Short-Term TSLA Price Movements - 2016

[vgrinshpun]

My speculation about Chinese deliveries eclipsing deliveries to Europe does not imply decrease of NA market. First, the guidance was not flat, as Q3 shareholder letter indicated that Q4 plan "of just over 25,000 deliveries", while Q3 was less than 25,000. More importantly, as I've been posting for a while now, with Tesla delivering so few cars in September and October, it is very likely that deliveries in Q4, similar to Q4 2015, will significantly exceed quantity of cars produced in Q4 due to partial emptying of the transit pipeline. As I posted before, due to this I think that Tesla will deliver 27 - 28K cars in Q4. If that pans out, there is room for significant increase in deliveries to China without a corresponding decrease in NA.

I am very careful using the table, consistent with the footnote I use it for ... speculation.

Here is the summary of information from TMC Europe Stats tables and ev-sales.BlogSpot.com, illustrating that my speculation above is plausible (thanks to @EinSV for reminding me about ev-sales.BlogSpot.com - excellent site which I haven't used in a while):

 

[Green Pete]

(MS doesn't expect Model 3 delivery's in 2017)

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Or 2018 apparently.

 

[vgrinshpun]

(MS doesn't expect Model 3 delivery's in 2017)

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My prediction is that Tesla will deliver more than 113,606 MS and MX in 2017, NOT 2018 as AJ projects.
Tesla will probably deliver around 150 MS/MX in 2018

 

[pGo]

I agree with Jonas that delivering M3 in 2017 is not going to happen as I have not seen any evidence yet specially when every analyst and most in here were wrong predicting when MX launched in volume. With M3, there are bigger challenges specially the supply chain and production lines for 5x quicker throughput than cure vehicles. All we have heard is the car is designed with production in mind.. I'll buy that when I see evidence. Enough talks. Walk the walk.

 

[AlMc]

I agree with Jonas that delivering M3 in 2017 is not going to happen as I have not seen any evidence yet specially when every analyst and most in here were wrong predicting when MX launched in volume. With M3, there are bigger challenges specially the supply chain and production lines for 5x quicker throughput than cure vehicles. All we have heard is the car is designed with production in mind.. I'll buy that when I see evidence. Enough talks. Walk the walk.

This is the crux of the bull/bear argument. Does history repeat itself ( target date misses) or has EM/TM learned from past mistakes and bring out the '3', on time and in some significant volume in H2 2017?

I do not know but that will have significant impact on the SP moves in 2017.

Yes, I am 'Captain Obvious'

 

[JBRR]

Not strictly short term, but policy issue that could affect TSLA. Stopping all subsidies could hurt TSLA short term, but would leave them with no competition.
Bloomberg on Trump energy and EPA transition team.
Trump Team’s Memo Hints at Broad Shake-Up of U.S. Energy Policy

Trump's EPA pick may struggle to dismantle Obama's environmental legacy

 

[vgrinshpun]

I agree with Jonas that delivering M3 in 2017 is not going to happen as I have not seen any evidence yet specially when every analyst and most in here were wrong predicting when MX launched in volume. With M3, there are bigger challenges specially the supply chain and production lines for 5x quicker throughput than cure vehicles. All we have heard is the car is designed with production in mind.. I'll buy that when I see evidence. Enough talks. Walk the walk.

We also have heard unambiguous warnings that Model X program is NOT analogous to Model 3 program and that one can't use information about launch of MX to predict the launch of Model 3.

 

[ggies07]

We also have heard unambiguous warnings that Model X program is NOT analogous to Model 3 program and that one can't use information about launch of MX to predict the launch of Model 3.

seriously, how many times does this have to be brought up? Two different cars, designed two different ways.

 

[McMuggets]

We also have heard unambiguous warnings that Model X program is NOT analogous to Model 3 program and that one can't use information about launch of MX to predict the launch of Model 3.

Model 3 is designed with mass production and ease of production in mind. Nothing fancy falcon-wing at all. If the masses can understand enough to learn from Model X woes, then surely the mega minds at Tesla would too. I bet Tesla will surprise everyone when they start pumping these Model 3's out before end of 2017.

