Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[mrdoubleb]

We have actual January delivery numbers:

Tesla Delivered More Vehicles in January than Reports Suggest

Tesla delivering around 11,485 vehicles (S, X & 3) within the US in January.​

Alpha Hat has a very, very good methodology of tracking the vehicle IMEI's within the U.S., which data mobile carriers are apparently selling freely. Has anyone inquired about how expensive their subscription is?

Assuming 11.5k in January and 11.5k in February, and the usual seasonal pattern of March=January+February we'd get 46k S+3+X deliveries in the U.S.

We know that Jan+Feb in Canada was 4,700 - conservatively assuming just the same level in March we get 7k deliveries in Canada. (We don't know whether Tesla pushed enough cars to Canada or did early deliveries. Does anyone here know whether March deliveries have picked up at Canadian delivery centers?)

(Plus there's Mexico which might deliver another thousand or two.)

That's 54k deliveries in North America alone. If we add in the 36k on ships and subtract the guided 17k in-transit vehicles we still get 73k global deliveries. But I think they'll be able to reduce in-transit inventory in the next 10 days, plus some of these estimates are conservative, which means we might be looking at around 80k total deliveries - close to the Q4 levels.

Another way to look at this is production, I had a good look at Bloomberg again and I think their Q1 estimates might be pretty good:

Bloomberg - How Many Tesla Model 3 Cars Have Been Made?

"Our best estimate is that Tesla has manufactured 225,988 Model 3s so far—or 70,325 in the current quarter—and is now building approximately 5,896 a week."​

There's 10 more days of production in Q1, which will add a bout 8,400 more Model 3's to the Bloomberg estimate, so their Q1 estimate right now is around 78k Model 3's made, a sustained full-quarter rate of around 6,000/week. This is in line with the Carsonight numbers as well.

If we add Model S/X production of say 19k to it, then we get production of 97k units, +12% QoQ increase over Q4 and a seasonally very good number. If we subtract the guided 17k in-transit vehicles from that number we get deliveries of around 80k.

So I'm starting to be cautiously optimistic about Q1: global Q1 deliveries in the 70k-80k range and production in the 90k-100k range, with potential upsides and very few downsides other than some major logistics hick-up in Europe. We'll be able to narrow this down a bit more right before the delivery report, based on eyewitness reports from Benelux delivery centers.

Not advice.

Well and as long we are being optimistic, it will be interesting see how much extra cash they made with the temporary AP and FSD discount upgrade. They had hundreds of thousands of potential customers with a once in a lifetime discount chance. I would have surely taken advantage of it if I was in their shoes.

 

[Carl Raymond]

I believe in this club, I am grateful for all the work the community has done so far, honestly this is where I read the real news about Tesla, for the last 3 years.
But this comment getting so many dislikes and ‘funnies’ really saddens me. We grew weak, we don’t tolerate negative opinions, we don’t simply answer the questions, we really start becoming a cult . You will notice that a lot of the old Tesla members used to be here, answering wholeheartedly every question, are not here anymore . Many stayed true the mission I don’t disagree with that, but in order for us to be focused and sharp we need to have healthy conversations so we don’t become the cult that we are believed to be. For me the difference between cult and club is the ability to receive and learn from outside opinions . I love and believe in Tesla, but instead of reacting emotionally to each post, let’s get to work and contribute, the battle just started...

I disagreed with the comment because the gist of it was that Musk should be forced into a persona that is not the natural Elon Musk.

Musk got this far by being himself. A freakish run of luck? No, there’s something about Musk that is special. He sees the world through the spectrum of physics. There’s a lot more to it - “Wait, but why” wrote thousands of words about what makes Musk special.

I can’t imagine why we’d want to meddle with a winning formulation.

Even where he appears to have screwed up, I suspect he hasn’t. If the judge rules against the SEC, it’s a huge coup, and a warning to all in power to not abuse that power.

People are pissed because the stock is down and are looking for somebody to kick. Thing is, Tesla have freaking won. Best car by miles, lowest price, crazy CAGR. The market will wake up to this very soon, unless people start driving with their eyes closed. Then suddenly we will hear “hail Elon, never doubted the man”. Sheesh. Give him a break. Give him a Nobel prize. Anything but a gag order.

