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

[MP3Mike]

I'd love to see S and X sales double over the next 2 years. I think if they can carve about $5k off the price, this should do it.

Not likely to happen anytime soon since the S&X aren't current supply/production constrained, it wouldn't matter if they only charged $0.01 they couldn't sell any more of them. Then of course there is the issue that they weren't designed for mass production. Tesla is going too be busy with the Y, Pickup, Semi, and Roadster to worry about increasing production of the S&X.

 

[ZachF]

I think the current highest risk, macro-wise, is China, and that risk is growing. You have the Apple/China stuff, and you also have Chinese tax revenue plummeting:

Bloomberg - Are you a robot?

It also seems like the CCP is increasing their sabre-rattling as of late.

 

[Electroman]

What the hell is Gene Munster talking here, about a 10% miss on deliveries? Is he on drugs or what?

Go to the video and listen to what Munster says:

Tesla shares tumble 10% as company misses Wall Street vehicle delivery estimates, cuts prices

 

[Zaxxon]

What the hell is Gene Munster talking here, about a 10% miss on deliveries? Is he on drugs or what?

Go to the video and listen to what Munster says:

Tesla shares tumble 10% as company misses Wall Street vehicle delivery estimates, cuts prices

It's the 'I'm thinking of a number... Oh, nuts--you missed it!' kind of miss.

 

[dc_h]

It's the 'I'm thinking of a number... Oh, nuts--you missed it!' kind of miss.

It was odd. Gene is usually on target. Never assume malice or global conspiracy where ignorance will fit. I see the shorts with some really crazy conspiracy crap lately about accounting and Tom Randall at BLoomberg getting insider info. Completely bonkers stuff.

Anyhow, great results, blew away my expectations on deliveries and complete opposite reaction I expected stock wise. On the bright side, Tesla has at least a month of orders for Europe and a lot of orders aren’t expected until the new year. China orders are opaque, but also sounds like enough for the rest of the quarter with enough for 2000 USA and Canada cars a week. If they can really get assembly started in China early second half, they can further reduce prices in China and expand their market more and make space for model Y production in Fremont.

Beware the macros though and don’t take it personally if the market takes Tesla down with it a bit. There’s a bevy of black swans out there waiting for a place to land.

 

[printf42]

I'd expect Tesla to license FSD tech for $10k per unit, with no volume discount. OEMs would pay.

$10k would be fair for the Hardware design license alone, customer then buy EAP and FSD directly from in-dash App Store, where 100% proceeding goes to Tesla.

Just frack the last margin out of those OEMs, .

But realistically, better wait and buy their location and workforce penny on the dollar to make the $25k car.

 

[generalenthu]

@AudubonB or someone else with access to factset / Bloomberg can you lookup what the consensus earnings estimate for q4 is?

Estimize consensus is below q3, which is totally crazy.

 

[oneday]

@AudubonB or someone else with access to factset / Bloomberg can you lookup what the consensus earnings estimate for q4 is?

Estimize consensus is below q3, which is totally crazy.

I had never heard of factset prior to 2018. I will admit my market experience is not very extensive but I have been trading stocks since 2009. This company seemed to come out of nowhere and now they’re like the Bible to the media, what gives? I signed up to their newsletter some months ago but searching their site and reading their email newsletter provides none of the information that is accessible to these consensus estimates they put out and are used by the financial media.

Would love some more insight here.

 

[Open Interest]

Jesus, 24 pages already? I'm not catching up this time.

I'm very sick so I may disappear if I go into the hospital. But anyway...

...I thought the delivery report was great. It was on the high side of my expectations.

The price cut was a mild surprise, but to me it indicates improving margins. I'm guessing those improving margins are mostly on elements present in the base model, so that's $2000 of the $3000 they were trying to cut out of the cost of the base model -- the rest will probably come with the new battery pack design.

Wall street is reacting like complete idiots, as if this extremely good delivery report was a negative. I will probably do some cash shufflin' to make sure I can execute my options.

Hang in there @neroden! Feel better soon.

 

[srius]

Accurate Q4 financials estimates based on the P&D report are hard - but robust lower bound estimates are much easier:

• AWD and MR % can be estimated from AWD VIN registrations
• But Troy's survey recorded an ASP reduction from $60k to $57k - that can be used too,
• M3 gross margin: we can conservatively assume the ~20.5% cash margin from Q3. It was very likely better, but this would be a safe number to use.

If such a conservative estimate still results in a good quarter, then the ER is likely to be even better.

Plugging that into the deliveries report is 4th grade math, quite literally.

Note that it's also possible that Q4 deliveries will not be decisively good, but the ER is still positive. In that case the P&D report probably won't have a decisive effect, only the ER will.

My point: Q4'18 is the first ever Tesla production and deliveries report which has a real chance to be highly predictive of the direction of the earnings report. I.e. the stock price might have a stronger reaction than usual (positive or negative).

