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

[Mars ☰mperor]

In the U.S., Model 3 delivery time has been updated: P3D 8-10 weeks; SR+ and AWD 6-10 weeks. S/X 4-8 weeks.

Price increase also confirmed?

T☰SLA Mania on Twitter

"No Demand for@Tesla???

Model 3 SR+ price has been increased by $500 Model 3 Performance increased by $1,000, comes with "20’’ Gray Performance Wheels"

Delivery time for SR+ & AWD has gone from 2-3 weeks to 6-10 weeks, and from 2-3 weeks to 8-10 weeks for Model 3 Performance"​

 

[StealthP3D]

Number of users holding went down from a peak of 170k in June, to ~145k yesterday, a drop of 15%.

Note that Robinhood # users holding is still very strong, still 45% higher than the ~100k users holding while the price was $300+ levels early this year:

My nephew works at an established tech company in Seattle and almost all the 20-30-something year old guys in his department have Robinhood accounts and trade regularly, mostly on a whim. They don't have big accounts, it's mostly entertainment for them. I don't take the Robinhood stats as meaningful in the grand scheme of things.

​

• "I think Q1 next year will be tough.", according to Elon, and "Q2 will be not as bad, but still tough". He said this 2 months ago on July 24, and he fully knew their own Model Y plans and progress.

When Musk said that, I remember thinking there was something funny about it, almost like he was trying to convince us of something he didn't (fully) believe. My interpretation, now that I've had time to think about it and have more clues, is that their strategy has moved some of the expenses into Q4 2019 (and maybe Q3). So the bottom line might not look that good, especially in Q4 (well at least relative to the strong production and sales) but the market won't care as much because growth and expansion will have been accelerated. If Model Y starts selling in Q2 2020, high margin variants will bolster the Q2 numbers. I don't see any way Q1 bottom line won't be weak but I think it's a false narrative that as the numbers go, so goes the stock price. The market looks beyond the numbers and now that Tesla is not so much on the brink of disaster, the numbers will take a back seat to internal developments. The market has only focussed on the numbers so heavily because the shorts were in control of the (mostly false) narrative. I think the market is beginning to see that Tesla has pulled out all the stops to make EV's profitable. That doesn't imply GAAP profits because, well growth. In house battery production, new plants, new models new energy products. But people are seeing how big this can be, how dominant Tesla will be. They still don't understand or widely believe in FSD so that's not going to be valued yet.

Anyway, whoever is driving up the price right now, it might be institutionals slowly testing the waters again (but then again ARK reduced their stake somewhat), but my guess is that it's possibly mostly shorts covering: Q3'2018 must still be a vivid memory.

I'm pretty sure shorts have been steadily covering for some time. Ark's selling is just a drop in the bucket compared to new long positions and I like the way they sell without knocking the price down. I'm glad to have them around - they add some price stability by buying when the market corrects. As their fund grows in size, so will the number of average TSLA shares they hold.

As TSLA runs up there will obviously be some profit-taking, etc. It's telling that the longest run of green days in TSLA history is only eight, at least so far. I think we can look forward to a long run of two steps forward, one step back, sentiment has changed to positive.

 

[AlexS]

In the U.S., Model 3 delivery time has been updated: P3D 8-10 weeks; SR+ and AWD 6-10 weeks. S/X 4-8 weeks.

If this info will hit institutional buyers we can see 270 before end of the week.

 

[kengchang]

SR+ now rated for 250 miles and price went up $500.

Performance now comes with 20" sport black rim

$100 non-refundable order fee instead of $2500 refundable deposit

 

[snellenr]

Dude, you have GOT to try FORTRAN 77! It will change your life.

You can do any of that high falutin’ programming stuff in FORTRAN IV using properly written Computed GOTOs and a moderate (.LE. 30 cards) use of blank COMMON.

 

[Fact Checking]

In the U.S., Model 3 delivery time has been updated: P3D 8-10 weeks; SR+ and AWD 6-10 weeks. S/X 4-8 weeks.

Wow.

I don't think this kind of organic expansion of U.S. Tesla demand ever happened before on such a scale, so early in a quarter (we are 2.5 weeks into Q4).

Previously we had big increases in orders when production volumes were still low and new Model 3 variants were released (Q2-Q4 2018), but that was primarily pent-up demand. None of that happened in this quarter and production has expanded further, which makes it even more impressive IMHO.

While Tesla did indicate an uptick in the order book in the Q3 delivery report, based on production levels I guessed it to be max of 1-3 weeks worth of demand - not 4-10 weeks (!).