Cheers. </rant>

 

[Fact Checking]

So I'm starting to be cautiously optimistic about Q1: global Q1 deliveries in the 70k-80k range and production in the 90k-100k range, with potential upsides and very few downsides other than some major logistics hick-up in Europe. We'll be able to narrow this down a bit more right before the delivery report, based on eyewitness reports from Benelux delivery centers.

Not advice.

If we crudely plug this range into @ReflexFunds's Q1 estimates from February 5, which was based on 76.4k global deliveries:

Near-future quarterly financial projections​

And apply a -6% price reduction for all ASPs then we get a very rough revenue estimate in the $6.2-$7.0b range - but note that this is really, really crude.

Cash flow EBITDA (earnings before interest and depreciation) scales up to about the $1.1b-$1.3b range - but the 6% price reduction might have a higher effect on cash flow so the error bars are particularly large here.

These numbers are very sensitive to in-transit vehicles: every 1k in-transit vehicles will reduce or increase revenue by about ~$60m and EBITDA by about ~$15m.

 

[neroden]

I’ll believe it when I see it.

However it is a good reuters report in that it shines light on illegal short activity (using bogus reports on seeking alpha etc) that has so far gone unpunished,

Before the Internet these shorts would be laughed off by finance press, but unfortunately with the advent of social media these bozos instead gather a large following/positive feedback loop and the bogus reports just intensify with ever growing absurdity.

there is no bigger example than Tesla of course.

"Montana Skeptic" in particular was the king of unsubstantiated claims... until Linette Lopez came along.

 

[neroden]

prices are higher on 3 (cept 35k of crs), y looks same

Up $500 on SR+, $1500 on LR and higher. That's actually not a huge change. Not seeing any option price changes.

 

[Singer3000]

I think partly that they wanted to maintain it as an attractive alternative to the SR, making it something of a "no brainer" for many prospective buyers.

Yes the relative price elasticity is probably playing a part here, as well as a desire to nudge buyers up from the $35k to the SR+. People have spliced and diced the COGS of the partial premium interior and the additional cells but from this price move alone I've got to think the margins on the SR+ are pretty good. And that's coming out of the Fremont factory. Given Shanghai production is guided to start within 4 quarters and the sheer size of the Chinese market, I just can't get over-excited about all these Model 3 demand cliff edge stories. S&X is the black box for 2019 cashflow, we'll get more info soon. "Patience young padawan" is the message of the moment for this stock.

 

[CorneliusXX]

Chanos is just another kind of activist hedge fund manager. Kinda like a dark version of Bill Ackman. He successfully cut off the life line for TSLA: right now it is close to impossible for TSLA to raise money with reasonable cost from the open market.
Wall Street is more or less a very corrupted structure and looks like a conspiracy theory in slow motion to kill/slow down TSLA.
The most recent garbage from moody is TSLA still rated as B3(junk), because 'missteps', how subjective can it be?

Tesla could raise money any day of the week on decent terms. Some of the largest investors have said they are willing to invest more recently.

On top of that, they have just repaid 1b in debt which was raised when Tesla had much weaker revenue. Reraising that debt would be easy.

It's a false narrative that Tesla has any trouble in this area. Musk doesn't want to raise funds as they are not needed and costly.

 

[Fact Checking]

The Consent Judgment required Tesla to adopt a mandatory internal procedure for the review of Elon's tweets but did not require Tesla to provide the SEC with a written copy of the procedures. So, Tesla adopts a policy in which Elon gets to decide, in the first instance, whether a tweet needs to be pre-approved. I'm sure that is not what the SEC (nor the judge, perhaps) envisioned.

Note that the last motion from Elon's lawyers gave us a bit more insight into that:

Motion for Leave to File Document – #31 in United States Securities and Exchange Commission v. Musk (S.D.N.Y., 1:18-cv-08865) – CourtListener.com

"Among other things, Mr. Musk would like to address the SEC’s unsupported assertions and submit documentation reflecting the negotiation history between the SEC and Mr. Musk and Tesla, which undermines the newly-presented interpretation the SEC sets forth in its Reply."​

Combined with the citations in the letter these are pretty strong words for a motion-for-leave-to-file letter, and puts forward the straightforward notion that the SEC knew very well what policy Elon and Tesla had in mind, because it came up during the settlement negotiations.

