TSLA Investor Discussions

[ppl]

JP back claiming $3M in working capital and spinning the Times stuff into a web of stockholders trap may have something to do with it

Tesla's Obscenely Expensive Cure For Range Anxiety - Seeking Alpha

I believe there are several issues with his posts
1. People always overspend. His argument that you don't need to buy larger battery is like telling Lexus owners how much cheaper a Chevy is. Personal choice still plays a role. The Chevy will, at least usually,get you to the same point
2. The larger battery pack does perform better
3. Depreciation is not over the guarantee only. The battery is not useless after 8 years. It is just guaranteed for 8 years. Why don't you just depreciate your Lexus over the 3 years since its guarantee runs out in three years
4. He doesn't take into account the lower maintenance costs which are guaranteed by service contract
5. His money estimates are off
6. Oh did I forget to mention his track record already on tesla. Not sterling

 

[Citizen-T]

I know you guys aren't going to like this, but it's true: this move is all about the technicals. Stop looking for a reason in the real world, you're going to give yourselves a headache.

 

[kenliles]

Probably right, but I'm not sure the technicals will be sufficient to drop into $36s This could be a good add time, no?

 

[ckessel]

I know you guys aren't going to like this, but it's true: this move is all about the technicals. Stop looking for a reason in the real world, you're going to give yourselves a headache.

I'm always curious on this though. Why today? The stock has mostly been 38+ for a couple weeks.

 

[aznt1217]

I know you guys aren't going to like this, but it's true: this move is all about the technicals. Stop looking for a reason in the real world, you're going to give yourselves a headache.

True story. It's human nature to try to find a reason that is tangible to us. I came back to post... darnit you were right LOL. I'm holding enough to wait for my short term position to turn into long term.

 

[Citizen-T]

Probably right, but I'm not sure the technicals will be sufficient to drop into $36s This could be a good add time, no?

It's a better time than yesterday. How's that? I'm holding for $36 personally, but that doesn't mean I'm right.

I'm always curious on this though. Why today? The stock has mostly been 38+ for a couple weeks.

There was momentum behind it for the past few weeks. We hit our heads on a ceiling at $40. We need to pull back a little and gather up steam to make another run at 40. Remains to be seen whether we break through it or not. At least that is the conceptual version of a much more detailed mathematical argument.

 

[kenliles]

with markets closed monday- only 2 more shopping days to make adjustments in front of report wednesday after market close;
anybody making adjustments on prediction of what will happen?

 

[ppl]

with markets closed monday- only 2 more shopping days to make adjustments in front of report wednesday after market close;
anybody making adjustments on prediction of what will happen?

I believe what happened is similar to my situation. Sold half my shares with a stop limit that had been in place at 37.00 then bought march calls strike 36. Only cost 6% of proceeds to buy enough calls to buy back all the stock I sold. NowI get to lock in my profit sit back and even wait till march 15 with no risk. Stock down large no loss other 6% I paid if its up I am still in

i believe many others employing similar strategies

 

[kenliles]

I believe what happened is similar to my situation. Sold half my shares with a stop limit that had been in place at 37.00 then bought march calls strike 36. Only cost 6% of proceeds to buy enough calls to buy back all the stock I sold. NowI get to lock in my profit sit back and even wait till march 15 with no risk. Stock down large no loss other 6% I paid if its up I am still in

i believe many others employing similar strategies

thanks ppl. That sounds about right and similar in strategy. I don't carry very many shares but use LEAP calls to stay heavy long through thick n thin. Then short term calls (have some mar $40 s) that will trade on the earnings up or down.

 

[Clprenz]

Just trying to get the ball rolling, has anyone done any estimates for Tesla revenue and loss? I'm expecting around 2,700 model S deliveries in Q4 and around 270 million in Model S revenue. anyone one have a detailed analysis? Love to hear it!

 

[CapitalistOppressor]

Just trying to get the ball rolling, has anyone done any estimates for Tesla revenue and loss? I'm expecting around 2,700 model S deliveries in Q4 and around 270 million in Model S revenue. anyone one have a detailed analysis? Love to hear it!

I think they'll have been lucky to have hit the bottom end of the range for Q4 which was ~2,500 units. ~2,750 for 2012.

