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

[avoigt]

Great numbers across the board.

• Production as well as delivery numbers are just great and clearly better than expectations
• 2018 is a great success with an unprecedented growth rate
• Price cuts in the US only prove that Tesla is profitable now
• With Q3 and Q4 profit Tesla kept the promise which is support for a good Q1
• Low inventory supports healthy demand in the US, price cuts keep TCO almost the same
• S und X demand continues on the plan and capped by cell production, supply constrained
• Financial stability and independence from raising money is achieved
• Tesla is moving closer to more conservative investors, funds and the S&P inclusion
• Continouity in results is a strong sign of stability and good management

Market:

• As in quarters before we see a "sell on good news" which is usually temporary
• As usual some media post wrong, misleading and fraudulent reports with "alternative facts"

Forward looking:

• Everything positive and according to the master plan
• Shorts lost their last argumentation of "Q3 a one time wonder"
• Misleading longs is now very difficult for shorts and bears
• All numbers provided should and will lead to even stronger profits and cash flow than in Q3
• Q1 - Q3 should be a slam dunk for Tesla now as Europe and later China will kick the accelerator

Negatives:

• none

Conclusion:

If you sell now that you are either dump, dumper or dumpest!

Or as I would express it: "someone else just earned the right to own your money...."

Overlooked by the market but very important to notice:

75% of all 3s delivered came from new orders and NOT from reservation holders. That translates in a very strong demand on existing and available premium cost models.

With SR and cost reduction in place (note that a lot of people could not get the tax credit anyway because of salary) demand for the 3 and other models from the US should be stable and in my believe will grow in the US. Add to this higher demand from Europe and China respectively and you get a sense what we will see in 2019.

Many demand levers are still untapped: leasing, SR, other markets, ads and many more.

2k reduction is only in the US. If Tesla had a demand issue and wanted to counter it with price reduction than we would see global price reduction, leasing and deliver in not yet addressed markets e.g. Asia ex China, India, South America and a faster roll out of UK and Aussie.

 

[uselesslogin]

I also waited for the rule to kick in. However I added to my Jan'20 leap positions. The IV for the weeklies jumped too much for me.

Yeah, I won't be making that much on the weekly I bought if I'm right. But, I like to make small bets because they help me remember if I was right or wrong about something.

 

[Sancho]

We shouldn’t be surprised about a drop in SP today. Same thing happened after the Q3 delivery report. Fools and manipulators are a toxic mix. The response to earnings is harder to manipulate and earnings are harder to misinterpret.

 

[shlokavica22]

Yeah, I won't be making that much on the weekly I bought if I'm right. But, I like to make small bets because they help me remember if I was right or wrong about something.

Actually you should make more, but only in case the stock recovers relatively fast (which is already the case, so good for you).

Edit: just for comparison with anyone else that opened position today- currently I'm 10% up on my Jan'20 700 bought right after we hit the -10% mark and the rule was triggered

 

[Pezpunk]

Again ... These numbers are pretty good and right in line (in fact slightly above) the consensus expectation here just a couple days ago. the vast majority of us were predicting numbers in a range of 53k to 63k Model 3s. Seemed like the consensus here was anything over 60k would be a "beat". My slightly optimistic prediction two days ago was 59,218.

How on Earth is 63,150 somehow a big red flag? It's slightly higher than most people were guessing, virtually guarantees profitability, and sets a new record for the company. I don't see the downside.

 

[X Fan]

Overlooked by the market but very important to notice:

75% of all 3s delivered came from new orders and NOT from reservation holders. That translates in a very strong demand on existing and available premium cost models.

With SR and cost reduction in place (note that a lot of people could not get the tax credit anyway because of salary) demand for the 3 and other models from the US should be stable and in my believe will grow in the US. Add to this higher demand from Europe and China respectively and you get a sense what we will see in 2019.

Many demand levers are still untapped: leasing, SR, other markets, ads and many more.

2k reduction is only in the US. If Tesla had a demand issue and wanted to counter it with price reduction than we would see global price reduction, leasing and deliver in not yet addressed markets e.g. Asia ex China, India, South America and a faster roll out of UK and Aussie.

"note that a lot of people could not get the tax credit anyway because of salary"

Interesting point. There is a large tranche of people that will be able to utilize the $3,750 tax credit.....

