TSLA Market Action: 2018 Investor Roundtable

[bdy0627]

Brad Erickson at KeyBank dropped his estimate from 15k to 5k 4 days before the end of Q4, causing TSLA to drop significantly. I wouldn't underestimate their incompetence, or the market's willingness to pay attention to someone who clearly doesn't know what they're doing.

Edit: Even if they were just following Electrek, which I would have assumed all Tesla analysts do, they would have known their Q4 estimates were way off. Apparently not.

This is certainly a possibility. I think if it happens then the dip will happen before rather than after the numbers are known.

 

[Krugerrand]

What if Tesla just reports total number of vehicles delivered and/or produced but doesn’t break it out by vehicle? They did that before. Maybe even they don’t break it out at ER and simply give current production extrapolated rate?

Because they could. Because that would really, really, really be something to get everyone in a dither. Because I think that would be hilarious.

 

[sundaymorning]

I personally expect much more than 7k delivery in Q1.

But in any case, I doubt today offers the best price to sell. TSLA usually swings by $20-30 in 10 trading days most of the time. We've been below $325 since 3/15, I think the chance of remaining below $325 through the delivery report is almost nil. It's too narrow of a range for TSLA to sit in for extended time. I expect the PPS to pop up to $325 or higher sometime in the next week or so, and possibly dip right before the 4/3 weekend. If you want to sell some trading shares, I think there will be a better price point.

The difference this time is that investors “know” it’ll be a big miss. Last few quarters we were still high on “hope”. Which gave us some possibility of a breakout, I really can’t see that this Q. If we re-read the 4th Q/ ER it sounded very negative & pessimistic in terms of hitting the projected goal of 2,500/week. Tesla showed no form of confidence in its ability to project a vertical ramp for this Q and it’s showing weaknesses right now, until the 8K (which essentially was designed to give us more.. wait for it—HOPE).

I believe the expected miss this quarter will hit us just as hard as the last ER for the reason that if we don’t meet production, Tesla’s projections for 5000/ week goal maybe pushed back yet again into 3rd Q. Which means bears will do a lot of talking, manipulating and FUD, which has proven to be quite effective during times of a miss. All this will be driven by shorts who will be pounding their chest against our low moral of experiencing another painful Q.

A big miss for Tesla will be magnified due its cash position, which means a possible capital raise to buy more time (which equals to more talks of Tesla’s inability to turn a profit), higher than expected CAPex, etc. hitting us on the bottom line. With this overall cloud looking over our heads, i can’t see myself gambling against the odds. This Q has high risk written all over it, and with minimal chance of upside I can’t see TSLA getting back to $340 before April. Best thing to do for myself is sit on the sidelines and go with my gut.

Let’s not forget that we dropped from $345 (pre ER) all the way down to below $300 (post ER). That drop could have been more worse had the 8k wasn’t issued. Currently $316 is priced correctly without a miss IMO. The possibility of yet another BUYING opportunity is > FOMO.

 

[mongo]

I believe the expected miss this quarter will hit us just as hard as the last ER for the reason that if we don’t meet production, Tesla’s projections for 2,500/ week goal maybe pushed back yet again into 3rd Q.

Tesla has the piece of machinery that can do 2,500 packs a week on its own being installed in GF1 currently (based on last update). I see no reason why 2,500 would not occur in (early) Q2 if it doesn't in Q1.

Edit: @sundaymorning clarified down thread that they meant 5,000 in Q3.

 

[Waiting4M3]

The difference this time is that investors “know” it’ll be a big miss. Last few quarters we were still high on “hope”. Which gave us some possibility of a breakout, I really can’t see that this Q. If we re-read the 4th Q/ ER it sounded very negative & pessimistic in terms of hitting the projected goal of 2,500/week. Tesla showed no form of confidence in its ability to project a vertical ramp for this Q and it’s showing weaknesses right now, until the 8K (which essentially was designed to give us more.. wait for it—HOPE).

I believe the expected miss this quarter will hit us just as hard as the last ER for the reason that if we don’t meet production, Tesla’s projections for 2,500/ week goal maybe pushed back yet again into 3rd Q. Which means bears will do a lot of talking, manipulating and FUD, which has proven to be quite effective during times of a miss. All this will be driven by shorts who will be pounding their chest against our low moral of experiencing another painful Q.

