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

[Ulmo]

Forbes mentions that M3 production is still below 5K/week


Others report here above 6K.
Which is fact and which is FUD?

Depends how you count Thanksgiving, Christmas, and New Year's Eve. Also depends how much of those holidays they reduced production.

 

[EVNow]

As much as I hope that Q4 will mirror Q3, but the expectations were much different. They crushed all the analysts estimates in Q3, not saying they can't again but expectations are much different.

I think the SP after Q4 earnings report will depend as much on Q1 guidance as on Q4 actuals. The $2k reduction has added uncertainty.

 

[brian45011]

When do institutional investors report their holdings? Isn’t it every quarter?

15th of 2nd month following quarter-end.

 

[dailo]

I think the SP after Q4 earnings report will depend as much on Q1 guidance as on Q4 actuals. The $2k reduction has added uncertainty.

Agreed, although I imagine most of the inventory for Q1 will be headed to Europe which I don't believe have a price reduction but probably have higher costs due to shipping.

 

[defc0n]

I think the SP after Q4 earnings report will depend as much on Q1 guidance as on Q4 actuals. The $2k reduction has added uncertainty.

Agree. Unless wall street is completely incompetent, these deliveries mostly tell the story for Q4. As of this moment though it looks like it may end up considered a beat:

TSLA - Tesla Inc. Crowdsourced Earnings Estimates - Estimize

Obviously the goal posts could be raised higher up until the report, though.

 

[Fact Checking]

Here's a fresh, very juicy and very exciting rumor about Tesla full self-driving (FSD) progress posted on Reddit, sourced from a Tesla employee who is part of the FSD beta-testing group:

"Had the opportunity to speak with a Mobile Technician today who is part of the employee test program for full self driving. Apparently everything is working well at this point (stop signs, street lights, left turns, right turns, etc.)"

"The only consistent bug he has had is "valet mode", where the car will drop off the occupants and find its own parking spot. While that part works fine, it had some issues coming back (refused to saying obstacle detected). He has a model x, and the instrument cluster is 2 parts, the right side shows a debug feed for fsd and the left side is normal"

"Additionally, they have a top down 360 view working for autopilot debugging to show the locations of cars and signs. He also noted that someone successfully got an mcu to mcu2 replacement done, but they were told not to do it anymore. All it required was a pin out change. They are also testing an oled display for the mcu to fix yellow banding."​

Caveats:

• It's all unverified, anecdotal hearsay from an employee who didn't read his NDA carefully enough.
• What works for one tester can often still have lots of bugs with other testers. I.e. the sample is not only untrusted, but also non-representative as well.

With those caveats in mind, this info and sounds highly plausible to me due to the non-trivial tidbits included, and it's at the top end of my (bullish!) FSD progress expectations.

If true then this news is huge: Tesla's own AI-chip and HW3 is working well, their new V10 neural network is a success, and Tesla is way ahead of every competitor in terms of bringing functional FSD to the mass market.

Tesla HW3 and FSD will be a literal goldmine, starting Q2'19 or so.

In a year or two ICE OEMs might be begging Tesla to license AutoPilot FSD tech to them, so that they can continue selling cars.

 

[Ulmo]

@ggr is this you?

What is demonstrably false here? Yeah, last sentence (and some wording) is inflammatory, but there is insight to first part of the post that no one has mentioned before. Numbers are useful. We won't be better investors and safer by closing our eyes to dangers. Or am I wrong and this is a 'feel good, come for emotional support' forum, rather than 'investors' forum?

I think Q4 numbers are excellent and I think ER will blow it out of the park, but that doesn't mean that MARKET currently doesn't interpret numbers exactly as OP suggests.

Not that it matters much, but I'd prefer you take more mellow tone and be a bit less of a judge/jury/executioner.

While I would agree if true, they said "7,000 Model 3 Tesla can't sell"; we know the new method is to stock inventory near stores so that customers can buy on the spot or have faster delivery. Part of increasing sales, decreasing time from production to sale, decreasing total undelivered, and reducing in-transit for delivery is increasing inventory and positioning it around the predicted sales locations. The "can't sell" verbage is plain wrong.

While we don't know exactly how they do it (such as if they are converting a car status that's on a moving car carrier from "inventory" to "in transit for delivery" when a sales order is matched to the already moving car), we know they are definitely doing logistics to reduce the time vehicles spend being fully made and not fully delivered AND reducing the amount of time between customer order and customer delivery.

 

[M3Rider]

I think the SP after Q4 earnings report will depend as much on Q1 guidance as on Q4 actuals. The $2k reduction has added uncertainty.

Q1 guidance is they sell all they make and they could have done it with moving 100% of the sales overseas. But with keeping some output for local sales AND $2K price drop, it feels like they'll start building lines in U.S.

