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

[EVNow]

Because they did not produce and sell as many cars + demand is weaker and costs higher.

Hmm ... we have P&D numbers and that is not what it says.

 

[thx1139]

Why is Q4 profit less than Q3. IIRC, most were predicting higher profit.

Lower priced mix with MR Model 3

 

[sweter]

If it was by importance then I'd guess he'd have mentioned Powerpack in front of Powerwall: industrial power storage is a potentially a much bigger - and sooner to act market than residential storage.

Also, the Semi is probably more important in terms of future revenue than the Model Y.

But yeah - it's also possible that he just randomly listed these items in rough order of importance and I'm over-analyzing it, but I don't think he'd have mentioned FSD so prominently if he knew it today that it still was quarters away from introduction, right?

Hasn't Elon been saying / thinking that FSD is right around the corner for the last two years? Even if he really believes this (which I think he does), I myself will believe it when I see it. That order of things in the list is probably what's on his mind the most and what he believes is the rough order of releases, but that doesn't mean it's exactly what is gonna happen.

I'm also with @KarenRei - this very much feels like the final push of Q3 where "only super hard work will make us achieve profitability". It was a bluff / motivational game. We know Elon loves to overdramatize ("single digit weeks from bankruptcy") and this is how I read this letter. Q4 ER might still be very good and we may be back to $350.

I'm surprised about mention of Q4 financials in this letter. Isn't there any legal limit of what the company can say about such things before releasing official numbers?

Also, I don't think Elon cares as much about $TSLA share price as much as we do. Especially now that he doesn't need Wall Street. He said many many times that he's not a businessman. His top priority is survival and subsequent success of Tesla the company. Any profit from stock is just a bonus, so he couldn't care less on what day the letter is released. And I love that.

 

[Fact Checking]

I feel you make dangerous assumption that there will be fast recovery before your calls expire. That's quite a risky game, especially when the macro is great unknown as well.

Especially since the macro timeline is the following:

• China trade agreement: March 1 deadline. It would be rather Trumpian approach to play brinkmanship up to the last minute before the 'greatest China deal ever' [closed by a toddler that is]. Plenty of opportunity for macro to be lousy in the Feb 15-28 time frame.
  
• Brexit: March 29 deadline, with PM May exercising brinkmanship.
• U.S. Government shutdown: Republicans are hurting in the polls, but November of next year is far away - maybe they have the stamina to try to change the narrative until end of March?

Note, I can see any of these resolved before Feb 15, and I'd expect at minimum the government shutdown to be ended by then, but it's not a certainty IMO.

• Then there's also the March 1 convertibles - wouldn't market participants want to wait for that chunk of money to be paid back successfully?

 

[AndyH]

To me honestly, with that new information I do not see Tesla over 350$ before June 30th again.

The next 2 quarters get rough.

Echo, echo, echo...

 

[EVNow]

You are thinking one sided. Lay offs can be a huge positive OR negative, depending the company announcing it and the reason for the cut. Here, as you can read in the statement, the reason is very negative.

Reason for layoff is always to reduce costs, which is always positive.

We are not talking about a contracting company here, but one on explosive growth.

 

[sweter]

It's very tempting to play the volatility now, but I'd been 50/50 successful with it in the past. So a note to self: HOLD.

 

[Fact Checking]

Just to clarify- your working hypothesis is that TSLA has FSD ready and waiting?

Yes, to the extent they can assure that via simulation testing, shadow mode testing and limited employer beta testing: i.e. I think they are ready to start rolling out HW3 in all new cars and start doing the staged rollout to closed beta and then a wider range of owners.

I'm basing that partly on this leak about FSD progress, and based on public statements about the progress of the chip and the HW 3.0 board.

 

[SteveG3]

Morgan Stanley has a note out this morning. They say that they expect negative cash flow approaching $1 billion for 2019.

 

[EVNow]

Lower priced mix with MR Model 3

Yes, that’s what I was thinking- and lower Chinese S&X ?

The negative from the letter is around profits in Q4 and Q1. Not around 7% lay offs, from Wall st perspective.

 

[KarenRei]

Exactly. The further it fails, the harder will take for it to recover (especially if the Q4 call is somewhat disappointing).
I feel you make dangerous assumption that there will be fast recovery before your calls expire. That's quite a risky game, especially when the macro is great unknown as well.