Adam Jonas doesn't include Model 3 production in 2017 estimates, nor does he take into account Gigafactory or Solar business in valuation and yet still ends up at $242 price target? That's a 25%+ upside potential from today's stock price of $192 on the car business alone, and the rest is gravy.

 

[vgrinshpun]

71K shares available for shorting were drawdown at Fidelity before the market open:

 

[sub]

Doubtful because it would imply that the N-American market is decreasing (remember Q3-Q4 global deliveries guidance flat). There are no signs of that, on the contrary. Also, be careful to use that table. If you read the footnotes, the Asian Pacific number for Q2/Q3 is 'total speculation'.

No idea regarding Asia/China deliveries but wasn't guidance basically flat because they can't be ncrease production much if any? If that is the case, an increase in one market must coincide with with a decrease in another, but this is deliveries not orders.

On Another topic, the MS note estimates 5 million fleet miles a day with 1/3 being autonomous. It was my understanding that the cars are collecting data even with auto pilot off. I'll assume this is including the pre AP1 cars but the math doesn't seem correct, many more cars have been sold post AP1 correct?

 

[techmaven]

Seriously, why would Tesla bring on the first phase of the Gigafactory for 18% growth in deliveries? Let's say for a moment that won't bring on 20 GWh of capacity... only, say, half the original estimate per phase of 7GWh... which would be 3.5 GWh. That alone is almost 50% growth.

Also then, why build the second phase of the Gigafactory for another $400-500 million, spending that money in 2016. If they really pulled out all the stops for Q3 beat, they could have waited on the 2nd phase.

What utter nonsense. Something is afoot.

 

[vgrinshpun]

Seriously, why would Tesla bring on the first phase of the Gigafactory for 18% growth in deliveries? Let's say for a moment that won't bring on 20 GWh of capacity... only, say, half the original estimate per phase of 7GWh... which would be 3.5 GWh. That alone is almost 50% growth.

Also then, why build the second phase of the Gigafactory for another $400-500 million, spending that money in 2016. If they really pulled out all the stops for Q3 beat, they could have waited on the 2nd phase.

What utter nonsense. Something is afoot.

Did you miss the Memo??

Potemkin Village.

 

[Mike Smith]

Surely a test of the 50dma at 194.68 is coming soon

 

[Mike Smith]

We've been below the 50dma since August

 

[AudubonB]

I'll comment later (maybe) on the energy policy shake-up possibilities, but for now, here is my last input on the 21-70 battery cooling discussion and since I'm commenting on it, I've no problem calling it On-Topic enough to stay in this thread.... You all are welcome to continue it.

• A 21 x 70 cylinder's side:bottom area is at a ratio of 13.33:1. That sidewall, then, presents a very large and tempting heat dispersal/diffusion agent, regardless of internal makeup.
• So, we'll soon see!

 

[SBenson]

(MS doesn't expect Model 3 delivery's in 2017)

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With 50K S+X deliveries in 2016 H2, Jonas expecting 93.6K deliveries in 2017 means decline in sales.

Sounds absurd to me.

 

[Mario Kadastik]

With 50K S+X deliveries in 2016 H2, Jonas expecting 93.6K deliveries in 2017 means decline in sales.

Sounds absurd to me.

No it sounds like MS doesn't believe that demand is there to keep going at the current production rate and that Q3 and Q4 are exceptions, not the rule for production / sales capacity.

 

[SBenson]

No it sounds like MS doesn't believe that demand is there to keep going at the current production rate and that Q3 and Q4 are exceptions, not the rule for production / sales capacity.

Yes, I understand that he is expecting demand to be the bottleneck. I just don't buy that. Or can't believe that.

He is just throwing darts, like everyone else. We will see. Time will tell.