A big miss for Tesla will be magnified due its cash position, which means a possible capital raise to buy more time (which equals to more talks of Tesla’s inability to turn a profit), higher than expected CAPex, etc. hitting us on the bottom line. With this overall cloud looking over our heads, i can’t see myself gambling against the odds. This Q has high risk written all over it, and with minimal chance of upside I can’t see TSLA getting back to $340 before April. Best thing to do for myself is sit on the sidelines and go with my gut.

Let’s not forget that we dropped from $345 (pre ER) all the way down to below $300 (post ER). That drop could have been more worse had the 8k wasn’t issued. Currently $316 is priced correctly without a miss IMO. The possibility of yet another BUYING opportunity is > FOMO.

I don't know if can get back to $340 before April, seems unlikely, but I think $325 before April is likely. After delivery report, I think if Tesla exits March at 2k/wk steady rate with good progress on Grohmann line, then we can get back to $340 and above in April.

One thing that jumped out at me that I really can't agree with you on, I don't see the 2500/wk being pushed into Q3 even if we miss, that sounds really pessimistic, do you mean the 5k/wk being pushed into Q3?

 

[madodel]

Yep, he’ll just use the money to create a new company or push forward the existing ones. Based on his modus operandi both would probably be highly beneficial for the common good.

The real question is will the bears short TSLA when it hits $3,200? Maybe drop the price to $3180. Would Musk then have to pay back his bonus?

 

[K_Dizzle]

The real question is will the bears short TSLA when it hits $3,200? Maybe drop the price to $3180. Would Musk then have to pay back his bonus?

That would create some solid shareholder value

 

[sundaymorning]

One thing that jumped out at me that I really can't agree with you on, I don't see the 2500/wk being pushed into Q3 even if we miss, that sounds really pessimistic, do you mean the 5k/wk being pushed into Q3?

Yes thanks for pointing that out, 5,000 for Q3 is my guess. Unless another bottleneck arises, then perhaps early Q4. $325 is a possibility, but then it may collapse after numbers are out.

 

[avoigt]

I believe there is some confusion here on this board about the battery pack assembly line and I would like to add to that discussion hoping not to step on anybody feeds.

There are two fundamental manufacturing approached that needs to be kept separated:

1. The semi-automated production they have been installed after realizing that what they attempted before did not work and is now based on humans helping machines to do a decent job. That has been fine tuned to increase efficiency and output over the course of the last months. Based on the written statement after the confusion in the last ER call it ought to be the production to 2500 U/W once in full swing. In parallel to that approach that I tend to call a work around they gave Grohman the priority 1 order to build a fully automated production in Germany.

2. The fully automated line from Grohman tested and confirmed to be working a while ago is able to produce 2500 /week without any human support and was told to be working and shipped in March to be installed. Unless EM did a claim without asking the German Engineers for approval, which may be a negative scenario, we can be certain that this line worked fine in Pruem (HQ) and after shipped and assembled from the same German Engineering team will definitely work as it did in Germany as physics as far as I know are the same in CA and DE. Risks are at the interfaces say material supply and logistics as well as space. All of that is easy to assess prior of shipping and its in the rule book from every engineer ever as basic #1 for Engineers. IOW I have absolutely zero doubt that the line works once implemented. Once its installed and running you have without ramp and without fine tuning a production rate of 2500/units. Without in that context means 1-3 weeks ramp to 100% once implemented depending on not anticipated challenges e.g. humidity, temperature changes, ground material ... you name it.

To make a long story short, the current ramp we see is either the old semi automated line working towards almost 80% capacity or the new fully automated Groman line but only if new Bottlenecks appeared somewhere in the production and hindered them to get to 2500 U/W. A mix of both would result in a much larger output than 2500 u/w that they potentially could store somewhere but I would be surprised if they want that. I am actually not certain if they intend to double the Groman line or keep both but the later sounds more likely to me in the short term.

What I am trying to say is that once the Groman line is implemented we should see as a step increase the full capacity and the 2500 U/W. Still we can have a smaller output of cars.

To assume given the slow ramp we have seen in Q1 that it will continue like that would mean that the Groman line does not work at all, will not be implemented or other severe bottlenecks appeared that they cannot get rid of in the weeks and months to come.

 

[30seconds]

The ramp is happening. In the last 3 months the Model 3 went from their lowest volume production to their highest. We may even be at the point where the weekly Model 3 production is greater than S + X combined.

Stock prices are forward looking. So the question becomes how fast can they ramp to 3,000, 4,000, 5,000?