If so then this would also explain the curious incident where the SEC asked Tesla a complex set of questions and gave them only a few hours to respond:

Response to Order to Show Cause – #27 in United States Securities and Exchange Commission v. Musk (S.D.N.Y., 1:18-cv-08865) – CourtListener.com

"On Sunday, February 24, 2019, the SEC sent a further request for information to Musk and Tesla, demanding a response on the same day (i.e., on Sunday). See Feb. 24, 2019 Email from C. Crumpton to B. Bondi, attached hereto as Exhibit 5."

"Musk’s counsel responded that he could not provide an immediate response, as the request sought substantial information and it was a Sunday, but that counsel would likely be able to respond in full on the following day, Monday, February 25."

"See Feb. 24, 2019 Email from B. Bondi to C. Crumpton, attached hereto as Exhibit 6. Rather than providing Tesla or Musk a reasonable opportunity to respond, on Monday, February 25, 2019, the SEC moved for an order to show cause why Musk should not be held in contempt."​

If we read the attached email that Tesla's lawyer sent then the SEC's conduct is even more outrageous:

Exhibit 6 – #27, Att. #6 in United States Securities and Exchange Commission v. Musk (S.D.N.Y., 1:18-cv-08865) – CourtListener.com

"Cheryl,

I am about to board a 6:00 pm flight back to DC following an all-day, out-of-town meeting at the US Attorney’s Office relating to an ongoing trial in a different matter.

We will endeavor to provide answers as promptly as possible, but your deadline today is not realistic given above and also that it is Sunday and people aren’t in the office.

We are looking into your questions and hope to be able to respond in full tomorrow.

Best regards,
Brad"​

Tesla lawyers answered within a couple of hours, and wasn't trying to stonewall: they literally didn't have the lawyers available on such a short notice, and they promised a response by the end of the next day, which too would have been a very tight schedule.

My reading of the subtext here: the SEC knew the probable answers perfectly well because boundaries of the disclosure policy were discussed during settlement negotiations, but Tesla's response would have taken the air out of the SEC's big Monday contempt of court filing.

I speculate that they gave Tesla such a short timeline because they knew Tesla wouldn't be able to comply, and because they didn't want to hear the answer: they wanted to file the motion on a pretense that they have a case ...

And yes, I agree with @neroden that it looks very probable that this was all deliberate bad faith action by SEC lead lawyer Cheryl Crumpton - but it would be hard to prove it, so I agree with @TNEVol that this won't come up, and probably neither the judge nor Tesla would raise this issue formally (sanctions, etc.) - but the judge isn't blind and will (I hope) understand what a nasty ambush this was.

 

[neroden]

And yes, I agree with @neroden that it looks very probable that this was all deliberate bad faith action by SEC lead lawyer Cheryl Crumpton - but it would be hard to prove it, so I agree with @TNEVol that this won't come up, and probably neither the judge nor Tesla would raise this issue formally (sanctions, etc.) - but the judge isn't blind and will (I hope) understand what a nasty ambush this was.

I agree with all of this as well, but I will point out that if the factual record on this is sufficiently developed, investors would be in a position to bring this up in a lawsuit against Crumpton et al. over market manipulation. TNEVol is right that it would be a long shot and hard to win due to the deference given by judges to corrupt government officials -- although actual damages really occurred and the evidence of bad faith and abuse of government office is strong -- but even making it clear that this was a possibility would probably deter future abuses, if the case was carefully constructed. It would require a suit by someone who was actually hurt by the Crumpton-manipulation-caused stock price drop (i.e. margin-called, lost money on expiring calls, sold due to belief the SEC lawsuit was well-founded). I wasn't (I was just sitting on my long position), so I wouldn't have standing.

