TSLA Market Action: 2018 Investor Roundtable

[anticitizen13.7]

No, it could be the suppliers or the creditors or the depositors, and that is the issue - the first one to pull the trigger is the most likely to get his money back.

Without knowing the supply agreement terms, this is all wild speculation and/or FUD.

If you have evidence, please share. Otherwise...

 

[CuriousSunbird]

Without knowing the supply agreement terms, this is all wild speculation and/or FUD.

If you have evidence, please share. Otherwise...

Looks like the bond markets are agreeing with me: The Tesla 2025 Bond Fell 5% Today - Tokyo Picker | Seeking Alpha

 

[Waiting4M3]

Exactly. Every serious business vets their customers. Credit worthiness and credibility on projected orders are an integral part of that decision. At some point a supplier will reconsider if it still makes sense to keep a customer when both suffer blows. And if not, you raise your price, you ask concessions or other guarantees or you simply fire the customer. Elon is certainly no stranger to that concept.

There is no real way for us to decide if any of Tesla's suppliers are at a point where reconsideration is possible, but dismissing it as an impossibility is unwise. I am pretty sure Tesla management is constantly working on this issue with their suppliers.

I agree that we can't really know how Tesla's suppliers view Tesla's long term viability, or how quickly their views may change over time.

I think going back to our earlier discussion, the point is about who has the leverage in negotiation, if the supplier still wants to do business with Tesla, but want to negotiate a better term, like cash up front. IMO this is likely a fruitless pursuit, consider this:

1. Tesla has $50B market cap
2. Tesla has production unit # growing at 50-100%
3. Tesla has demonstrated will and ability to replace a bad supplier, even if it means delaying production ramp, see MX FWD
4. Tesla has demonstrated will and ability to bring in-house parts even if it means delays, see M3 battery module line, and MX seats IIRC
5. Tesla has demonstrated will and ability to 2nd source, even around their most trusted supplier if the supplier can't deliver, see SA TE project using Samsung cells

#2 is a huge carrot, and #3-5 are big sticks, enabled by #1. If a supplier truly doubts Tesla's long term prospect they can certainly walk away, but if they want to remain in business with Tesla, but want to tear up a contract and get better payment terms, at this point of M3 ramp? good luck with that

 

[Esme Es Mejor]

You keep running these logic loops. The whole reason Tesla is going to fold is the suppliers demanding immediate payments. These suppliers are going to demand payments because they think Tesla is going to fold.

That’s the power of wishful thinking.

 

[madodel]

You keep running these logic loops. The whole reason Tesla is going to fold is the suppliers demanding immediate payments. These suppliers are going to demand payments because they think Tesla is going to fold.

He keeps selling and no one here is buying. ;-)

 

[Waiting4M3]

Looks like the bond markets are agreeing with me: The Tesla 2025 Bond Fell 5% Today - Tokyo Picker | Seeking Alpha

Way to cherry pick the trade that happened in Berlin, 3am before the news came out today.

 

[Mkorpal]

One thing is for sure, there is a very strong correlation between stock price movement and my use of the ignore feature.

 

[mongo]

$2.4B owed to supplier, at 20-25% margin, means $500-$600M gross profit. Damn, I was hoping that # is even higher

600-800 million, I think
High end 3.2 billion @ 25% GM = 800 million profit 3.2 * 75% = 2.4 Billion.
Low end 3.0 Billion @ 20% GM = 600 million profit 3.0 * 80% = 2.4 Billion

Plus all the labor/ plant overhead bumps up the profit column proportionately.

 

[anticitizen13.7]

Looks like the bond markets are agreeing with me: The Tesla 2025 Bond Fell 5% Today - Tokyo Picker | Seeking Alpha

You do not understand the difference between correlation and causation.

 

[sweter]

Something about all this 300/day," lets show em what we can do crap.." makes me a little concerned. Why is it grinding on me for some reason? It makes me wonder why the bottleneck is some extra workers tossed into the mix. The line is supposed to be mostly automated until the last part of the process? I guess it could be encouraging that the expensive robots are working so well that they have to wait for people to finish the vehicles. But then I thought, that would be crazy. Why have a bottleneck be the human parts of the production process, especially when you have half a million orders to fulfill and could get a half a million more if you fulfilled the first batch. A better reason would be that some of the automated parts of the process are not working at all and require good old fashioned elbow grease.

On one hand, 300+ per day is great and would be very close to what their goal was. But requiring extra bodies from X and S line is not good because that means Apr 2, everyone goes back to their normal job and we are back at 200+/day. The haters will be back to hating and 5k will be as far out of reach as it was 12 weeks ago when they did 700 over 3 days with very little improvement over the quarter.

I guess Canada makes more sense now, as its going to be pretty easy to stay under 200,000 for Q2. It would have been very difficult with 2000 to 3000 to 4000/w. But my guess is that on the earnings call they will move back the 5k date to Q3. I hate to stay, but the improvements a bit underwhelming. At least they will be able to extend the Tax credits by an additional quarter.