I'm really curious what caused this:

• Is this the Nürburgring effect? Did Tesla finally crack one of the secrets to Porsche's stable sales and sky high margins?
• Is this the Taycan effect? Did a good chunk of the 30,000 Taycan reservations flock to the Model S and M3P in disappointment at Porsche's mediocre performance where the only thing 'ludicrous' is the price?
• Is this the trade war effect? Does the unconditional capitulation of Trump tremendous win of Trump in the trade war against China and the resulting cease-fire ease consumer worries about short-term U.S. recession and job loss risks?
• Is this the portfolio effect? Does a +40% rise in TSLA and other high-tech stocks improve U.S. balance sheets enable some profit taking or deleveraging to allow another Tesla for the family, or two?
• Is this the final $1,750 federal tax credit effect? Use it or lose it - but only ~1.5% of a Model S/X ASP, and only ~3% of a Model 3 ASP, so according to @neroden's tax credit model it's worth about 1-2 weeks of pull-forward demand.
  
• Is this the Smart Summon effect? Over half a million Smart Summon demonstrations all across the U.S. over a single weekend sure caught attention. If yes then the Halloween pranks with Smart Summon will add another week or demand or so to the backlog ...
• Is this the V10 release effect? Sentry mode finally usable, Caraoke, Netflix, Spotify, computer games - what more to ask for?

Or something else?

Very curious development, and while Q3 earnings could be really bad ("Tesla missing Wall Street expectations" in all categories), this is bullish AF in the long run. I'm particularly happy about Model S/X order queue of 4-10 weeks - this is a big potential GAAP profit factor.

This IMO also explains the Model Y leaks and the Pickup Truck unveil: Tesla is now focused on developing Q1 demand. Would not be surprised if the Pickup Truck unveil was in late November, to guarantee that any media attention and influx of orders would help the January/February numbers.

The more tenacious long term shortz will also have to start seriously considering the prospect of Tesla being added to the S&P 500 in May-June or August-September next year: if Q4 is profitable and Q1 or Q2 is borderline profitable with a bit of FCA credits and deferred revenue help, then S&P 500 addition looks probable, given that the bad Q1'2019 (and Q2'2019) losses will have rolled out of the 4-quarter window of the S&P 500 profitability equation:

• Q2'2019: -$408m
• Q3'2019: -$200m?
• Q4'2019: +$410m?
• Q1'2019: +$200m?
• Q2'2019: +$300m?

I.e. if Q3 isn't "too bad" - say -$200m loss, then Q4 earnings of $410m or better, and a profit of $200m in Q1'2020 would trigger S&P 500 inclusion of TSLA. Or if not then, then in Q2, with August-September addition to the S&P 500, because the -$408m loss of Q2 will have rolled off then.

Still way too early to call though and not advice - I have a particularly bad track record with GAAP profitability and S&P 500 inclusion speculation ...

 

[UnknownSoldier]

So what is the current over/under on Q3 actually being break-even or close instead of a "surprise" big loss again?

We know they delivered 97,000 cars and margin on 3 is slightly lower again due to product mix. I don't really see how they make it to break-even this quarter from what we know...

 

[Pezpunk]

So what is the current over/under on Q3 actually being break-even or close instead of a "surprise" big loss again?

We know they delivered 97,000 cars and margin on 3 is slightly lower again due to product mix. I don't really see how they make it to break-even this quarter from what we know...

chances of break even are practically nil. i don't think it's realistic.

 

[bhtooefr]

My nephew works at an established tech company in Seattle and almost all the 20-30-something year old guys in his department have Robinhood accounts and trade regularly, mostly on a whim. They don't have big accounts, it's mostly entertainment for them. I don't take the Robinhood stats as meaningful in the grand scheme of things.

Also, I've heard of people doing their buy-and-hold positions in traditional brokers' accounts, and their trading shares in Robinhood due to the free trades.

 

[ReflexFunds]

SR+ now rated for 250 miles and price went up $500.

Performance now comes with 20" sport black rim

$100 non-refundable order fee instead of $2500 refundable deposit

A 10 miles range boost to SR+ is very significant!
Could this be further software and efficiency gains? Seems unlikely given how efficient SR+ is already relative to LR.
Could it be a small chemistry upgrade rolled out first to the SR+ models? Could well be.
Was the SR+ range initially advertised lower than its EPA rating like the initial LR RWD cars? I doubt it, but has anyone seen the full range reports for SR+?

 

[Pezpunk]

by the way, here's a link to my shareholder question. Please upvote if you find the question interesting. Say

 

[Fact Checking]

So what is the current over/under on Q3 actually being break-even or close instead of a "surprise" big loss again?