 

[Dan Detweiler]

There, I said it, I'd prefer Musk to receive some sort of a gag order. (I changed this last statement to be more dramatic, as Disagreements were accumulating too slowly )

So you want a gag order? Think about what that entails. That would set precedent that if the head of a company wants to defend said company from what he or she sees as misleading or downright false statements they would not be allowed to do so if that response in some way upset a governing body, regardless of whether their response was factual or not. They would not be given the opportunity to set high standards or inspire their employees through challenging goals or high expectations if they happen to be seen as unattainable, or as a threat to established methods by someone that may or may not have any knowledge of the industry or the company itself.

When you start placing gag orders on people there are ripple effects that speak long and hard about the society as a whole and the rights and privileges its citizens do or do not enjoy. In short, it is a very, VERY slippery slope, and one that the writers of our Constitution would be ashamed to see come to pass. It is an example of the exact things the founding fathers warned us against regarding the power of government. I know I am part of a shrinking number of Americans that feel this way, but I am of the opinion that those men were pretty damn smart and knew the dangers that lay ahead for a fledgling democracy. Silencing people with gag orders and the like is but a small step towards tyranny.

Dan

 

[Fact Checking]

There, I said it, I'd prefer Musk to receive some sort of a gag order.

Given that you based your conclusion on false claims:

Tesla, TSLA & the Investment World: the 2019 Investors' Roundtable​

I believe it is you who should be more thoughtful about what you are saying.

Sending Elon to the Gulag would complete the full circle of classic Soviet Russia justice you are proposing: a bogus conviction based on false claims, resulting in a gag order and imprisonment.

(I changed this last statement to be more dramatic, as Disagreements were accumulating too slowly )

Wow, you appear to be proud of getting disagrees when you come to a bogus conclusion based on false claims. Who needs short trolls when longs will spread disinformation for free?

 

[lklundin]

This makes a ton of sense to me @Iklundin - do you have any that you would particularly recommend avoiding or that you find useful? For myself, I'd be looking for a lovely blend of lower volume (so I can read more), and higher quality of information and argument. I ask as I'm hoping to take what you already know, and use that to shortcut my own ability to replicate what your'e doing

"It's a nasty job but someone has to do it".

There are several subreddits that are quite good, related to e.g. SpaceX. Sometimes I stray over to the RealTesla reddit, which is full of uninformed and emotional posts, posters tend to try and reassure each other of Tesla's failed business model, Elon Musk's fraud etc. Only plus is that they forbid posts that simply speculate on whether a named poster is motivated by being e.g. long or short on TSLA. This could work here too.

Then there is TSLAQ on Twitter, also quite terrible to read, deceitful, manipulative.

While the longer contributions to Seeking Alpha give insight to the short thesis, the above gives insight into the sentiment and mental state of the short sellers. Desperate is a word that comes to mind. Many on RealTesla are knowledgeable about ICEs, so they may be posting out of resentment at the prospect of losing their ICE-related jobs.

As a Scandinavian the above attitudes towards Elon Musk also remind me of this, possibly Nordic sentiment:
Law of Jante - Wikipedia

It would be quite natural for a victim of childhood bullying to vehemently challenge the Law of Jante.

 

[shlokavica22]

And I have no conviction anymore in Tesla's execution (mostly EM's managing expectations and communication) to ever again get back to 100% TSLA. It's been 4 rough years, and it doesn't get better.

How so?!
TSLA is now a solid profitable company.
TSLA adopted more fiscally responsible attitude and manages growth without adding too much risk.
TSLA effectively transformed from "boutique" auto manufacturer, into mass-producing one.
TSLA delivers cars with exceptional gross margin, which (according to specialists in the field) can not be matched by the Legacy automakers (at least for the very near future).

Over-dramatic much?

 

[KarenRei]

I apologize if this was already posted (still catching up), but awesome new GF3 flyover video :

Concrete and box beams galore! Also roof trusses going up! All pile drivers gone - the pile driving stage is complete.

 

[Sancho]

Given that you based your conclusion on false claims:

Tesla, TSLA & the Investment World: the 2019 Investors' Roundtable​

I believe it is you who should be more thoughtful about what you are saying.

