TSLA Market Action: 2018 Investor Roundtable

[humbaba]

Tesla guided 50-55k Model 3 and 26-27k Model S+X production for Q3, with sales slightly above production.

Here's the 3 currently known estimates:

• The InsideEVs July and August sales numbers, extrapolated to end of September, put them within the guidance range.
• The Bloomberg tracker puts them beyond guidance.
• The "Troy Spreadsheet", which has a prediction track record of 96% and 98% for Q1 and Q2 estimates puts them in the middle of guidance.

I.e. three independent estimates are predicting Tesla meeting guidance.

SA is probably lying and misleading, as usual, most of the SA authors there are biased against Tesla with no rational basis, and the managers of the SA platform frequently promote anti-Tesla articles, which gives them even more prominence.

If you provide a link I can probably tell which particular lies and omissions this particular SA article relies on.

I hesitate to post an SA link here, but: https://seekingalpha.com/article/42...g-short-targets-might-know?source=marketwatch

In fetching the link I saw that they have added three more SA articles.

I know, I can always just ignore the article feed -- but is there any site that tracks stock price that doesn't push the FUD articles?

 

[MarcusMaximus]

Um, no. It's not pessimism. It's just realism regarding Tesla's timelines. We've gone through this dozens of times here on this thread over the years. The ones who've been here for years will understand more.

And one can be perfectly realistic with Tesla's timelines, and still be an avid Tesla bull.

Right, but you aren't considering Tesla's timelines there. You're taking someone else's timeline and extending that.

 

[humbaba]

I'm a huge Tesla bull. But reality is Elon is terrible at giving guidance and timelines. Completely terrible. He often shares what is theoretically possible as guidance. He really ought to not be on the quarterly conference calls because it's gotten to a point where all the analysts just roll their eyes when Elon talks about guidance. Except maybe Trip Chowdry.

If you think Musk is bad, then getting acquainted with "DAZ Soon" would introduce an entirely new calibration. And I'm not talking about vaporware (e.g., Duke Nuke'em) but a company that does -- eventually -- produce what they say. Mostly. Eventually.

I really think you are over reacting to Elon's guidance times.

 

[wipster]

European deliveries will be much higher priority than standard range car, because they will be long-range with options and good margin.

Tesla will likely push off standard range car (due to low margins) for as long as they can. Makes too much business sense.

Whether it makes better business sense (i.e. increased profits), it makes terrible PR sense. I'm pretty sure you have a significant amount of folks on that reservation list that reserved in order to get the $35K model... regardless of whether it does 0-60 in 3.4 seconds, it's still gonna be the best BEV in it's price range, still gonna be a damn good car, and still gonna have access to the Supercharger network. Plus it probably fits the demographics of the potential buyers better with the $3,750 tax credit.

I doubt seriously that the reason it hasn't been available yet is due to their inability to build it yet... I'm sure they can. They might be able to build one less expensively later, but so what? There will be a LOT of happy campers if the SR m3 becomes available to order as of January 2, 2019. And that has to help Tesla in the short and long-term.

Of course I've taken my drugs now, so who knows...

 

[ZachF]

A solid outlook -- its starting to look to me like they will have no way to avoid going over guidance, but whatever.

What gets me is that I check the price at market watch. Okay, that's my bad, but I'm not sure where else to look and Yahoo finance seems to have just as much FUD.

But... market watch posted a link to seeking alpha where the title is something like "Model 3 is falling short of targets". Um, what?

I realize this might seem a naive question, but WTF? I guess its sales, not production, but [1] puts them at 55,000 with September still to go. Even if the claim is actually about production it seems difficult to spin Tesla having >30,000 M3s held back from the second quarter.

I'm not wasting my time going to Seeking Alpha so maybe someone here can explain this? I mean, I know its lies, but... in the face of reality... d*mn!

1) Monthly Plug-In Sales Scorecard

Looking at those sales numbers, I think we (In the US at least) hit peak ICE sales in 2016. Forever.

