Had a discussion with a couple of TMC friends last night. Here are my summary thoughts:
Short-Term:
Q4 ER and 2017 Guidance
I expect Q4 delivery numbers and ER to be positive
Market wrote off a very good Q3 ER as one time gimmickry. Seeing an equally positive Q4 ER will force Mr.Market to accept that TSLA has made a turning point in terms of cashflows and business model sustainability. Loss/car type BS will be permanently destroyed.
I also believe Musk staying true to his spirit will throw in some very positive 2017 guidance. Don’t know how much market will believe and which elements. But overall I think Musk will provide enough ammo for analysts to revise their ratings/price-targets upwards.
Risks: InsideEv numbers are a bit bothersome. In all likely hood InsideEvs numbers are somehow missing something. I believe no one knows how they estimate their numbers and if there are any holes in their model.
Conclusion: Wouldn’t bet on this until after Jan 2/3 delivery numbers. But if deliveries meet expectations of 25K or more, I expect a very good rally going into ER and after.
Medium Term:
AP 2.0, Tesla Energy
1) Very positive due to EAP/FSD development
Market, or for that matter ‘society’ in general, is severely underestimating Tesla’s position/strength in autonomous driving development. I read many articles and presentations on the virtues or economic impact of self-driving cars. In all these places numerous companies get mentioned but Tesla doesn’t get mentioned even once, even as a pitiful contestant.
This is really bizarre. I believe this is a symptom of a bigger problem - Musk losing a lot of credibility lately.
As close followers we know better than that. Yes, Musk overplays things. But we know what Musk is very capable of achieving (solving really hard engineering/technical problems) vs not really capable of achieving (delivering on announced timelines).
Overall, I expect EAP/FSD features will be more or less rolled out as expected in this
timeline by schoneluct. I believe the feature rollouts with occasional demo videos as
predicted by Fred, will totally shock the world.
Achieving full FSD, ahead of everyone else, with a sizable head-start is worth 10s or even 100s of billions in valuation. This is very severely underestimated.
2) There is a chance that Tesla Energy will finally takeoff as gigafactory comes online.
However it is not clear that the sales/distribution channels are properly established. A few BNEF reports that I saw seem to suggest that the sales/distribution infrastructure even in the most promising markets like in Australia is very weak to non-existent.
So TE is a bit of a puzzler. Hopefully Q4 ER with 2017 guidance will shed some light into it.
However given that Mr.Market acts as though TE doesn’t even exist, I believe TE acts as a hidden small (relative to AP 2.0 impact) call option.
In a nutshell, TE can’t hurt but has potential to help a bit.
Longer-Term:
Model-3
I presented my case many number of times. I don’t believe Model-3 will start customer (non-employee, non-musk-tesla-family-and-friends) deliveries in 2017. Probably not even in early 2018.
Delivering on promised timelines is something Tesla/Musk struggle a lot with. This will be no exception. Especially given the enormity of the project I expect even bigger delays than normal - to get things ‘right’ - as opposed to rushing out the product with sub-par quality or on a sub-par manufacturing line.
However I do NOT believe this has risk to the stock-price. 1) Because of the above catalysts 2) Market's expectation of model-3 timeline already accounts for all the possible delay. So it will not be a “disappointment”, because there is no expectation in the first place. In other words, it’s already priced in.
Price-Target: $300+ by early 2018. Of course barring any big macro winds and/or force majeure events. This is merely my personal opinion. Not investment advice. Please do your own research and draw your own conclusions.
