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

[Wooloomooloo]

I don't think it's that unreasonable. 15k would have been better. But if you consider seasonality (every year), and then tax credit drop off, and m3 cannabilization, I could see 15k. So a little below MY expectations. (I was expecting 60 + 15)

Guidance was "slightly lower" than Q4 2019. A 56% drop isn't "slightly lower" in anyone's book - although personally I agree with you that 15k would have been a better estimate, it just wan't an estimate that was alluded to by anyone at Tesla.

Also, lets be honest here, if anyone posted a week ago they thought S and X sales would drop 50%, they'd have earned 30 down-votes and a "funny" and accused of being a short-troll. No?

 

[EVNow]

Won't they have another 10k outstanding in deliveries at the end of Q2? The slow boat to Europe and China isn't going to change much.

Problem is not just the slow boat - it is figuring out what should be the last boat to China/EU. They have to just make sure there is sufficient time after the last boat lands to finish deliveries. This would also make sure there is no huge delivery push at the end of the quarter and customers get good delivery experience.

 

[EVNow]

Also if anyone posted a week ago they thought S and X sales would drop 50%, they'd have earned 30 down-votes and a "funny" and accused of being a short-troll. No?

No. I posted as such a couple of days back (saying won't be surprised if S&X was between 10k and 15k) didn't get a single down-vote.

 

[Fact Checking]

This makes no sense. AlphaHat said US deliveries were 37% higher than InsideEVs in January. You were using AlphaHat to tell us InsideEVs 12k Jan+Feb number was way too low.

Why would deliveries have suddenly cratered in February? Weather was better, tax credit pull-forward should have been wearing off and Tesla cut prices at the start of the month.

Occam's razor says AlphaHat was just wrong. Along with Bloomberg and Carson, who were even more wrong. Wall Street analysts who reduced guidance during March were the ones we should have listened to.

I don't know, but a couple of factors, some smaller, some larger:

• Weather wasn't better: the polar vortex at the end of January and the beginning of February (Feb 5), which could have had a negative effect not just on ICE sales, but on Tesla sales as well.
• The NASDAQ bottom was end of Q4, which might have created more uncertainty, especially in tech heavy California. January--February was dominated by "recession is imminent!" articles, reaching peak fear at the end of January.
• "Peak economic uncertainty" in the U.S. was during the government shutdown, which lasted from end of December to January 25.

Consumers tend to scare easily and recover slowly, especially if it's an easy to defer purchase like most new car purchases.

But yes, it's entirely possible that the Alpha Hat January numbers were wrong.

 

[Hogfighter]

That’s it, I’m out. I will still hold my retirement TSLA as I can’t touch that for 10 years (at least), and Tesla will be absolutely massive by then. But sold all my stock and calls outside of that.

My reason is that Elon always has to do things the hard way. You close half of your galleries, discontinue the lower priced S/X, and don’t expect a dramatic fall in sales? Why are they not advertising!?

In this world, you have to play ball. It sucks, but that’s how it is. If you don’t advertise, you lose way more $ in lost sales due to negative press. Imagine how many S/X sales have been lost over the years due to negative FUD!

I’ve had my S for 6 years, and people still ask me about all of the nonsense you see daily in mainstream media. Elon would rather fight with Cramer than schmooze Wall Street. I’m just so over it.

 

[Chunky Jr.]

I look at Q1 as the Tesla equivalent to the initial delay when buffering an audio or video file before playback begins. Now it is in steady state so no more buffering delays needed.

 

[KarenRei]

Won't they have another 10k outstanding in deliveries at the end of Q2? The slow boat to Europe and China isn't going to change much.

That would mean producing as many as were sold, since inventory from this quarter carries over. Producing as many as are sold = major cash positive.

The problem is only in the first quarter that you expand the market.

 

[Doggydogworld]

That assumes constant ASP, which I don't think was the case: average S/X prices actually went up, due to the elimination of the 75D and the increase of the base price during much of the quarter.