 

[Singuy]

The report is absolutely fantastic. I do believe there's a huge disconnect between Tesla's mission and Tesla's business. Investors just can't fathom the idea of transitioning to sustainable energy to be a money making idea and dismiss the statement as if it doesn't exist. Everytime Elon pushes for the mass to be able to afford an electric car, investors freaks out as if demand just suddenly disappeared. Tesla really didn't have to drop their price by 2k, just like how they really didn't need to fork the tax bill difference if people missed their delivery date.

This is a company that is set on doing the right thing and not extort their customers for a quick buck. I mean just think about all the years the iPhone base model had 16 gigs of RAM, even when ram prices were peanuts. This is why I had zero connection with apple products and think that pos company can burn in hell.

 

[Buckminster]

This is what FC said a few days ago:

Here are @Troy's final production and deliveries estimates for Q4:

Troy Teslike on Twitter

"Here are my final #Tesla estimates for Q4 2018. I tried my best to make them as accurate as possible but this Q wasn't easy. We'll find out on Jan 2nd.

Production

51,459 Model 3
21,714 Model S+X
Total 73,173

Deliveries

54,707 Model 3
12,683 Model S
12,119 Model X
Total 79,509"

My take:

• If these numbers verify then S+X is a "miss" of 100k production and deliveries, the Model 3 a rather big "missing expectations" as well.
• The S+X numbers look plausible and there the sampling rate of the VIN survey is pretty stable.
• I think the Model 3 numbers of 51.4k are low, and the other two VIN based estimates are higher: @Model3VINs is at 58k, Bloomberg at 60k. (My own naive VIN numerology suggests 62.8k Model 3 production.)
• Nevertheless @Troy has a good track record for Q1, Q2 and Q3 - and prognostication for Q4 is particularly difficult due to almost complete lack of guidance from Tesla.

2.2% out FC - losing your touch methinks...
My calculator is struggling with Troy's percentage. Do I add 1 zero or 2?

 

[Pezpunk]

yeah, it's worth noting that Fact Checking's simple VIN math turned out to be the most accurate predictor of M3 deliveries.

 

[Tslynk67]

Again ... These numbers are pretty good and right in line (in fact slightly above) the consensus expectation here just a couple days ago. the vast majority of us were predicting numbers in a range of 53k to 63k Model 3s. Seemed like the consensus here was anything over 60k would be a "beat". My slightly optimistic prediction two days ago was 59,218.

How on Earth is 63,150 somehow a big red flag? It's slightly higher than most people were guessing, virtually guarantees profitability, and sets a new record for the company. I don't see the downside.

Yes, it's nonsense. As many of us have pointed out, these actual figures are higher than many of us here predicted, including some of the more bullish members.

And perhaps a good moment to remind the Tesla guidance in the Q3 Report:

OUTLOOK

Model 3 quarterly production and deliveries should continue to increase in Q4 compared to Q3. Our target of delivering 100,000 Model S and X vehicles this year remains unchanged.

 

[winfield100]

Done. Is that also today, or just tomorrow?

are you sure it hit it?
i'm closely looking and nothing i see more than -8% or so, not -10%

 

[avoigt]

I have to say that the Troy sheet estimate got me a little uncomfortable in the last days of 2018. I'm happy that he was off but not happy that we lost a reliable source of production numbers.

There was a longer discussion with @Troy about that his mythology in the environment we are in will be less reliable in December. He did not reconsider given the points made but I hope he does now for the future. You can also say we have not been unable to convince him. Troy may have been mislead by his previous astounding success and appreciation IMHO.

For instance @ValueAnalyst agreed to disagree on Twitter as well as me and I though a few days back it would have been time to make a step back to reevaluate the method. valueAnalyst is from what I hear (not an Patreon) very close to reality with the prediction. Best result in Q3 and Q4 looks very good as well.

However lets look forward and all hope that Troy does make an analysis on his own and changes his method for a better prediction in the future. This does include for instance using the recorded google EU spreadsheet which has rich data already as well as information that 75% of all 3 orders have not been from reservation holders, as well as market opportunities in EU and China larger than in the US as the addressable consumer market is simple larger as well as others....

 

[printf42]

Seems the market is confirming the dip is pure short manipulation, up tick rule kicks in and not much selling going on anymore.

