TSLA Investor Discussions

[Lloyd]

Sorry I don't understand this comment... what's your point?

You posted, and complained, that you would not be able to take your Leaf to a supercharger location. My point is that it is not appropriate, or engineered to take the power available.

 

[NigelM]

No, I think that's the issue Nigel is talking about. We are in the phase that GeorgeB has blogged about 11 days ago, and any changes since then that we might know about, and discussing here, are very temporary. There is no other new information other than anxiety which some people think they need to express over and over.

Correct. From an investor perspective, even in the worst case scenario things look manageable and it's not difficult to model. So with my spreadsheet, and given the info in that last Tesla blog less than 2 weeks ago, and the fact that I haven't heard of a single case where Tesla failed to meet a promised delivery date, I'm starting to get a little bored with all the wimpy anxiety and hand-wringing. I suspect short-sellers are feeding off those type of thoughts themselves and that's why they're shorting.




P.S. can everyone who wants to discuss Leaf's, charging and the like please move over to those threads and sub-forums. Thanks!

 

[EarlyAdopter]

OK, what does Tesla need to do to become cash flow positive:

1. Let's be really pessimistic and say that they need to generate $100m per quarter from Model S only.
2. Average Model S price $75k. So they have to deliver 1,333 cars per quarter, or 450 cars per month. Even if we take out the deposits and assume $70k per car, that's still only 475 cars per month needed for basic cash flow to be +/- zero

Nigel, I don't quite follow the math here. If their burn rate is $100M per quarter, average selling price is $75k, and gross margin is 25% they would need to sell 5333 cars per quarter to break even, not 1333.

average selling price $75,000 * 25% margin * 1333 cars = $25M
average selling price $75,000 * 25% margin * 5333 cars = $100M

And profitable:

1. Assume that 1H2012 losses continue, but at a lower rate and FY2012 comes out at $350m. It's pretty fair to assume that FY2013 costs will be more like 2010 levels and I'd assume that Tesla will need about $250m in margin to break even.
2. Uising their stated and indicated margins, and assuming no powertrain business, at a Model S average price of $75k Tesla will need to deliver about 13,000 cars next year.
3. IMO, with powertrain and development revenues it's quite feasible that Tesla can breakeven with around 8,500 cars next year.

This I can follow. If burn rate drops to $250M/yr ($62.5M/qtr), then to get to $250M in margin it would indeed be 13,000 cars:
average selling price $75,000 * 25% margin * 13,000 cars = $244M

Why different math in the two cases? Revenue in the first, earnings in the second. Was there some distinction between the two you were trying to make that I missed?

 

[joefee]

@Norbert

The ramp issue is "temporary" if we see real progress to at least 3000K very soon (next 2 weeks). I started a poll on this here:

How many Model S’s will be delivered in 2012?

related thread here:

Model S Delivery Update

 

[NigelM]

Why different math in the two cases? Revenue in the first, earnings in the second. Was there some distinction between the two you were trying to make that I missed?

The first is about cash flow, the second about profitability...two different subjects. Tesla could generate cash and carry forward losses for years (see Amazon); but running out of liquidity would present a problem.

 

[Norbert]

The ramp issue is "temporary" if we see real progress to at least 3000K very soon (next 2 weeks).

In the next 2 weeks? The plan given in the last quarterly report Q&A (a "soft" target, though), was about 500 in Q3 and 4,500 in Q4. (They said they are not completely certain that they can reach 5,000 by Dec 31st, but that they will be at a high production level by then).

 

[NigelM]

(They said they are not completely certain that they can reach 5,000 by Dec 31st, but that they will be at a high production level by then).

The market won't remember what was said, it'll remember what was printed:

Production on plan for 2012 goal of 5,000 deliveries

Model S Production on Schedule for 2012 Goals

As our capabilities scale, we plan to continue making customer deliveries on a methodical ramp with a target to deliver 5,000 units this year.

 

[Norbert]

The market won't remember what was said, it'll remember what was printed:

Certainly, which means we need to be prepared for the possibility that the market might get slightly "disappointed". We don't have any information yet that those concerns would have already been resolved.

 

[NigelM]

Certainly, which means we need to be prepared for the possibility that the market might get slightly "disappointed". We don't have any information yet that those concerns would have already been resolved.

Q3 guidance and then results will be the trigger for a significant movement either way. (IMHO)

 

[kenliles]

New Form 4 SEC filing;
Elon bought 5.3M shares @ $31.17

 

[Norbert]

Q3 guidance and then results will be the trigger for a significant movement either way. (IMHO)

Right, depending on where the production will be when they announce Q3 results, they will have more and better information to update the guidance for Q4 and 2012. Although, as the steep part of the ramp up was apparently planned for beginning of Q4, it may still be too early to give certain predictions about quantities.

 

[Norbert]

New Form 4 SEC filing;
Elon bought 5.3M shares @ $31.17

So for more than $150 million? A non-trivial amount.