Sales of ICE cars will never be higher in the US than they were two years ago... follow me:

Here are US auto sales (in 000s)
2017: 17,234
2016: 17,611
2015: 17,472
2014: 16,519
2013: 15,597
2012: 14,493
2011: 12,777
2010: 11,591
2009: 10,233
2008: 13,235
2007: 16,143

Here are PHEV/EV sales according to above source (000s):
2017: 199
2016: 159
2015: 116
2014: 122
2013: 98
2012: 53

Now, lets subtract the lower number from the upper to get ICE sales
2017: 17,035
2016: 17,452
2015: 17,356
2014: 16,397
2013: 15,499
2012: 14,440

Now sales overall this year are down to flat from last year, meanwhile sales of PHEVs/EVs look like they are going to be above 300k for the year total so, if total auto sales hit ~17,100k, that leaves ICE sales at <16,800k.

Next year I'd bet on total PHEV/EVs sales around 500k , that means to break the ICE car sales record total sales are going to have to jump to above 18,000,000/year, and every year that number will get higher and higher in order to break the ICE record. 2020 will probably be 700k in the US.

The ICE car has hit it's peak already... It's only down from here!

 

[Rarity]

Just to be clear any bond rating is going to consider the debt to equity ratio. The stock price is in the denominator of that ratio.

The stock price is not the denominator in that ratio. Rather, it is the equity portion of the balance sheet.

 

[DaveT]

I really think you are over reacting to Elon's guidance times.

Yes, I do this every time Elon gives unrealistic timelines/guidance, and then people defend Elon's timelines/guidance. And I argue in futility. Then I get exhausted, and give up. Tesla then misses those timelines/guidance, and people blame all sorts of things. Then Elon gives more unrealistic timelines/guidance, and the cycle starts all over again. This has been going on for over 4 years here.

But that said, don't misinterpret what I'm saying as being negative. It's just what it is. You'll get disappointed if you really believe in Elon's timelines/guidance. But most longstanding TSLA investors here have learned to apply a filter of sorts. They know timelines will be sorely missed most of time. But eventually, the products do come out and they are amazing. Sometimes even better than expected.

Also, sometimes Elon's guidance/timelines do come true in time.

Q3 profitability will be one of them.

 

[Thekiwi]

Noumea analyst Romit Shah on Bloomberg tv right now

Calls Tesla “uninvestable”. Has downgraded stock to neutral. “Because tweets”

Then proceeds to say:

“Fundamentals of the company have never been better.”

Then says “the resignation of the CAO was the tipping point for me”

But then says:

“I don’t believe there to be any accounting shenanigans, everything is fine accounting wise”

???

 

[DaveT]

Sorry, you post like you know it as fact when it's just your opinion.

What I have noticed is that it used to say 6-9 months, then 5-8 months, and now 4-7 months.....so we shall see I guess...

It's definitely my opinion that we won't see standard range Model 3 until Q2 next year. My opinion is based on a variety of factors I shared in my earlier posts. One of those factors (although not the only one) is how I interpret the tour article saying standard range coming in the next 8 months. And it appears that you're disagreeing, based on your interpretation that the 4-7 months estimate on Tesla's site is accurate. I guess we'll choose to disagree here, and we'll see when the standard range Model 3 does actually ship.

 

[neroden]

Once people know there are cars available for immediate delivery the temporary overcrowding problem will go away.

This is complete magical thinking, Donn. Care to give *any* backing for this wildly ludicrous statement other than your bare, unsupported, ridiculous assertion?

I've seen the gigantic staging lots which other manufacturers have for transportation logistics. Right now, Tesla simply doesn't have them.

 

[Fact Checking]

You'll get disappointed if you really believe in Elon's timelines/guidance.

Elon's timelines/guidance should always be understood in the following context:

• "If that job was done by clones of Elon Musk, working 24/7, sleeping on a couch, and if absolutely everything went well, then we'd be ready in that time frame. Perhaps."

Elon cannot make any other estimates: he has no real notion about the distance in capability between himself and others, and he certainly doesn't assume or expect failure, because he usually sees the path forward on a first principles basis. The farther out the end of a project is, the worse his estimates are usually.

But it doesn't matter - just multiply all his estimates by at least 2x. What matters is that Elon gets the really difficult aspects of his job right: he knows in which direction to go and he knows whether something is possible with the resources available.

That ability of Elon is really uncanny: it was amazing to see how within 10 short years he effectively threaded the needle with similarly fanatic people at SpaceX and pulled off something that a planetful of literal rocket scientists genuinely found to be somewhere between "impossible", "unfeasible" or "uneconomical": launching and then landing commercial scale liquid fuel orbital boosters able to launch huge geostationary satellites, financed as a side R&D project of a regular launch system. There was very little FUD: it was the absolutely honest, informed opinion of most of them that it's not worth going there.