 

[EinSV]

I believe there is some confusion here on this board about the battery pack assembly line and I would like to add to that discussion hoping not to step on anybody feeds. <snip>

2. The fully automated line from Grohman tested and confirmed to be working a while ago is able to produce 2500 /week without any human support and was told to be working and shipped in March to be installed. <snip> IOW I have absolutely zero doubt that the line works once implemented. Once its installed and running you have without ramp and without fine tuning a production rate of 2500/units. Without in that context means 1-3 weeks ramp to 100% once implemented depending on not anticipated challenges e.g. humidity, temperature changes, ground material ... you name it.

To make a long story short, the current ramp we see is either the old semi automated line working towards almost 80% capacity or the new fully automated Groman line but only if new Bottlenecks appeared somewhere in the production and hindered them to get to 2500 U/W. A mix of both would result in a much larger output than 2500 u/w that they potentially could store somewhere but I would be surprised if they want that. I am actually not certain if they intend to double the Groman line or keep both but the later sounds more likely to me in the short term.

What I am trying to say is that once the Groman line is implemented we should see as a step increase the full capacity and the 2500 U/W. Still we can have a smaller output of cars.

To assume given the slow ramp we have seen in Q1 that it will continue like that would mean that the Groman line does not work at all, will not be implemented or other severe bottlenecks appeared that they cannot get rid of in the weeks and months to come.

You could be right, but there is language in the 8-K that could be read otherwise. I'll quote it all for context and highlight the relevant portion which explicitly says that the Grohmann equipment will have a "ramp" in Q2. So that could mean that the equipment was tested in Germany and working fine, but they did not go through all of the optimization necessary to ramp it up to its full capacity.

Tesla, Inc. is clarifying the following statement made by Elon Musk, Tesla’s Chief Executive Officer, during Tesla’s fourth quarter and full year 2017 financial results conference call held on February 7, 2018:​

“[We] expect the new automated lines to arrive next month in March. And then it's already working in Germany so that’s going to be disassembled, brought out to the Gigafactory and reassembled and then go into operation at the Gigafactory. It's not a question whether it works or not. It's just a question of disassembly, transport and reassembly. So we expect to alleviate that constraint. With alleviating that constraint, that's what gets us to the roughly 2,000 to 2,500 unit per week production rate.”​

The “2,000 to 2,500” units per week cited in this comment refers solely to the capacity of the additional automated battery module manufacturing equipment that is currently located in Germany, and not to Tesla’s total Model 3 production run rate or to the capacity of the automated battery module equipment that is already present at Gigafactory 1. Tesla’s ability to meet its target of 2,500 per week by end of Q1 2018 is not dependent on the additional equipment that is currently located in Germany, as that equipment is expected to start ramping production during Q2 2018. With respect to battery module production, Tesla’s ability to meet its target of 2,500 per week by end of Q1 2018 is dependent only on the equipment that is already present at Gigafactory 1, as well as the incremental capacity that is currently being added through the semi-automated lines that were also discussed during the conference call.​

Referring to the Grohmann equipment's "capacity" and stating that the equipment was "already working" in Germany does not necessarily mean it has been fully optimized in Germany and is already working at full capacity. And given the "ramp" language, I am cautious about concluding Tesla will basically assemble the line, flip a switch and the line will be running full tilt.

I will freely admit I could be overreading this but especially given the explicit "ramp" language in the 8-K prefer to err on the side of caution.

Either way, the result could be essentially as you describe since the "ramp" of the Grohmann module manufacturing equipment could be straightforward and relatively quick once the equipment is installed.

 

[Waiting4M3]

You could be right, but there is language in the 8-K that could be read otherwise. I'll quote it all for context and highlight the relevant portion which explicitly says that the Grohmann equipment will have a "ramp" in Q2. So that could mean that the equipment was tested in Germany and working fine, but they did not go through all of the optimization necessary to ramp it up to its full capacity.