Sending Elon to the Gulag would complete the full circle of classic Soviet Russia justice you are proposing: a bogus conviction based on false claims, resulting in a gag order and imprisonment.



Wow, you appear to be proud of getting disagrees when you come to a bogus conclusion based on false claims. Who needs short trolls when longs will spread disinformation for free?

I’m a huge Musk fan, and I greatly admire all your posts FC, but I agree with Zhelko here (at least until he got overly dramatic about a gag order).

I give Musk an A+ in most facets of his role as CEO, but on communication a B would be generous. It’s actually hard to even give him a grade because he’s all over the map. Sometimes he comes across as very sincere and grateful and brilliant and sometimes he comes across as harried, unserious, and hyperbolic.

But unlike Zhelko, I wouldn’t try to gag Musk or change his style, as if that was remotely possible. Rather, I would encourage him to share more of the public communication with others who are better at it.

Why is Musk the only person speaking at a big product launch? Even the master Steve Jobs shared the stage with senior leadership. Some of the best Tesla conference calls have been when Musk brought in other executives and let them do more of the talking.

Tesla has recruited some of the best and brightest in the industry. Show them off, Elon!

 

[Fact Checking]

I apologize if this is already posted (will delete if so, still catching up), but awesome new GF3 flyover video :

Concrete and box beams galore! Also roof trusses going up! All pile drivers gone - the pile driving stage is complete.

View attachment 388742

Fantastic progress! Perhaps this overview shot is the best one showing how it's going to look like:

Size of the main building is going to be roughly 50mx450m AFAICS - the assembly lines are going to run in the length of the building I suspect?

And indeed this might be complete by May.

 

[shlokavica22]

I apologize if this is already posted (will delete if so, still catching up), but awesome new GF3 flyover video :

Concrete and box beams galore! Also roof trusses going up! All pile drivers gone - the pile driving stage is complete.

View attachment 388742

Yeah, it was posted, but you added your take on that, so still informative.

Once again confirmed they work 24/7. It will be really interesting to see whether GF3 will start production before the new Porsche Taycan lines start production (GF3's construction started later and from "scratch" while Taycan production is within existing facility).

Edit: Btw, for comparison: BMW's Plant Dadong has been under expanded construction with the expanding of the market, and the construction of a new plant in the northeast began in 2014, which boasts complete four processes, and it’s officially opened on May 19th, 2017

 

[Fact Checking]

I give Musk an A+ in most facets of his role as CEO, but on communication a B would be generous. It’s actually hard to even give him a grade because he’s all over the map.

I agree with all that, but there's a large chasm between "B- on a good day in old-school communications" and the actual accusation voiced based on misleading quotes straight out of TSLAQ Central ...

Nor do you seem to be crediting Elon's social media presence, which is genial, A+. They might not be your age group, but the new generations are mostly unspoiled by gascar propaganda, and these are the consumers who are is going to buy cars in the next 10-30 years and they love the goofy, unorthodox way Elon communicates.

And Millennial investors? They are more convinced than ever, they are forming a rock solid investor class for Tesla:

Robintrack

If those 125k+ retail investors have just 10 TSLA shares on average that's already among the top 20 major institutional investors with 1.2m shares. If they have 20-50 shares then they are among the top 3 institutional shareholders...

They are watching, listening and reading, and it's not CNBC or the WSJ.

 

[ReflexFunds]

Anyone notice the new Model S Standard Range is no longer available? When was the last time anyone saw it for sale? This was the 80/85kWh battery released at the end of February.

Estimated delivery is also now April for Model S. Still showing March for Model X.

 

[Fact Checking]

It's a false narrative that Tesla has any trouble in this area. Musk doesn't want to raise funds as they are not needed and costly.

Also, as he explained it at once of the recent conference calls, it's a sign of corporate maturity to grow from internally generated cash, not from equity sales.

This goes beyond just the cost saving and anti-dilutive effects: by the company's existing products directly financing new products there's a healthy internal feedback loop to improve efficiencies. At the size of Tesla they cold easily blow $5b of cash on what could be done with smart utilization of $1b.