Similarly, he knew the Model 3 would be a hit and could be made. This is what a CEO needs to be able to do, and screw timelines, that's only something you know after the fact anyway, for any reasonably complex high-tech project. Any manager who says they can keep timelines is either lying or is wasting money.

 

[Fact Checking]

The ICE car has hit it's peak already... It's only down from here!

I believe to make the 'peak ICE' argument we should look at 'cars sold per 1,000,000 U.S. residents', i.e. divide the numbers by the size of population.

Annual population growth of +0.7% is masking the relative contraction of the automotive segment. It might sound small but relative to the growth of the automotive segment it's a pretty significant factor: for example population growth alone generated demand for about 120,000 cars in 2015 - the number of all EV sales in that year ...

 

[⚡️ELECTROMAN⚡️]

Noumea analyst Romit Shah on Bloomberg tv right now

Calls Tesla “uninvestable”. Has downgraded stock to neutral. “Because tweets”

Then proceeds to say:

“Fundamentals of the company have never been better.”

Then says “the resignation of the CAO was the tipping point for me”

But then says:

“I don’t believe there to be any accounting shenanigans, everything is fine accounting wise”

???

That's why I felt comfortable buying some more on today's dip.

 

[Thekiwi]

Making SR available only to first day line waiters in Q1 2019 seems to me to be the right way to go. It would change the narrative of "there's no $35K version available" to "they are only releasing them in limited quantities" which IMO is pretty weak. Whether that's 1%, 5% or 10% is probably debatable. Hard to believe it would be more than 10% and it would reward loyal Tesla fans who are only able to afford the most affordable 3. Win-win

Just a hunch, but It’s possible model 3 demand will look a lot like demand for other popular premium consumer brand sales, in that there will be large demand at the high end, and a lot of demand at the low end, with the least demand for the middle options. Those with plenty of discretionary spend will get the high end models for the best experience, while those with much less disposable income are stretching themselves to buy the cheapest entry level product.

Examples of this would be Product lines from Apple, Dyson & Nike. (The most obvious example is the Apple MacBook Air - a $1000 laptop with a lot of hardware from 5 years ago - is still one of the best selling Apple computers)

I could be completely wrong, but I think Tesla is that sort of brand - those that can afford it get the best available options, while a large amount of people that normally wouldn’t buy a new car, and/or buy one above $25k will stretch themselves to be able to get into a $35k option when it arrives. (The latter actually describes myself, we would never consider buying a new car - but are going to buy the $35k model 3)

 

[MarcusMaximus]

I believe to make the 'peak ICE' argument we should look at 'cars sold per 1,000,000 U.S. residents', i.e. divide the numbers by the size of population.

Annual population growth of +0.7% is masking the relative contraction of the automotive segment. It might sound small but relative to the growth of the automotive segment it's a pretty significant factor: for example population growth alone generated demand for about 120,000 cars in 2015 - the number of all EV sales in that year ...

Well, kinda. But you have to look at the population growth as of ~16 years ago. My daughter was born in 2014 and still doesn't have her own car yet*, 4 years later!

*Not entirely true. She has a Model S for kids.

 

[Fact Checking]

I hesitate to post an SA link here, but: https://seekingalpha.com/article/42...g-short-targets-might-know?source=marketwatch

In fetching the link I saw that they have added three more SA articles.

I know, I can always just ignore the article feed -- but is there any site that tracks stock price that doesn't push the FUD articles?

This SA article is exceedingly easy to debunk:

• The only basis of the article are claims by 'skabooshka'.
• 'skabooshka' is a self-confessed short - a source of bias not disclosed in the SA article.
• 'skabooshka' earned infamy end of June, when he (as we later learned) intentionally lied about Fremont only being able to produce 5,000 cars per week. (Back at the end of Q2 the short thesis was that the paint shop could not possibly paint 7,000 cars in a single week.)
  
• Tesla produced 7,000 in the final week, after which 'skabooshka' posted daily production figures he had available for that week and which he withheld previously, which confirmed the 7,000 figure.

Not a single number, calculation or other source is quoted in the article, other than 'skabooshka'.

Now 'skabooshka' is repeating a similar pattern he used at the end of Q2 as well: claiming that Tesla production is falling short of targets. They are using similar tactics: innuendo, rumors, vague but ominous phrasing, and always combined with the possibility of bankwuptcy - and it's much easier to create doubt dishonestly than to create certainty honestly.