Low chance I'd say - and there might be a negative FCF surprise as well if their capex ticks up due to Shanghai and Model Y spending. In principle FCF could even be negative, as Tesla did guide for that possibility in quarters where they are expanding production.

 

[ReflexFunds]

“China’s industry ministry on Thursday said it has added Tesla Inc to a government list of approved automotive manufacturers, granting the manufacturing certificate that the electric vehicle maker needs to start production in the country.

The list was published by China’s Ministry of Industry and Information Technology.”

China grants Tesla car manufacturing certificate: industry ministry

 

[CorneliusXX]

I think it was a valid comparison given the similar revenue size (currently) between Tesla & Netflix, and then seeing the difference in Valuation and FCF metrics (And how cheap Tesla looks in comparison).

Their industries are completely different. Most comparisons don't make much sense.

 

[KSilver2000]

Also, I've heard of people doing their buy-and-hold positions in traditional brokers' accounts, and their trading shares in Robinhood due to the free trades.

Maybe part of the drop-off showing on Robinhood is because simple online trades are now free at almost all places since around the start of this month.

 

[Fact Checking]

Also, I've heard of people doing their buy-and-hold positions in traditional brokers' accounts, and their trading shares in Robinhood due to the free trades.

Free trades and easy on-the-go app. Most of the retail brokerage apps and websites are atrocious.

 

[bhtooefr]

Was the SR+ range initially advertised lower than its EPA rating like the initial LR RWD cars?

Yes. (And the LR RWD is still voluntarily advertised lower, even with the increase to 325.)

Full list of model year 2019 voluntary range reductions per the latest EPA datafile:

2019 Tesla Model 3 Standard Range Plus (RWD): Combined range voluntarily lowered to 240 miles
2019 Tesla Model 3 Long Range (RWD): Combined range voluntarily lowered to 325 miles

2019 Tesla Model S AWD - 100D: Combined range voluntarily lowered to 335 miles
2019 Tesla Model S AWD - P100D: Combined range voluntarily lowered to 315 miles
2019 Tesla Model S AWD Standard Range: Combined range voluntarily lowered to 285 miles
2019 Tesla Model S AWD Long Range: Combined range voluntarily lowered to 370 miles
2019 Model S Performance (19" Wheels): Combined range voluntarily lowered to 345 miles
2019 Model S Performance (21" Wheels): Combined range voluntarily lowered to 325 miles

2019 Tesla Model X AWD - 100D: Combined range voluntarily lowered to 295 miles
2019 Tesla Model X AWD - P100D: Combined range voluntarily lowered to 289 miles
2019 Tesla Model X Long Range: Combined range voluntarily lowered to 325 miles
2019 Tesla Model X Performance (22" Wheels): Combined range voluntarily lowered to 270 miles

...we'll ignore the discontinued pre-Raven S/X, but all of the Ravens have something left on the table, and the SR+ and LR RWD still have something left on the table.

I doubt it, but has anyone seen the full range reports for SR+?

Give me some time and I can calculate something out of the EPA datasets? The true range numbers are confidential but there's enough data on how much charge energy went in, and the efficiency, to calculate the actual range without voluntary reductions, I think.

Maybe part of the drop-off showing on Robinhood is because simple online trades are now free at almost all places since around the start of this month.

Yeah, I noticed that possibility a couple days ago.

 

[EVMeister]

The WLTP range of the Model 3 SR+ is still 254 miles. So either the UK site hasn't caught up, or it's simply a change to reported EPA range.

 

[Fact Checking]

Maybe part of the drop-off showing on Robinhood is because simple online trades are now free at almost all places since around the start of this month.

I don't think so:

While Robinhood users portfolio levels are not reported, there's a proxy metric for "Robinhood number of users", which is the number of users holding GE stock, which is still a "boring" stock with low volatility (despite recent negative news):

There you can see that while Robinhood number of users and their growth indeed probably leveled off, positions didn't decline.

This trend is similar for range-trading, high liquidity blue chip stocks with low chance of sudden price movements (i.e. ideal for day-trading) such as MSFT:

Or AMZN:

Only TSLA is showing a ~15% drop in Robinhood users holding:

... which suggests that despite other brokerages now also offering "free trades", the number of active Robinhood users has not dropped, and that the drop in users holding pattern is specific to Tesla and supports my hypothesis that it's mostly profit taking after a very good +40% bull run and de-leverage and de-risking before Q3 earnings.

 

[elliott82]

Just saw this and had to lol