They sold 5k/week in Q4.
Ok, -$1,750 in tax credit, but for some with lower tax liability the new price is even better.
I don't believe they'll have more than 3k/week left for U.S. after they ship what they promised to Europe/China.

Will the tax credit rush justify a drop from 5k/week U.S. sales/demand to 3k/week?
I think they will be short on the inventory in U.S.

 

[Lucky_Man]

May be worth spending some time figuring this out. Is there a contact to ask for explanation ? Otherwise report to SEC.

Does anyone have a screenshot from earlier ?

Don't expect SEC to do much during Trump's shutdown. Official statement at SEC.gov | HOME

 

[MarcusMaximus]

That's not the moral of the (chart) story. Just says TSLA followed NASDAQ down. If NASDAQ doesn't go down for a week - neither will TSLA.

BTW, after last quarter's P&D report, initially SP went up (IIRM, to 318) then went back down all the way to 301 at close.

Ofcourse, tomorrow NASDAQ gets hammered because of AAPL. Funny thing is even in Q3, the macros big slide started with AAPL earnings. TSLA is down $3 and AAPL down $12 in the after hours.

I’m aware, just lucky timing. I asked ~5 minutes/40 pages before then if anyone knew how long the downturn lasted after Q3 P/D release.

 

[brian45011]

With these figures, is it remotely possible that 2018 becomes profitable as a whole?

No. Net Income for first 3 quarters in 2018 was -$1.115 billion. Net Income in 3rd quarter was +$311.5 MM.

 

[SOULPEDL]

We've now seen what the analysts think about the Q4 production and delivery numbers. Anyone care to guess what happens to the stock price after the Q4 conference call in Feb?

I'm with you and said same a couple weeks back. Stock pops early Feb back to 380 on EARNINGS and MARGINS. From then on, it's about Software and the big wait for other factories end of year. Am I the only one not surprised by today's response? The numbers were in line, not stellar as in the past. Underestimate/Overcommit didn't quite happen in deliveries, but it will happen in $$$. After all, isn't that the only thing that matters when you already have the best car and years ahead? Prices will continue to drop... to $35K. No surprise there either.

Have you looked at Apple lately? Market is ultra skittish IMO. No change here in strategy here, buying more at $297 and we're just fine. Stop the whining. This is depressing reading all this neg. See ya in Feb.

 

[thx1139]

Media does exactly the same thing to Trump.

Umm no

 

[Ulmo]

Anybody feels like the media focus will not be on Q4 profitability, but on $2k price cut and saying it doesn't matter what happened in Q4, going forward Tesla margins will be cut in half, so margins are doomed, SP targets need to be cut in half etc. ? Even though the cuts only apply to U.S., which means 50% S/X and probably less for Model 3... If Europe gets 3k/week and China gets at least something, maybe 1k? then assuming production won't exceed 7k/week in Q1, that leaves 3k/week for U.S., which is <50%.
Btw, even with those recent tariff cuts, the prices in China will be biting - Tesla cuts Model 3 prices in China | Reuters
$72k for an entry level car? I assume MR, which will now be $44k in U.S.
This is expensive, I don't think I would have spent this myself. Unless there are tons of well off people there who don't care about money, I think this will mean a lot less sales than in Europe. Which is why I'm thinking 1k/week.
Anyway, this $2k/car price drop in U.S. will mean less than $1k/car for Q1 on average.

Shorts will say "because Tesla is selling at $35,000 per car, that Tesla is a failure", and they will say "because Tesla still sells cars at above $35,000 per car, that Tesla is a failure", and they'll say it in the same sentence with a straight face and shout it as if it is obvious and an emergency and to sell the stock.

 

[Fact Checking]

@ggr is this you?

What is demonstrably false here? Yeah, last sentence (and some wording) is inflammatory, but there is insight to first part of the post that no one has mentioned before. Numbers are useful. We won't be better investors and safer by closing our eyes to dangers. Or am I wrong and this is a 'feel good, come for emotional support' forum, rather than 'investors' forum?

I think Q4 numbers are excellent and I think ER will blow it out of the park, but that doesn't mean that MARKET currently doesn't interpret numbers exactly as OP suggests.

Not that it matters much, but I'd prefer you take more mellow tone and be a bit less of a judge/jury/executioner.