Tesla, Inc. is clarifying the following statement made by Elon Musk, Tesla’s Chief Executive Officer, during Tesla’s fourth quarter and full year 2017 financial results conference call held on February 7, 2018:​

“[We] expect the new automated lines to arrive next month in March. And then it's already working in Germany so that’s going to be disassembled, brought out to the Gigafactory and reassembled and then go into operation at the Gigafactory. It's not a question whether it works or not. It's just a question of disassembly, transport and reassembly. So we expect to alleviate that constraint. With alleviating that constraint, that's what gets us to the roughly 2,000 to 2,500 unit per week production rate.”​

The “2,000 to 2,500” units per week cited in this comment refers solely to the capacity of the additional automated battery module manufacturing equipment that is currently located in Germany, and not to Tesla’s total Model 3 production run rate or to the capacity of the automated battery module equipment that is already present at Gigafactory 1. Tesla’s ability to meet its target of 2,500 per week by end of Q1 2018 is not dependent on the additional equipment that is currently located in Germany, as that equipment is expected to start ramping production during Q2 2018. With respect to battery module production, Tesla’s ability to meet its target of 2,500 per week by end of Q1 2018 is dependent only on the equipment that is already present at Gigafactory 1, as well as the incremental capacity that is currently being added through the semi-automated lines that were also discussed during the conference call.​

Referring to the Grohmann equipment's "capacity" and stating that the equipment was "already working" in Germany does not necessarily mean it has been fully optimized in Germany and is already working at full capacity. And given the "ramp" language, I am cautious about concluding Tesla will basically assemble the line, flip a switch and the line will be running full tilt.

I will freely admit I could be overreading this but especially given the explicit "ramp" language in the 8-K prefer to err on the side of caution.

Either way, the result could be essentially as you describe since the "ramp" of the Grohmann module manufacturing equipment could be straightforward and relatively quick once the equipment is installed.

I read the part that you highlighted:

as that equipment is expected to start ramping production during Q2 2018

to mean that the Grohmann line will be used to ramp M3 production during Q2.

I won't rule out that the Grohmann line could need some work to bring to full speed, but it's just for producing battery modules, not nearly as complex as a whole car production line, so "ramping" may be too strong of a word, I think a little fine tuning maybe all it will need to hit full speed

 

[EinSV]

I read the part that you highlighted:

as that equipment is expected to start ramping production during Q2 2018

to mean that the Grohmann line will be used to ramp M3 production during Q2. I won't rule out that the Grohmann line could need some tuning, but it's just for producing battery modules, not nearly as complex as a whole car production line, so "ramping" may be too strong of a word, I think a little fine tuning maybe all it will need to hit full speed

Possibly, but that's not the most natural reading IMO and as I said I prefer to err on the side of caution. As a practical matter, it may not matter as battery production may no longer be the bottleneck once the Grohmann equipment is installed even if it is not yet operating at full capacity. Also, as you say "ramp" in the context of a battery production module is very different than ramping an entire car production line and could be pretty quick.

 

[kingjamez]

Does anyone else think that the opening up of sales to Canada means that Tesla believes that the "real" ramp is about to or has happened? I think the only reason to open up Canada now is to push out 200k to July.

-Jim

 

[bdy0627]

The difference this time is that investors “know” it’ll be a big miss. Last few quarters we were still high on “hope”. Which gave us some possibility of a breakout, I really can’t see that this Q. If we re-read the 4th Q/ ER it sounded very negative & pessimistic in terms of hitting the projected goal of 2,500/week. Tesla showed no form of confidence in its ability to project a vertical ramp for this Q and it’s showing weaknesses right now, until the 8K (which essentially was designed to give us more.. wait for it—HOPE).

I believe the expected miss this quarter will hit us just as hard as the last ER for the reason that if we don’t meet production, Tesla’s projections for 5000/ week goal maybe pushed back yet again into 3rd Q. Which means bears will do a lot of talking, manipulating and FUD, which has proven to be quite effective during times of a miss. All this will be driven by shorts who will be pounding their chest against our low moral of experiencing another painful Q.

A big miss for Tesla will be magnified due its cash position, which means a possible capital raise to buy more time (which equals to more talks of Tesla’s inability to turn a profit), higher than expected CAPex, etc. hitting us on the bottom line. With this overall cloud looking over our heads, i can’t see myself gambling against the odds. This Q has high risk written all over it, and with minimal chance of upside I can’t see TSLA getting back to $340 before April. Best thing to do for myself is sit on the sidelines and go with my gut.

Let’s not forget that we dropped from $345 (pre ER) all the way down to below $300 (post ER). That drop could have been more worse had the 8k wasn’t issued. Currently $316 is priced correctly without a miss IMO. The possibility of yet another BUYING opportunity is > FOMO.

