had a large negative margin. So will powerwall 2 until the new line is running smoothly.

Wow! I just posted unfiltered data indicating 3% negative margin over the 9-month period - are you really calling it a large negative margin?

 

[ongba]

SP is now close to the 50 Month SMA which was breached once in Feb 2016 and is now testing the 200 Week SMA which was also breached once during the week of Feb 8 2016. Lower Bollinger band resides slightly lower below both moving averages. A hammer candlestick at these levels with good volume could signal a bottom...keep your fingers crossed...

 

[techmaven]

After a brief glance at 10-Q, Tesla started to break-down revenues and cost of revenues for the Services and Other line item, that includes TE products. Unfortunately the current shareholder letter/10-Q do not have information on Powerwall/PowerPack sales, so we can't draw concusions on ASP/kWh or cost, but at least they start to list the revenue and cost information.

As I expected (but hoped for a better outcome) TE products did not bring any profit yet. The QoQ increase in TE revenues in Q3 was $21.9M vs. increase in cost of $23.3M. So GAAP margin was negative 6.4%. Looking at 9-month increase over the same period of last year, increase in TE revenues was $47M vs. increase in cost of $48.4M. The GAAP margin was negative 3%. Hopefully as they transition from the manual assembly of TE products and ramp production, margins will improve in Q4. One thing that is not clear is what portion of the TE deliveries was sales vs. potentially providing products for customer testing as part of promotion or some other type of agreement, like payment for the installed TE products from the savings from it's use.

Adding transparency for the TE financials is a welcome change. I have a feeling that we probably see good positive margins in Q4, otherwise I doubt they would start to break this information out.

Interesting. It is very weird that this section is written as an increase. In other words, we don't know an increase from what. Without a baseline it's a bit strange to try to evaluate. Q3 is definitely a quarter where they are ramping new product, so that's a lot of additional labor and training as they ship the new PowerPack 2. And in Q4, they will also have the headwinds of ramping up PowerWall 2. Of course, as volumes ramp, the fixed costs drop. I suspect labor costs are much higher in Q3 and Q4 as a percentage due to the ramp up and new product introductions.

 

[electracity]

Wow! I just posted unfiltered data indicating 3% negative margin over the 9-month period - are you really calling it a large negative margin?

You can't be serious that Tesla had a positive margin on production of 5000 units.

 

[vgrinshpun]

You can't be serious that Tesla had a positive margin on production of 5000 units.

You got to be kidding, I never said that margin is positive, it is negative.

The point is that calling a 3% negative margin "certainly a large negative margin" is a slight exaggeration, don't you think?