Not necessarily.

1) It's falling on lowered expectations of a good Q4. The actual Q4 ER will negate any of the "expectations game" about what the Q4 ER will entail.

2) Even if that weren't the case, "doom and gloom" news does get old. One piece of "doom and gloom" can spike the stock down for a bit, but it never lasts. You have to sustain negative news to sustain low prices.

3) Even if that weren't the case, the ability to buy options in a "doom and gloom" period, to expire after ER would offset losses from other options (assuming one has a general bullish thesis). A single good option buy can offset many bad option buys.

4) There's many pieces of good Tesla news that could / will be pushing on the SP over the next month. Maybe even the announcement of a date for the MY unveiling. But at the very least, a month worth of rapid GF3 progress, and at least the unloading of the first Model 3s in Europe and a wave of European review articles. Yes, there also could be bad news (another overreported Tesla crash, some lawsuit or another, etc), but on balance, I see far more upward potential.

5) As for macros, I also see more upside potential than downside. Which route Brexit is headed on next (albeit not the specific outcome) should be clear by mid February (probably around the start of February). And Trump is going to increasingly feel the need for an out (which he'll invariably call a win) on either the shutdown or China, if not both, since he's suffering from two simultaneous negatives. Again, more negatives are possible, but on the balance, I see lots of "spike" potential.

 

[Fact Checking]

New Morgan Stanley has a note out this morning. They say that they expect negative cash flow of $1 billion for 2019.

MS is one of the perma-bears, right? No surprise there.

Q4 would falsify that cash flow estimate - if there's even $1m of GAAP profit then cash flow should still be in the $500m-$1b range, and quite easily more than that.

Q4 ER cannot come soon enough - it would bring clarity.

 

[j6Lpi429@3j]

To me honestly, with that new information I do not see Tesla over 350$ before June 30th again.

The next 2 quarters get rough.

WHY?
For someone with the name 'analyst', you don't seem to do any.

This is the most innovative car company on earth, one of the most loved cars by its customers, selling one of the most anticipated products across any category in history. Its disrupting 3 industries at once, it makes the three safest cars ever produced, and its the only foreign company building a car factory in china without a joint venture.
Oh and its profitable.
Oh and it did all of this with effectively ZERO advertising.
So yeah... lets see the analysis that says the company stock price is not going to go up. lets see the analysis as to how the next two quarters will be rough. Do some analysis.

 

[secondstage]

Why is Q4 profit less than Q3. IIRC, most were predicting higher profit.

Because Tesla selled a lot high margin performance model 3. The model 3 average sales price was 60k in Q3 (Q2 54k). In Q4 because of the MR, the price dropped again.

 

[Krugerrand]

I'll give you one reason: Cargo space -- I can't fit a water heater in Model 3, I can in Model S. I would still buy an S in preference to a 3, though not at the premium for a 100D.

Because you and everyone else buys a water heater every week as part of your staples of life.

I just retired my cargo hauler to van heaven. When I buy this week’s water heater, I’ll tie it to the roof of my 3, with my weekly purchase of a new matress underneath of course, or perhaps I’ll try the novel idea of just having them both delivered.

 

[schonelucht]

This raises the possibility that there potentially going to be a "Full self-driving" product introduction between now and March 15 - within less than two months.

How much of these false flag "this might look like FSD is right around the corner" signals do we need to learn our lesson?

 

[Fact Checking]

BTW., macro futures are now beyond yesterday's spike over that China news/rumor. So there might be some macro tailwind today.

 

[SteveG3]

MS is one of the perma-bears, right? No surprise there.

Q4 would falsify that cash flow estimate - if there's even $1m of GAAP profit then cash flow should still be in the $500m-$1b range, and quite easily more than that.

Q4 ER cannot come soon enough - it would bring clarity.

More flip-flopper re what they want to pose as than perma bear, but, they’ve been in present as bearish mode for a year or so.

 

[EVNow]

Brexit: March 29 deadline, with PM May exercising brinkmanship.

That is not correct. May genuinely doesn't have any good options i.e. options that can win majority in the parliament.

 

[Anton W]

How much of these false flag "this might look like FSD is right around the corner" signals do we need to learn our lesson?

Hyper bulls always run to FSD when desperate to maintain their confirmation bias of valuation