According to the 8K, the semi-automated line has the potential for up to 2,500 per week. Let's say it's actually 1,500. If they stockpiled 1,500 battery modules during the recent production shutdown, they could potentially run Fremont at 2,500/week the last week of March and correctly confirm that they have exited the quarter with production at 2,500/week. In reality, production would then drop for at least a few weeks, and then increase with the Grohmann line.

Does anyone think they didn't stockpile a lot of battery modules during the shutdown? As long as they did then why wouldn't they orchestrate the end of the month so that they can get 1 week at 2,500?

 

[Waiting4M3]

Does anyone else think that the opening up of sales to Canada means that Tesla believes that the "real" ramp is about to or has happened? I think the only reason to open up Canada now is to push out 200k to July.

-Jim

what do you mean the real ramp, the one from 2500 to 5k/wk?

 

[sundaymorning]

reported analyst expectations remain 13.5-14k. Remember right before the end of last quarter some analysts started dropping their estimates closer to where they should have been, causing TSLA to drop. I don't see why this won't happen again now, since their estimates are again way too high. Any day we could get a report that so-and-so is dropping their estimate from 15,000 to 7,500 and down we go.

Let’s see if they repeat this scheme. Might be worth noting for next Q as well.

 

[AZRI11]

According to the 8K, the semi-automated line has the potential for up to 2,500 per week. Let's say it's actually 1,500. If they stockpiled 1,500 battery modules during the recent production shutdown, they could potentially run Fremont at 2,500/week the last week of March and correctly confirm that they have exited the quarter with production at 2,500/week. In reality, production would then drop for at least a few weeks, and then increase with the Grohmann line.

Does anyone think they didn't stockpile a lot of battery modules during the shutdown? As long as they did then why wouldn't they orchestrate the end of the month so that they can get 1 week at 2,500?

My sentiments exactly. This seems obvious to me. Only an act of god can keep production below 2500 next week.

 

[Reciprocity]

You could be right, but there is language in the 8-K that could be read otherwise. I'll quote it all for context and highlight the relevant portion which explicitly says that the Grohmann equipment will have a "ramp" in Q2. So that could mean that the equipment was tested in Germany and working fine, but they did not go through all of the optimization necessary to ramp it up to its full capacity.

Tesla, Inc. is clarifying the following statement made by Elon Musk, Tesla’s Chief Executive Officer, during Tesla’s fourth quarter and full year 2017 financial results conference call held on February 7, 2018:​

“[We] expect the new automated lines to arrive next month in March. And then it's already working in Germany so that’s going to be disassembled, brought out to the Gigafactory and reassembled and then go into operation at the Gigafactory. It's not a question whether it works or not. It's just a question of disassembly, transport and reassembly. So we expect to alleviate that constraint. With alleviating that constraint, that's what gets us to the roughly 2,000 to 2,500 unit per week production rate.”​

The “2,000 to 2,500” units per week cited in this comment refers solely to the capacity of the additional automated battery module manufacturing equipment that is currently located in Germany, and not to Tesla’s total Model 3 production run rate or to the capacity of the automated battery module equipment that is already present at Gigafactory 1. Tesla’s ability to meet its target of 2,500 per week by end of Q1 2018 is not dependent on the additional equipment that is currently located in Germany, as that equipment is expected to start ramping production during Q2 2018. With respect to battery module production, Tesla’s ability to meet its target of 2,500 per week by end of Q1 2018 is dependent only on the equipment that is already present at Gigafactory 1, as well as the incremental capacity that is currently being added through the semi-automated lines that were also discussed during the conference call.​

Referring to the Grohmann equipment's "capacity" and stating that the equipment was "already working" in Germany does not necessarily mean it has been fully optimized in Germany and is already working at full capacity. And given the "ramp" language, I am cautious about concluding Tesla will basically assemble the line, flip a switch and the line will be running full tilt.

I will freely admit I could be overreading this but especially given the explicit "ramp" language in the 8-K prefer to err on the side of caution.

Either way, the result could be essentially as you describe since the "ramp" of the Grohmann module manufacturing equipment could be straightforward and relatively quick once the equipment is installed.

Your interpretation is exactly the take I got. To me, the new equipment is more about ramping above and beyond 2500/w and that the equipment to do 2500/w was already there at the gigafactory tough not all in place and running at the time of the call though they never exactly said that.

 

[Words of HABIT]

TESLA +1.92%
GM +1.88%
Perhaps those at GM liked Elon's pay package too?
Glad to see a green day.
Cheers all.