Maybe. They still had a lot of 75D inventory to sell, though. Look at Norway's daily reports, about half were 75D even in late March.

We also don't know the new 18,650 cell cost base
Nor do we know how the Autopilot and FSD take rates changed:

True, though I think they moved off the old 18650 contract earlier in 2018. Much lower Q1 volume could mean higher pricing. I don't have a feel for 3k vs. 5k Autopilot.

We don't know how much deferred revenue Tesla will recognize - significant milestones were reached.

This has no effect on cash.

There might be efficiency improvements, layoff effects.

True, but severance tends to offset that the first quarter.

You estimate -200m accounts receivables outflow, which is pessimistic I believe:
- end of Q4 accounts receivable was already at elevated levels of $1.2b,
- China owners are required to pre-pay I believe, also many European customers did that I believe,

​

AR was 949m on 12/31, not 1.2b. A higher mix of prepay would help, I don't have a good feel for that.

DSO is typically two weeks using the standard calculation, but Tesla sales ramp massively at the end of the quarter. I model AR as the final week or so of deliveries. It probably should be just the last 4 days or so. We'll see.

In addition to the points you raise, I didn't account for Tesla's 170m ABL availability on 12/31. In theory they could borrow as much as 670m more on the ABL in Q1, not my 520m. That assumes they had enough collateral. They have a lot of inventory in China, which I don't think qualifies.

 

[TheGrimSweeper]

Stock seems to be rebounding.

Damn I should have bought some at 261!

I guess let's wait and see with the SEC news. If its bad news surely it will present another buying opportunity. If it's good news, then I expect the stock to climb.

 

[jhm]

I'm too far behind to catch up and this question has probably been answered 50 times, but wanted to throw my two cents in:

1. S/X are financially critical to Tesla. They produced half of Tesla's automotive gross profit in the blowout Q3/Q4 quarters. Without S/X those quarters show big losses
2. Model 3 gross profit peaked in Q3/Q4. ASPs are declining. Without S/X the next 4-6 quarters would suck badly.
3. S/X do not need an expensive body refresh. The S design is near-timeless. The X .... has a great personality
4. S/X position Tesla as tech leader, 0-60, etc. (Roadster will be a halo car, not a flagship)
5. X alone holds 6-7 people (Y 3rd row is basically useless)

I pretty much agree with this. I think a lot of folks here have been underestimating just how important growing the Model S/X business is to Tesla's financial stability.

When it comes to a refresh, I still believe there is a need to upgrade the batteries. Of course, autonomy tech will be cutting edge, and the bodies are timeless. But as long as there is the PERCEPTION that the battery tech maybe a generation behind that of the Model 3, we've got problem. A colleague of mine bought a Model 3 Performance. He said he could have afforded a Model S, but was concerned that the Model 3 was more advanced. So the perception that the Model 3 may be technologically more advanced than the Model S/X is a real problem that leads to some buyers opting for the lower price vehicle. There are two basic option for fighting this perceptual problem: advertise the Model S/X or upgrade the pack.

I know folks here will give me flack for raising this issue yet again. However, when we are discussing issues of consumer demand, perception is often more important than the reality. For the most part, the technical arguments put up against a battery upgrade have failed to address consumer perception. If you have to wade through detailed engineering material to make your case, you've already lost 99% of consumers out there. The absolute easiest way for Tesla to tell customers that the Model S/X have best battery tech is to swap out the pack for the latest battery tech. The second easiest way is to drop cash into ad campaigns to "educate" buyers to see the 18650 packs as optimized for highest performance. Or Tesla could do nothing and watch demand shrink 50%.

 

[Causalien]

Not only big guys, Robin users are also taking advantage of the bargain price:

Robintrack

Lol. There was a guy yesterday who loaded up the truck with otm calls. $130k of them. Surprised they are still buying.

 

[KarenRei]

I guess let's wait and see with the SEC news.

No saying when that will happen. Which is annoying :Þ

 

[Tslynk67]

That’s it, I’m out. I will still hold my retirement TSLA as I can’t touch that for 10 years (at least), and Tesla will be absolutely massive by then. But sold all my stock and calls outside of that.