 

[Darren12]

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Morgan Stanley puts out another note with full details on how they arrived at the current price target of $242

Tesla’s Mission 2017: Funding the Model 3

Stock Rating: Equal-weight

Industry View: Cautious

Price Target: $242.00

We see the 2 key drivers for Tesla’s stock price in 2017 as: (1) Model 3 pre-launch/launch milestones and (2) and how the company accesses capital to fund the plan. Success on the latter directly impacts the former. The equity outcomes may be highly volatile.

In our view, the Model 3 is a potential funding strategy for Tesla’s bigger mission to accelerate the development of a highly safe and efficient transport utility. However, 2017 is all about the later stages of development (and the possible commercial launch) of the Model 3. The acquisition of SolarCity was, in hindsight, an unavoidable pursuit and we have, for now, ascribed zero value to Tesla shareholders. The Gigafactory will be critical to controlling the reliability of the battery supply, the most value-added component of Tesla's vehicles, but by itself we do not see it as a material mover of the stock next year. 2017 is the year of the Model 3. What’s the content? Where are the prototypes? When do we get to drive it? Will we want one? Is it as good (or better) than the Model S for less than 1⁄2 the price? When does it launch? We may not get the answers to all of these questions in 2017, but we’ll have to get some. And each one matters.

Key thoughts on upcoming catalysts for the stock:

1. We expect 4Q results to broadly resemble 3Q in many ways. We are anticipating strong growth and potentially positive cash flow from operations (before capex) to be accompanied by great investor uncertainty around the quality and sustainability of the performance.

2. We do not expect the Model 3 to be launched in 2017. While we cannot rule it out, we do not adopt as our base case a scenario in which Model 3 deliveries begin in 2017. We recognize that Tesla management has targeted a 2H launch date and that they will make every effort to satisfy high levels of preliminary demand and fill orders for the product as soon as possible. However, our base case is for a launch in late 2018. We have taken this conservative approach to allow for the probability that Tesla will choose to prioritize the quality, cost, performance and lifesaving technology of the vehicle. While Tesla still adopts a high level of vertical integration, we expect the Model 3 to rely even more extensively on 3rd party suppliers than the Model S, potentially increasing the scope of supply-related factors outside of the company’s control.

3. Prior to a launch, we anticipate Tesla should be in a position to reveal further important technical details about the Model 3 and its capabilities as part of an effort to help bolster the financial capital at its disposal to execute as flawless and as on-time a launch as it possibly can. Tesla has a well-established precedent of communicating important product information to the public in a highly visible way.

4. Safety and sheer human driving pleasure are the two key attributes (in that order) that we expect Tesla to showcase with the Model 3, regardless of when it is launched. Elon Musk stated on the 3Q call that it did not need to raise capital (but he did not categorically rule it out). We have not modeled in a capital raise, but gross cash in our earnings model does dip below $1bn by the end of 2018. We only point out that the Model 3 is so important to this company’s future on multiple levels that they really have to get it right. One could reasonably expect Tesla to emphasize to the investment community the opportunity it has to accelerate the launch of what could be the world’s safest automobile and one that represents a potential step-change in real-world machine learning (and the subsequent social and economic benefits). We see 'teasing' the Model 3 launch as going hand and hand with efficiently funding the strategy. These two 2017 drivers appear to be inextricably linked.

The future of this industry is about miles, data, people (e.g., software engineers) ... and capital. We estimate Tesla's global fleet drives approximately 5 million miles per day with around 1/3 of these miles on autopilot. We also estimate the pace of daily miles traveled to double in just over 1 year. This puts Tesla in a unique position to push state of the art algorithmic driving and machine learning in personal transport... key pillars of accident-free driving. Analysis of aggregated Tesla driving data that reveals statistically significant positive safety outcomes could have a potentially powerful impact on perceptions of regulators, consumers and investors. We encounter validation of Tesla’s technology, processes and people throughout the auto and tech industries. Uncertainty around funding the plan (the right side of the balance sheet) at a time of great cash consumption keeps us EW.

Thanks for sharing, very informative. If you look at the DCF (first pic), they are forecasting Tesla to hit 500k units delivered a year starting in 2025 (vs guidance of producing that many in 2018). And this is the BASE case....