 

[NigelM]

Right, depending on where the production will be when they announce Q3 results, they will have more and better information to update the guidance for Q4 and 2012. Although, as the steep part of the ramp up was apparently planned for beginning of Q4, it may still be too early to give certain predictions about quantities.

Q3 results will be announced well into October so they'll know what the Q4 production figures will be by then.

 

[NigelM]

New Form 4 SEC filing;
Elon bought 5.3M shares @ $31.17

So for more than $150 million? A non-trivial amount.

It's a 10 year stock option. He didn't buy them....(Yet). http://ir.teslamotors.com/secfiling.cfm?filingid=1494730-12-3

 

[Norbert]

It's a 10 year stock option. He didn't buy them....(Yet). http://ir.teslamotors.com/secfiling.cfm?filingid=1494730-12-3

At least it's an incentive to get the stock price above $31.17.

 

[Norbert]

Q3 results will be announced well into October so they'll know what the Q4 production figures will be by then.

It still leaves the whole of Nov and Dec for additional ramp-up (which Elon said is possible, above the rate of 20k per year).

 

[kenliles]

well yes and no; it's actually options at that price so no money changes hand right now, but it does help establish the market price per share of the stock since it's a large block of options;
term of the option is 10 years-
whoops - I see Nigel beat me to the punch above

 

[NigelM]

....it's actually options at that price so no money changes hand right now, but it does help establish the market price per share of the stock since it's a large block of options..

The options were granted on 8/13 and so they were fixed at the closing price on Monday ($31.17). The market price determines the option price, but the granting of options does nothing to establish the market price regardless of how many options there are.

 

[kenliles]

The options were granted on 8/13 and so they were fixed at the closing price on Monday ($31.17). The market price determines the option price, but the granting of options does nothing to establish the market price regardless of how many options there are.

my experience in public traded 'start up' is different. When the market price is determined largely on confidence of management and future profitability, the willingness of major executives to accept large option blocks for their efforts at current market evaluations add to the confidence that the stock is based on. No one, including myself is saying these options reflect the market price- but they most definitely help establish the market share price when that share price is based largely on future potential and the management ability and belief to get it there.

 

[joefee]

The options were granted on 8/13 and so they were fixed at the closing price on Monday ($31.17). The market price determines the option price, but the granting of options does nothing to establish the market price regardless of how many options there are.

+1
I can't tell you how many options I had working for many tech companies that never made the option grant price ("under water options"). This grant is nice PR but does not change the short term fundamentals. What has been an increasing worry for me is why insiders are still net sellers of their options at this point (see data below for last 6 months). Also alarming is why do key executives like George B [only 200 shares] & Deepak [980 shares] have so few shares. I get the auto sell to comply with insider trading rules, portfolio diversification, etc. but I can't understand why they would not retain a significant number of TSLA shares with the growth path the company is on.

Am I missing something here ??? I hope this data is incomplete (like it is for Elon). Tell me it isn't so that I have more shares then the bottom 4 insiders !!!

Top Insiders Fidelity.com (does not include Elon’s 33% stake held in trusts)

Name Position Total Holdings Last Transaction Type Last Transaction Date
GRACIAS, ANTONIO J. Director 88,762.00 Sell 05/14/12
STRAUBEL, JEFFREY B. CTO 79,634.00 Automatic Sell 03/26/12
BUSS, BRAD W. Director 11,764.00 Buy 07/02/10
MUSK, KIMBAL Director 3,992.00 Automatic Sell 02/02/12
EHRENPREIS, IRA M Director 3,446.00 Acquisition (Non Open Market) 12/09/11
AHUJA, DEEPAK CFO 980.00 Option Execute 07/16/12
PASSIN, GILBERT Vice President 329.00 Option Execute 07/16/12
BLANKENSHIP, GEORGE VP 200.00 --
WHITAKER, E General Counsel 0.00 --

Predictive Insiders

Name Position Buyer / Seller Avg 6-Month Return Total Holdings Last Transaction Date
GRACIAS, ANTONIO J. Director Seller +22.67% 33,333.00 05/14/12

TSLA Insider Transactions | Tesla Motors, Inc. Stock - Yahoo! Finance

Tesla Motors, Inc. (TSLA) -NasdaqGS
29.19 0.23(0.78%) 11:51AM EDT 8/15/2012- Nasdaq Real Time Price

Get Insider Transactions for:
Net Share Purchase Activity
Insider Purchases - Last 6 Months
Shares # Trans

Purchases 0

Sales 1,186,290 29

Net Shares Purchased
(Sold) (1,186,290) 29

Total Insider Shares Held 47.22M
% Net Shares Purchased (Sold) (2.5%)
Net Institutional Purchases - Prior Qtr to Latest Qtr
Net Shares Purchased (Sold) 757,501
% Change in Institutional Shares Held 1.2%