One thing this does though is show that they will not be going bankrupt anytime soon. They have the ability to crank out 2500/w in a push throughout the entire quarter, that is a lot of cars and it should help them keep their heads above water. Capex in general should be dropping at the same time that cash is flowing in from Model 3. The net effect should be more stability and enough to get them to 5k/w.

These are exactly my thoughts. I didn't like that email at all.

Which means that the initial market reaction might be positive and trigger a climb. Good moment to sell as after that we will be back to climb/dip momentum.

 

[Tslynk67]

Return of the Power Hour?

 

[bdy0627]

Looks like we are going to have quite the battle for $265 here.

 

[UnknownSoldier]

The Battle for $265 is pretty interesting on a generally macro upwards day.

I don't really understand the Fibonacci thing people were talking about, can someone link me to a good article about that?

 

[bdy0627]

It is odd how a couple of points could be that important. If we end at $263 after being down to $248 earlier, is it really THAT different than ending at $265? Kinda crazy.

 

[Richgoogol]

It is odd how a couple of points could be that important. If we end at $263 after being down to $248 earlier, is it really THAT different than ending at $265? Kinda crazy.

I doubt it'll matter that much when the production rate report comes out. Traders will reassess everything and make bets accordingly. If there's no news whatsoever, it would matter more.

 

[bdy0627]

Looks like it's actually the whole market dropping there.

 

[jhm]

The more likely scenario is that suppliers get nervous that Tesla can't pay the debt coming due and decide to ask for their cash first, just in case.

Yes, I said that suppliers could withhold product until paid, if they wanted to. But to do so would compromise their long-term relationship as a supplier to Tesla. Moreover, suppliers have had ample time to study Tesla's financials, and there is nothing new here to make supplier reconsider credit risk. Presumably the suppliers are all grown-ups and want to in a mutually beneficial relationship with Tesla. So the more likely scenario is that suppliers simply wait for Tesla to ramp up production.

For example, Panasonic is easily Tesla's most important supplier. Do you think it is likely that Panasonic would compromise this relationship because the Model 3 ramp is about 6 months behind? Do you think that Panasonic has been unaware of Tesla's financial position over the last 5 years? Tesla has proven to be a huge growth engine for Panasonic. It's absurd to think they might get nervous and screw the whole thing up.

 

[SteveG3]

meh, I think we still have a nice pop, a good bit beyond $265, going into the close

 

[bdy0627]

I doubt it'll matter that much when the production rate report comes out. Traders will reassess everything and make bets accordingly. If there's no news whatsoever, it would matter more.

Assuming the report indicates what Fields said in the email, with what appears to be a herculean effort for a temporary boost to 300+ per day, what do you think the market does with that? This seems an awful lot like the elon email that was leaked prior to the Q3 ER that was a temporary beat but sold by the market. Language is very similar too. My best guess is more volatility Monday with the market unsure what to do with the numbers after such a huge drop and a little bit of recovery. It doesn't suggest to me a clear buy the news, particularly since the number is almost news now after that email. I wouldn't think we would sell off since production is close, though the temporary nature of the effort will probably be a negative for the market. These market reactions seem impossible to predict anyway.

 

[Reciprocity]

I disagree, can you explain what Doug means by "ramping from 300 into the end of the week" if the borrowed people are only there on Friday? If they need manual work to reach 300/day, then to go from 1500/wk (200+/day) to 2100/wk (300/day), it seems that they would need to borrow those people for an entire week, or unless the extra people will crank out 600 cars on Friday? That would be a 4200/wk burst rate. If there are a few manual steps that can leap Tesla from 1500/wk to 4200/wk, you don't think Elon would be on automating those steps like white on rice?

Like I said, I like the idea of more then 300/d.. but the email from Doug Field is clear.. This is a quote from Electrek:

Tesla says Model 3 production at ‘over 200 units per day’, pushing to get to 2,500 units/week, says report

In the email, Field reportedly confirms that Tesla is currently producing “over 200 Model 3 vehicles per day” and urges workers to do everything they can to prove the naysayers wrong and get to over 300 units per day.

This confirmed that they where at over 200 per day, so lets say 1500/w. This is pretty much in line with the estimates I have seen here on this forum. We have all been looking for the signs of 2000+, which 300/day would be at 2100 and greater then 300/day would be outstanding. My concern is that they go back to 1500/w on Monday and they start to grind up to 3k, 4k and eventually 5k. My biggest issue with this that throughout the entire quarter and even with a shut down and exclaiming they had the ability to make packs at 2500/w with equipment already at the gigafactory. This is concerning because it means that they only really went from just under 1000/w to just over 1500/w in a whole quarter. I was really hoping for over 2000/w without any funny games at the end of the quarter and we clearly are getting some end of month gaming of the numbers.

If you think they wont push back 5k, then ok. But from my point of view the ramp is now exponential, its very linear and not even that steep. I wish there were real signs of a post shutdown break through and more vertical graph. Buts its fairly model S/X linear. Which is not terrible, but also its not great for car with 500,000 reservations.