 

[Krugerrand]

I have to admit if I was Elon, I would not have dropped the price. Sure, it means progress towards $35k, but surely right now a higher, more sustainable looking profit margin would be better? Use the extra cash to invest for the companies future. I'd be happy if they waited a month, or even a quarter before making the price reduction.
Why sell cars for less than the market is prepared to pay?

I applaud his continued consistent honesty, integrity and laser focused commitment to mankind by making incremental steps toward affordable EVs for all, $1,000 at a time.

Not his fault there’s a segment of the population who are evil or dumb or both and doing their best to trick **** others.

Elon knows what he’s doing. Have a little faith. Surely he’s proven himself. All this constant questioning of him by people supposedly on his side and in support of him isn’t helpful.

 

[viridi]

Again ... These numbers are pretty good and right in line (in fact slightly above) the consensus expectation here just a couple days ago. the vast majority of us were predicting numbers in a range of 53k to 63k Model 3s. Seemed like the consensus here was anything over 60k would be a "beat". My slightly optimistic prediction two days ago was 59,218.

How on earth is 63,150 somehow a big red flag? It's slightly higher than most people were guessing, virtually guarantees profitability, and sets a new record for the company. I don't see the downside.

The confusing part to me is where did the 64,000 plus analysts’ estimate come from?!!! If that were truly the estimate, then price targets should have been much higher (especially from the hyper bears like Goldman). Something is very fishy here.

 

[Fact Checking]

Fantastic result, congrats Tesla! You did a bit better than I expected, and that's a welcome change.

Market will come to terms with numbers eventually, and figure out they're great.

Indeed, great results!

First, let's look at inventory, the final bastion of the much-mutated 'short thesis':

• Inventory is comparable to Q3, because the reduction in inventory due to delivery optimizations were breathtaking: in-transit vehicles dropped from 11,824 in Q3 to just 2,907 in Q4.
• In particular S+X inventory dropped: in-transit vehicles dropped from 3,776 in Q3 to 1,897 in Q4, which is a delta of 1,879 - and Tesla delivered 27,550 while they produced 25,161, a delta of 2,389 units, so the net unsold inventory went down by about 510 units, which should improve cash flow by about 50 million dollars.
• Model 3 inventory: deliveries reduced inventory by -1,756, while vehicles in transit went from 8,048 to 1,010, a reduction of -7,039 - the net increase in unsold inventory is 5,283 units, about a single day week of production. Cash effect is about a $210m reduction of cash flow.
• The net inventory effects from the S+X and 3 changes should thus be around $150m only. The effect from the Q3 weekend ending cash flow delay alone should offset that. I.e. the 5k in finished goods Model 3 inventory is a nothingburger.

In fact I'm pretty confident to predict that Q4 financials should be even better than Q3 financials:

• The 63.1k Model 3 and 27.5k S+X deliveries are predicting fantastic Q4 financials as well: in excess of 7 billion dollars of revenue, $1.5b operating cash flow, close to a billion dollars free cash flow. 7.5-8.0 billion dollars of revenue and 2 billion dollars operating cash flow is not out of question either.

 

[Cobbler]

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

With 61,394 Model 3s produced in a 13-week quarter, Tesla produced an average of 4,722 Model 3s per week in the December quarter. Yes, Tesla is still not making 5,000 Model 3s per week.

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

 

[Artful Dodger]

Guy on CNBC, Munster I think, called it a 10% ish miss. Indicates production problems remain. Said expectations for some were over 100,000 units. He will be back on throughout the day so more to come. Seemed way optimistic to me but question is how this frames expectation for financials.

CNBC: "Tesla's fourth quarter deliveries 'a big disappointment,' says Gene Munster"

 

[Hock1]

The FactSet analyst estimate is completely opaque and is exactly what the SEC should be investigating with regard to TSLA. This is the type of thing that Wall St gets away with consistently and the regulators turn a blind eye to. I would guess they wait for the numbers to be released and then add a thousand or so to create a "miss".

This farce is so outrageous and patently obvious that even the ineffective, disengaged SEC might have done something about it, if it weren't TSLA.

I'm hoping that at least a few "swing" traders and options jockeys (gamblers) on this board learn a not-too-expensive lesson here. Buy stock and hold for the long term (i.e. 3-5 years and maybe more). Save yourselves a lot of angst and money. JMO.

 

[qunqun]

Tesla Shanghai building permit, finish in 180 days.