I am less concerned with that than I am with the cancellation issue. I've been advocating a low cancellation rate hypothesis, but it easily could be higher than I assumed.

This guy finalized on 12/16 for a 40kWh with standard suspension and has a May/June delivery window -

Finalized our 40kw/std suspension today. May-June delivery estimate. Honestly, they could deliver our car a couple months later and we'd be OK with it.

He doesn't say when he reserved, but there are a lot of reports right now of brand new customers finalizing almost immediately, and he calls himself a prospective customer a week ago.

The early part of his date range would be about the time that Tesla is producing it's 10,000th car, while the at the end of the range they will be somewhere nearer to 14,000. So yet again we are faced with data that potentially indicates a fairly high cancellation rate among the original regular production list.

Of course it's a non issue if the reservation rate gets back up, but if it's true then it means that the current reservation rate is already an indicator of production just a few months out. I much prefer an outlook where Tesla has a nice backlog to tide itself through to the point where Model X production begins, but that hypothesis is based mostly on (hopeful) conjecture, while the high cancellation alternative has a growing number of reports which support it.

Data wins. Always.

So if I had to make a bet right now on the conference call, I'd bet on a low end report on 2012 deliveries that came close to, or just surpassed their minimum goal based on the September guidance. Production rate is excellent, quality problems diminishing, supplier issues being resolved, productivity increasing. ~$265 million in revenue for Q4, higher than anticipated costs with the production ramp up. Losses were ugly, but bleeding stopped by mid December.

Might well have dipped a couple of fingers into the piggy bank raised during the October secondary. Gonna guess they have ~$180 million in cash left. Possible unpleasantness with their auditors. No going concern issues, just general "whoa that was close" stuff.

A high cancellation rate (WAG, 50%+) amongst the 11,000 or so U.S. customers who had reserved before the Q3 results. ~7,000ish new U.S. reservations (going from memory, so don't shoot me for not looking it up) in Q4, with awards and the stores being the big drivers of sales.

Reservation list will be knocked down to a typical 2 month wait by the end of Q1 2013. Production rate will be adjusted to new reservations at that point. New store openings will drive additional sales growth, but Tesla will stick to their 20,000 unit guidance for 2013.

No reason for giddy optimism, no indication of impending doom. Nice, middle of the road, status quo report. Possibility of profitability by Q4 of 2013, dependent on increasing gross margins to desired levels, with store openings being key to maintaining sales momentum. Shorts bet that reservation rate will collapse, while the rest of us bet it stay's steady or goes up as more stores open. Stock settles into a trading range between $30-$40.

If cancellation rate turns out to have been low then I'll consider being giddy again

 

[ppl]

Just trying to get the ball rolling, has anyone done any estimates for Tesla revenue and loss? I'm expecting around 2,700 model S deliveries in Q4 and around 270 million in Model S revenue. anyone one have a detailed analysis? Love to hear it!

Ok my vin 5733. My reserv number 132xx. Do the numbers 250 3rd qtr. suspect 2700 4th qtr 1st week jan factory closed. Calculations over 400 cars a week. Even more interesting 3700 downgrades/cancelled reservation prior to 4th qtr. subtract that from my reservation number then subtract my vin number leaves 3800 missing reservations BUT no builds yet 40 kw, red color, standard suspensions. Anyone with these options have been skipped over. More than explains all the reservations not built out yet. So we know production good. We know low cancellations in reservations. We know about 12000 reservations 4thqtr at least another 4000 so far this qtr (with Europe) despite price increase. We know revenue high with average price of cars they are delivering about 90000 (remember all 85kw about 750 sigs ). The only missing items are guidance and cost. I believe with rapid ramp up costs will be elevated but wii come down. Good luck to longs and fts (fxxx the shorts)

 

[avatar]

Look y'all - We can try to read the tea leaves as much as we like but the bottom line is there isn't that much data for us to predict whats going to happen on Wednesday. So lets just enjoy the ride. Longs stay long. Shorts stay short. This way when the Tsunami shows up the longs can clean up. Happy presidents day everyone!