My reason is that Elon always has to do things the hard way. You close half of your galleries, discontinue the lower priced S/X, and don’t expect a dramatic fall in sales? Why are they not advertising!?

In this world, you have to play ball. It sucks, but that’s how it is. If you don’t advertise, you lose way more $ in lost sales due to negative press. Imagine how many S/X sales have been lost over the years due to negative FUD!

I’ve had my S for 6 years, and people still ask me about all of the nonsense you see daily in mainstream media. Elon would rather fight with Cramer than schmooze Wall Street. I’m just so over it.

So that comes out at a Hog's Negativity Rating of...?

 

[traxila]

That’s it, I’m out. I will still hold my retirement TSLA as I can’t touch that for 10 years (at least), and Tesla will be absolutely massive by then. But sold all my stock and calls outside of that.

My reason is that Elon always has to do things the hard way. You close half of your galleries, discontinue the lower priced S/X, and don’t expect a dramatic fall in sales? Why are they not advertising!?

In this world, you have to play ball. It sucks, but that’s how it is. If you don’t advertise, you lose way more $ in lost sales due to negative press. Imagine how many S/X sales have been lost over the years due to negative FUD!

I’ve had my S for 6 years, and people still ask me about all of the nonsense you see daily in mainstream media. Elon would rather fight with Cramer than schmooze Wall Street. I’m just so over it.

Makes no sense that you would sell all but hold on to your retirement TSLA because Tesla will be 'absolutely massive' by then. If it is going to be absolutely massive....sounds like you have just been worn down. Do not blame you. All the best.

 

[Fact Checking]

Guidance was "slightly lower" than Q4 2019.

That's false, guidance was slightly lower than Q1'2018 deliveries, which was 21k, not 27k.

It's still a miss, but not as large as you suggest.

 

[azaz]

I know @DaveT has talked about it in the past, but at some point Tesla is gonna need a real communications and advertising team to effectively counter disinformation. they are missing out on too many sales just from misinformation.

 

[Tslynk67]

Lol. There was a guy yesterday who loaded up the truck with otm calls. $130k of them. Surprised they are still buying.

And here am I crying about $185 I paid for a Friday 312.5 call

I learned something though - yesterday that option was up 60% at one point and even taking into account 2x$20 trading fees, I could have pocketed $50 profit = take the money when you can...

 

[Chickenlittle]

So key to tsla survival and thriving, in my opinion, is not tied to S and X thriving. The model3 and soon to come semi are the keys. That is why tesla has not expanded lines for those models. They are not done with those but suspect they won’t be expanded and maybe a line’s robots and space used for semi. As model3 ramps the importance of S and X decreases proportionally not ready to disappear but lower volumes will allow higher margins on those. I loved my S but sold it for the X and recently sold my X because I loved our 3s so much. Of course size of S and X will be needed by some but most of X and S sales were not about that that, just no car as good until model3 came out

As important as the roadster was to tesla in 10 years the S and X may become more of historical importance to tesla like the roadster

 

[Tslynk67]

I know @DaveT has talked about it in the past, but at some point Tesla is gonna need a real communications and advertising team to effectively counter disinformation. they are missing out on too many sales just from misinformation.

Don't agree with any kind of advertising, but PR could improve and communications is their weakest suit by a long way. There's a load of us here that could head-up Tesla communications better than who-ever is doing it right now. Is there anyone, seriously?

As for anti-FUD, well a lot of us are busy on Twitter, which seems to be the main social media conduit for it, but I think there's scope for some more official Tesla pushback to some of the straight mis-truths we read and hear on CNBC, BI and their ilk.

 

[Antares Nebula]

Bulls staying true:

"We haven’t changed our annual estimate 350k - 400k cars - $30 bil rev. We expect Tesla to break all production and delivery record this qtr. the one we’re in right now. Tesla is also upgrading to FSD has the #China plant going and several new products launching in a year."

Ross Gerber on Twitter