The first sentence alone:

"The stock price is tanking because there are roughly 7000 Model 3s in inventory that Tesla can't sell."​

Contains two lies, a false statement and an attempt at trolling investors:

• The Model 3 inventory increase in Q4 was 5,200 units, not 7,000. S+X inventory actually decreased.
• "Can't sell" is an intentional false statement, i.e. a lie. It's fresh unsold inventory of common configuration options.
• The drop in the stock price was more of a reaction to the $2k price reduction and a bear raid, than the record deliveries. So the assertion of causality is a false statement. Interestingly, once manipulative shorting was banned after the initial drop (the 'uptick rule') the SP recovered significantly. I.e. the drop was probably engineered by short sellers, not investors who got bearish. (Bearish investors are not affected by the uptick rule - they could have sold during the day but didn't - they were buying.)
• "Tanking" is inflammatory language, and combined with the lies it was a clear attempt at trolling investors.
• The young throw away, expendable account is a sign of bad faith posting as well.

I agree with your "careful bull" stance, but you can do better than give obvious trolls credibility and support. While a bull echo chamber is harmful, adding disinformation and noise to this forum is not an improvement.

People curious about that kind of noise can search for $TSLAQ on Twitter or read Seeking Alpha - it's not like the anti-Tesla trolls don't have their soapbox.

 

[M3Rider]

Tesla HW3 and FSD will be a literal goldmine, starting Q2'19 or so.

You shouldn't sound so confident until you put all your money in Q2 calls

I do believe they can have main scenarios worked out pretty quick, but corner cases will take them much longer.

 

[Fact Checking]

I do believe they can have main scenarios worked out pretty quick, but corner cases will take them much longer.

So there's an interesting property of neural networks: once they start working well, they tend to do so in a broad set of circumstances. They are very dissimilar from traditional procedural algorithms that have a difficult slope of reliability to climb and an expensive debugging phase.

Waymo's demo FSD uses:

• Geofencing,
• GPS specific "hints",
• Special hacks to avoid "difficult" traffic scenarios,
• Very limited set of "drop off points" where passengers can exit their self-driving taxis.

If Tesla's FSD doesn't use such tricks then they are way ahead of Waymo.

Good neural networks are basically defined by a well maintained image library of labelled "corner cases" - and here Tesla has a huge advantage of hundreds of thousands of vehicles constantly providing such "corner cases".

I.e. while "corner cases" are an anomaly for regular algorithms, they are at the center of neural network training data.

 

[MarcusMaximus]

The first sentence alone:

"The stock price is tanking because there are roughly 7000 Model 3s in inventory that Tesla can't sell."​

Contains two lies, a false statement and an attempt at trolling investors:

• The Model 3 inventory increase in Q4 was 5,200 units, not 7,000. S+X inventory actually decreased.
• "Can't sell" is an intentional false statement, i.e. a lie. It's fresh unsold inventory of common configuration options.
• The drop in the stock price was more of a reaction to the $2k price reduction and a bear raid, than the record deliveries. So the assertion of causality is a false statement. Interestingly, once manipulative shorting was banned after the initial drop (the 'uptick rule') the SP recovered significantly. I.e. the drop was probably engineered by short sellers, not investors who got bearish. (Bearish investors are not affected by the uptick rule.)
• "Tanking" is inflammatory language, and combined with the lies it was a clear attempt at trolling investors.
• The young throw away, expendable account is a sign of bad faith posting as well.

I agree with your "careful bull" stance, but you can do better than give obvious trolls credibility and support. While a bull echo chamber is harmful, adding disinformation and noise to this forum is not an improvement.

People curious about that kind of noise can search for $TSLAQ on Twitter or read Seeking Alpha - it's not like they don't have their soapbox.

I mostly agree with you, but nobody can say exactly what caused the drop. I would note that the exact same thing happened after Q3 numbers and the Q2 numbers. I wouldn't recommend reading anything at all into the current drop. Mr. Market has decided that TSLA must always have a large drop after P/D numbers release, for whatever reason.

 

[EVNow]

Will the tax credit rush justify a drop from 5k/week U.S. sales/demand to 3k/week?
I think they will be short on the inventory in U.S.

I'm talking about the $2k drop in price having an impact on margins & income.

 

[Fact Checking]

I'm talking about the $2k drop in price having an impact on margins & income.

I expect minimal impact from the $2k price reduction: with say 65k M3's sold it's $130m less cash flow and income worst case.

I.e. only about 3% of cash margin. Tesla had a gross profit of $1,400m in Q3 - more in Q4.

Other effects:

• The lower price of $2k will bring in about 2-3% more buyers based on the price reduction alone.
• Some buyers with higher buying power will decide to spend more on high margin options: premium paint, or wheels, or EAP.
• Goodwill from customers who are waiting for lower priced Model 3s and missed the $7.5k tax credit.

I.e. it's quite possible, and in fact probable, that the $2k reduction, now that they can do over 6k/week Model 3 production, increases income and maybe even margins.

Note that in 2018 increased the price of AWD configurations, twice, by +$2k total. By reducing the base configuration by -$2k they are back to the original price for the (popular) AWD option.