 

[Remus]

Yes, I do this every time Elon gives unrealistic timelines/guidance, and then people defend Elon's timelines/guidance. And I argue in futility. Then I get exhausted, and give up. Tesla then misses those timelines/guidance, and people blame all sorts of things. Then Elon gives more unrealistic timelines/guidance, and the cycle starts all over again. This has been going on for over 4 years here.

But that said, don't misinterpret what I'm saying as being negative. It's just what it is. You'll get disappointed if you really believe in Elon's timelines/guidance. But most longstanding TSLA investors here have learned to apply a filter of sorts. They know timelines will be sorely missed most of time. But eventually, the products do come out and they are amazing. Sometimes even better than expected.

Also, sometimes Elon's guidance/timelines do come true in time.

Q3 profitability will be one of them.

Nicely said, I don't even think Q3 profitability is in the bag. But I have been buying.

 

[wipster]

Elon's timelines/guidance should always be understood in the following context:

• "If that job was done by clones of Elon Musk, working 24/7, sleeping on a couch, and if absolutely everything went well, then we'd be ready in that time frame. Perhaps."

Elon cannot make any other estimates: he has no real notion about the distance in capability between himself and others, and he certainly doesn't assume or expect failure, because he usually sees the path forward on a first principles basis. The farther out the end of a project is, the worse his estimates are usually.

But it doesn't matter - just multiply all his estimates by at least 2x. What matters is that Elon gets the really difficult aspects of his job right: he knows in which direction to go and he knows whether something is possible with the resources available.

That ability of Elon is really uncanny: it was amazing to see how within 10 short years he effectively threaded the needle with similarly fanatic people at SpaceX and pulled off something that a planetful of literal rocket scientists genuinely found to be somewhere between "impossible", "unfeasible" or "uneconomical": launching and then landing commercial scale liquid fuel orbital boosters able to launch huge geostationary satellites, financed as a side R&D project of a regular launch system. There was very little FUD: it was the absolutely honest, informed opinion of most of them that it's not worth going there.

Similarly, he knew the Model 3 would be a hit and could be made. This is what a CEO needs to be able to do, and screw timelines, that's only something you know after the fact anyway, for any reasonably complex high-tech project. Any manager who says he can keep timelines is either lying or is wasting money.

You know full well that Elon stole that idea from young Sheldon Cooper! I saw it on TV a couple weeks ago! He still has the young genius' original theory in a folder in a hidden drawer at his office at SpaceX...

 

[avoigt]

Yes, I do this every time Elon gives unrealistic timelines/guidance, and then people defend Elon's timelines/guidance. And I argue in futility. Then I get exhausted, and give up. Tesla then misses those timelines/guidance, and people blame all sorts of things. Then Elon gives more unrealistic timelines/guidance, and the cycle starts all over again. This has been going on for over 4 years here.

But that said, don't misinterpret what I'm saying as being negative. It's just what it is. You'll get disappointed if you really believe in Elon's timelines/guidance. But most longstanding TSLA investors here have learned to apply a filter of sorts. They know timelines will be sorely missed most of time. But eventually, the products do come out and they are amazing. Sometimes even better than expected.

Also, sometimes Elon's guidance/timelines do come true in time.

Q3 profitability will be one of them.

I lately read a Reddit post from someone who said (not my words) "I am sick an tired to hear that bs that Tesla is always late."

You may want to read this article and listen to Elons 2015 interview in Detroit. Thats just 3 years ago. : Elon Musk's 2015 Tesla Forecasts Compared To Today — The Future Looks Bright | CleanTechnica

 

[ZachF]

I believe to make the 'peak ICE' argument we should look at 'cars sold per 1,000,000 U.S. residents', i.e. divide the numbers by the size of population.

Annual population growth of +0.7% is masking the relative contraction of the automotive segment. It might sound small but relative to the growth of the automotive segment it's a pretty significant factor: for example population growth alone generated demand for about 120,000 cars in 2015 - the number of all EV sales in that year ...

Car sale per capita probably peaked in the 70s.... but you also have to remember the average car then was a piece of junk that would need a miracle to reach 100,000k+ miles.

As far as cars per person, the US basically has one car per every adult of driving age, and that number hasn't moved much in a while.