 

[kenliles]

Look y'all - We can try to read the tea leaves as much as we like but the bottom line is there isn't that much data for us to predict whats going to happen on Wednesday. So lets just enjoy the ride. Longs stay long. Shorts stay short. This way when the Tsunami shows up the longs can clean up. Happy presidents day everyone!

Won't work, but excellent advice avatar.
Everybody relax. Tesla's going to do great for the longs.
ppl , thanks for that , good numbers to consider
(Nice job @TeslaRoadTrip. Incredible)

 

[adiggs]

A thought about revenue flow for Tesla and the reservation backlog; building the 85's so heavily throughout Q4 will be good in the short term (cash flow), but in the Q2 or Q3 timeframe, there is going to be pain associated. Or a bad business situation will develop (or of course, both).

We are seeing pretty high reservation #'s getting delivery timeframes at this point, as long as what they finalized are the 85's. That means the remaining reservation backlog is steadily shifting towards the lower end of the revenue mix which leads to uneven/reduced revenue flow in the future. It also means that the 40/std suspension early reservationists are sitting on the sideline, continuing to wait for their car - some for years - while others new to the party reserved and get their cars in the seeming blink of an eye. That can't be healthy for the business if it goes on for too long.

The solution that I see necessary to manage this well comes in a few parts, and is something I will be listening for when Tesla reports:
1) acknowledge this developing situation (or explain why building the 85's and not the 40's won't lead to a future shift to lower ASP's)
2) explain publicly to the 40 /std susp. reservation holders what is happening (cars not yet crash / EPA certified), so they can't be built. The alternative is to shut down the factory (clearly not a realistic option)
3) the only clear follow through is that when the 40 / stds have their certs in place, let everybody know that the 85's are going on the back burner while the 40's and 60's (and std suspensions) get "caught up"; which could mean a full quarter of significantly lower ASP's
4) Ultimately, the ideal state for Tesla is a single global reservation list, with cars built close to in-order, regardless of the geography or configuration. That will provide a more realistic (and less subject to manipulation) quarter to quarter revenue flow and ASP value that will allow investors to focus on delivered units, and less on what those units are.



If there isn't some sort of clear and conscious catch up period for the people who've been waiting a very long time, that has the potential to start translating into ill-will and an increase in cancellations (they'll take my reservation money, but they won't build my car).

I have no personal skin in this game (X reservation), though I like many am an investor. Handling this ASP and revenue flow issue transparently is going to be important to avoid investing shocks in the company. And now that I think about it, it seems easy to see coming.

 

[aronth5]

Probably doesn't mean anything but I find it interesting that Elon will be on the Jimmy Kimmel show on Thursday just a day after 4th qtr earnings report. A good sign?
It will be interesting to see if he spends more time on the NYT Broder flap, Tesla earnings or SpaceX which has a launch to the ISS next week and expected to have another grasshopper launch shortly.

 

[firstinflite]

A thought about revenue flow for Tesla and the reservation backlog; building the 85's so heavily throughout Q4 will be good in the short term (cash flow), but in the Q2 or Q3 timeframe, there is going to be pain associated. Or a bad business situation will develop (or of course, both).

We are seeing pretty high reservation #'s getting delivery timeframes at this point, as long as what they finalized are the 85's. That means the remaining reservation backlog is steadily shifting towards the lower end of the revenue mix which leads to uneven/reduced revenue flow in the future. It also means that the 40/std suspension early reservationists are sitting on the sideline, continuing to wait for their car - some for years - while others new to the party reserved and get their cars in the seeming blink of an eye. That can't be healthy for the business if it goes on for too long.

The solution that I see necessary to manage this well comes in a few parts, and is something I will be listening for when Tesla reports:
1) acknowledge this developing situation (or explain why building the 85's and not the 40's won't lead to a future shift to lower ASP's)
2) explain publicly to the 40 /std susp. reservation holders what is happening (cars not yet crash / EPA certified), so they can't be built. The alternative is to shut down the factory (clearly not a realistic option)
3) the only clear follow through is that when the 40 / stds have their certs in place, let everybody know that the 85's are going on the back burner while the 40's and 60's (and std suspensions) get "caught up"; which could mean a full quarter of significantly lower ASP's
4) Ultimately, the ideal state for Tesla is a single global reservation list, with cars built close to in-order, regardless of the geography or configuration. That will provide a more realistic (and less subject to manipulation) quarter to quarter revenue flow and ASP value that will allow investors to focus on delivered units, and less on what those units are.



