TSLA Market Action: 2018 Investor Roundtable

[Zhelko Dimic]

Right, that was my point.
The italicized bit is from the fortune article.
It is a now often repeated common error.
Fortune mag is just a high profile example.

Does the statement today from Tesla mean
they do not need money this year,
or
they do not need money if they hit 5K model 3/week?

This is how engineers talk. They say correct stuff, you just need to shed assumptions your mind is adding.
And yes, it's the second one. That's perfectly clear to me. No one can guarantee otherwise.
Engineer.

P.S. I get what you're saying. I just don't find their language confusing or obfuscating anymore, which I think it's been, couple years back

 

[Waiting4M3]

I think your ramp is back loaded.

Q2: 66k [2k*12 (S/X) = 24k, 2k entering and 5k leaving for 3 = 3.5 k average * 12 = 42k]
Q3: 84k = (2k + 5k ) * 12
Q4: 84k minimum, dependent on new equipment.

Some (not me personally) would argue that your Q2 M3 production estimate is too high, based on Q1, they expect most of the quarter to stay at 2k/wk, then jump up towards 5k/wk in the last month. But the optimist and devil's advocate in me want to put an argument out there that it could actually be too low. Here is why:

 

[ZachF]

Hilarious that Porsche and Audi cannot even begin to get an electric car out until 2020 and shorts are nit-picking that Tesla's EXPONENTIAL GROWTH is not fast enough.

Nobody wants to buy Tesla products....

sales:
2012: $413m
2013: $1,998m
2014: $3,193m
2015: $4,046m
2016: $7,000m
2017: $11,759m

This year will probably be ~$20b, and $30b is likely for next year.

BMW sales are around $100b/y, so it'll be getting within spitting distance of big boys, amazing what has been accomplished in such a short time.

 

[TradingInvest]

Q1 model S/X deliveries are a bit disappointing. My feelings toward how the market will react to Q1 earnings still remains negative.

Going forward, S/X number will not be as important as it used to be. The number will be stable around 100,000 a year. There are limited number of people who can afford cars in this price range. A few hundred more or less cars each quarter is not a big deal. Also the number of cars in transit is high at end of Q1.

On the other hand, Model 3 and Model Y number will reach one million a year, then several millions a year. That's a big deal from financial point of view. The other big pieces include Tesla network, pickup truck, solar, and energy storage. My estimate shows by 2028 Model S and X will only account for 1% of Tesla's sales and profit.

Past few days the main focus has been bankruptcy. Once people realize that's all FUD, Tesla's huge potential will become the focus again.

Shorts created a great buy point for longs who have cash and have been waiting to get it.

 

[Mrr82]

I think your ramp is back loaded.

Q2: 66k [2k*12 (S/X) = 24k, 2k entering and 5k leaving for 3 = 3.5 k average * 12 = 42k]
Q3: 84k = (2k + 5k ) * 12
Q4: 84k minimum, dependent on new equipment.

Maybe I'm missing something obvious....but why do you use 12 weeks every quarter? There's an average of 13.035 weeks per quarter.

 

[MP3Mike]

Maybe I'm missing something obvious....but why do you use 12 weeks every quarter? There's an average of 13.035 weeks per quarter.

Maybe he is trying to account for the factory shutdowns?

 

[Mrr82]

As long as MS/X are production constrained, I don't see any problem in Q1's 24,728 production total. The low delivery total is just delayed payment for Deepak's Q4'17 financial maneuvers, refilling the inventory/showroom cars. Not great, but not unexpected. I'm sure the SA crowd will receive that negatively. I hope long term investors will not be so short sighted.

Correct. They emptied out pretty much all inventory in Q4....they had a record number of orders in Q1 despite the long order wait. That's a very good sign and probably also means an increase in cash from deposits. They had 4k out for delivery at the end of Q1, so they are setting themselves up for an Epic Q2.