Great, you all set to unveil the "conservative" Q4 cash flow number
Hmm... wasn't aware that Troy's survey can show ASP, and it only dropped $23k - quite a surprise considering the MR effect and his sheet showed AWD% dropped 23% (46%@q4 vs 69%@q3).

 

[JollyRoger]

Musk tweet, tesla captured 50 percent of total plug in electric car sales, with that translating to 2/3 of the market in terms of revenue!! Is this a hint about q4 earnings...

 

[UnknownSoldier]

Can we calculate an estimate for revenue based on that statement?

 

[NicoV]

The whole thing indicates ongoing production problems for Q4. The hope is that they are at least outputting 5k entering the current quarter, but i'm skeptical they will run january 2019 at 6k a week for the full month. I hope they surprise me.

I wouldn’t characterise that as ‘ongoing production porblems’. They’ve ramped their production beyond the break-even point, and can’ take their time to ramp it even further. Solving the remaining bottlenecks in a economical way, instead of a ‘hail Mary’ way.

 

[NicoV]

But, I’d rather Tesla focus on making the iOS of cars, instead of Android. Although it sounds against the mission, it could still be the right way to the goal, time will tell.

An important factor in the iOS versus Android battle is that Google saved all the the (non-apple)phone vendors by providing them a free OS, and at the same time, a common platform for apps. Think of how the mobile phone world would look like today if Google wouldn’t have built Android. That’s how the car world will look like in 10 years time.

 

[Buckminster]

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.

Steady FC. I haven't completed my 5 stages of grief following the 7% drop yesterday. I am currently bargaining with Gene Munster by fax - not sure he is getting them.. Once I get through depression, I will be ready to go to the moon by FSD, as is my nature. We really do need neroden back soon to steady the ship and give FC a challenge before he gets bored of us fanbois.

 

[SPadival]

Did anyone already give Troy the Nate SilverBronze Award for the worst forecast of 2018?

 

[KarenRei]

there's a lot of conflicting information on what's going on in december 2018. At times they've been high, but they've also outputted far lower from some reports.

Even if they outputted 24k for december, that doesn't exactly sell a great story. Once you subtract out that assumption of 6k a week December high, then it significantly lowers the average for October and November. Basically making those months even less productive on average. That isn't a great story either that they were basically making a little over 4k a week for the first two months of the quarter on average.

The whole thing indicates ongoing production problems for Q4. The hope is that they are at least outputting 5k entering the current quarter, but i'm skeptical they will run january 2019 at 6k a week for the full month. I hope they surprise me.

If they're planning to send 3k M3/wk to Europe (the reported plans), and simultaneously similar numbers to China, and keep selling in the US and Canada, they better have production at high levels at least by the end of Q1. Overseas deliveries start in late February.

Of course, the reports coming out of Fremont is that the paint shop had a big upgrade in early December and by mid December was consistently doing over 1300 cars per day (sometimes nearly hitting 1400), which equates to about ~7500 M3/wk. Of course, that was only for a small fraction of the quarter, so it didn't have a big impact on the Q4 production volumes.

 

[Sean Wagner]

That’s how the car world will look like in 10 years time.

You mean we're all going to be riding around in Xaomi, Huawei, and Oppo Pods powered by CATL batteries fed by Ming Yang wind turbines and Trina solar cells?

Quote/ ... Beijing has spent an estimated $58.8bn subsidising its electric car industry over the past decade, according to the US-based Center for Strategic and International Studies, creating the world’s largest market for electric cars as well as a dominant position in batteries— surpassing Japan and South Korea. Subsidies have also helped propel Chinese solar makers into the ranks of the world’s largest producers, overtaking competitors in the US and Europe. ... /Unquote, Source [yesterday]
Subscribe to read | Financial Times

 

[KarenRei]

304.87 premarket. Looks like we want to test lows again today.

Thanks, Apple. :Þ

 

[Fact Checking]

What the hell is Gene Munster talking here, about a 10% miss on deliveries? Is he on drugs or what?

Go to the video and listen to what Munster says:

Tesla shares tumble 10% as company misses Wall Street vehicle delivery estimates, cuts prices

Note that Gene Munster's firm, Loup Ventures, despite having been bullish on Tesla in 2018, are not TSLA shareholders, according to the latest disclosures, AFAICS.

So maybe he is regretting that and wants a better entry price, now that macros are bearish?

It was odd. Gene is usually on target. Never assume malice or global conspiracy where ignorance will fit. I see the shorts with some really crazy conspiracy crap lately about accounting and Tom Randall at BLoomberg getting insider info. Completely bonkers stuff.

Anyhow, great results, blew away my expectations on deliveries and complete opposite reaction I expected stock wise. On the bright side, Tesla has at least a month of orders for Europe and a lot of orders aren’t expected until the new year.

Another bright side: the Q4 delivery numbers make S&P 500 inclusion of Tesla 99.99% certain in May - in about 4 months.

I'm sure Munster is aware of that - yet not a single mention of it.

Never assume incompetence where financial self-interest will fit.