If there isn't some sort of clear and conscious catch up period for the people who've been waiting a very long time, that has the potential to start translating into ill-will and an increase in cancellations (they'll take my reservation money, but they won't build my car).

I have no personal skin in this game (X reservation), though I like many am an investor. Handling this ASP and revenue flow issue transparently is going to be important to avoid investing shocks in the company. And now that I think about it, it seems easy to see coming.

1. at this point it doesnt mean a thing because the 85kwh order will continue to pile up.
2. as the ramp up occurs, it will cost less to make per unit
3. elon stated profits projected at end of 2013.
4. 40 kwh hasn't been epa certified as of yet which means many people haven't finalized their orders and still waiting word.
5. if you've waited this long, there's no reason to wait a little longer, TESLA is doing everything it can.
6. even if you burn through the list of 85s, the average car still cost about $70K after all options are included.

 

[adiggs]

1. at this point it doesnt mean a thing because the 85kwh order will continue to pile up.
2. as the ramp up occurs, it will cost less to make per unit
3. elon stated profits projected at end of 2013.
4. 40 kwh hasn't been epa certified as of yet which means many people haven't finalized their orders and still waiting word.
5. if you've waited this long, there's no reason to wait a little longer, TESLA is doing everything it can.
6. even if you burn through the list of 85s, the average car still cost about $70K after all options are included.

1) I agree that over the long haul, and for long term investors such as myself, it won't make a difference. In the short haul though, the affect on revenue of building 40's primarily can be a shock to investors, especially if they haven't been prepared for it. If an 85 has an ASP 20k higher than a 40 on average, and assuming margins are the same for all the cars Tesla builds, they may find themselves building 5 cars to get the revenue and margin they that they get for building 4 today. That may not sound like much, and it's not a long term or permanent problem. But that kind of lumpiness in revenue streams without any warning to the investors is a way to build distrust in one's accounting practice.

If my post reads as a sky-is-falling, or that somehow Tesla is in danger of going bankrupt, then clearly I've written what I intended to say very poorly. I see short term lumpiness in revenue (and therefore margins) coming Tesla's way. It is inevitable if they do the right thing and focus on the 40's and other options that they haven't been able to build. My only point is that when I listen to the earnings call and read the report, I want to see Tesla talking about the short term lumpiness. (Transparency!)

In the end, the only way I see this being a serious negative for the company is if they don't talk about it, and then have to explain what happened (past tense) in the Q1 or Q2 earnings call. That sort of a conversation that could easily be anticipated lowers investor confidence. Much as I love the company and look forward to driving Model X, it will surely lower my confidence in the company as an investment, if for no other reason that this sort of dynamic in the business is what they need to be explaining before it happens so we're all ready for it when it happens.

 

[firstinflite]

1) I agree that over the long haul, and for long term investors such as myself, it won't make a difference. In the short haul though, the affect on revenue of building 40's primarily can be a shock to investors, especially if they haven't been prepared for it. If an 85 has an ASP 20k higher than a 40 on average, and assuming margins are the same for all the cars Tesla builds, they may find themselves building 5 cars to get the revenue and margin they that they get for building 4 today.

I see where you are coming from but you are thinking purely in terms of 100k vs 70k; however, I believe that you are forgetting one very crucial fact about TESLA. We are an electric car company, the reason why the price of 85KwH is more expensive is because the batteries are larger and more expensive to build, while the 40kwh is half the size and is half as expensive to build. The main cost of the vehicle are in the batteries, everything else is relatively cheap and easy to build. Therefore, the cost to build a 40kwh car is much less than the cost to build an 80kwh car. Regardless, if we meet the projected 20,000 delivery rate then we have a great chance of success with a minimum of $1.6 billion in revenue. 25% gross margins of $1.6 billion is smokin good for a startup.

 

[Norbert]

Don't forget that the battery cells come from Panasonic, not from Tesla itself. So it depends on how the price is calculated. In theory, a 40 kWh battery might only mean that Panasonic makes less money, while for Tesla the difference might be much smaller that one would think.