 

[tlo]

Nobody wants to buy Tesla products....

sales:
2012: $413m
2013: $1,998m
2014: $3,193m
2015: $4,046m
2016: $7,000m
2017: $11,759m

This year will probably be ~$20b, and $30b is likely for next year.

BMW sales are around $100b/y, so it'll be getting within spitting distance of big boys, amazing what has been accomplished in such a short time.

This is exactly what traditional valuation methods miss. Exponential growth. Even if growth rate eventually slows, the net YOY increase in sales continue to accelerate.

 

[kbM3]

Shorts created a great buy point for longs who have cash and have been waiting to get it.

Or longs who have margin.

 

[mongo]

Maybe I'm missing something obvious....but why do you use 12 weeks every quarter? There's an average of 13.035 weeks per quarter.

• People think I'm optimistic, so I drop a week.
  
• If I don't need the full 13 weeks to show a huge volume difference, it makes the argument better.
  
• Math is easier
• Hoping the workers to get some time off...
• Room for line updates

 

[corduroy]

Hey everyone, long time lurker who has been soaking up the wisdom around here for several months. I'm a new long TSLA investor who has been in and out a couple times in the $295-$325 range, after getting spooked by all the FUD news. Going to hold my ground and listen to my instincts this time! Just pulled the trigger on a decent amount of shares at $260.

 

[Unpilot]

Hey everyone, long time lurker who has been soaking up the wisdom around here for several months. I'm a new long TSLA investor who has been in and out a couple times in the $295-$325 range, after getting spooked by all the FUD news. Going to hold my ground and listen to my instincts this time! Just pulled the trigger on a decent amount of shares at $260.

Congrats! A decent amount is relative of course..I just bought 10 shares at 252..then 4 more at 260.

A fun way to scratch my Tesla itch.

 

[TradingInvest]

Or longs who have margin.

If you mean "longs who have margin" so they could buy with margin, I am not a fan of margin. My early experience with margin was not pleasant. Math shows using margin is a losing strategy. When I use margin, I am basically making money for the brokerage, while I take huge risk, they take zero risk. I don't like this kind of deal.

I would rather sit on fully paid TSLA shares and slowly get the 20 fold.

 

[MikeC]

Data point: Confirmed my 3 order on 3/17 and just got a VIN this morning: 1174x.

 

[kbM3]

If you mean "longs who have margin" so they could buy with margin, I am not a fan of margin. My early experience with margin was not pleasant. Math shows using margin is a losing strategy. When I use margin, I am basically making money for the brokerage, while I take huge risk, they take zero risk. I don't like this kind of deal.

I would rather sit on fully paid TSLA shares and slowly get the 20 fold.

I don't get what you're saying. Hypothetically if you borrow to buy more shares, and the stock increases over time more than the interest rate, mathematically you win. If Tesla does appreciate at 30% per year, as seems likely, and you are borrowing at 3% interest rate, you effectively come out ahead at the appreciation rate - interest rate = 27%. Plus, you may be able to write off the interest.

I realize if the stock goes down, you would lose by the depreciation rate + interest rate. = 33%.

Am I missing something?

 

[jhm]

I think your ramp is back loaded.

Q2: 66k [2k*12 (S/X) = 24k, 2k entering and 5k leaving for 3 = 3.5 k average * 12 = 42k]
Q3: 84k = (2k + 5k ) * 12
Q4: 84k minimum, dependent on new equipment.

Yeah, this looks reasonable too. My basic point was that Tesla seems to be creating a 40% q/q narrative. I expect this is more to sandbag expectations than to express aspirations. IOW, I think Tesla wants to deliver more on your curve, but is setting lower expectations with the market along the lines of a 40% q/q curve.

The reference to the Ford's Model T is also very important for resetting expectations. Tesla stock gets trashed for not meeting Elon's aspirational timelines. But compared with historical benchmarks, what Tesla is actually delivering is quite phenomenal. Sadly, the stock is not getting much credit for what is actually been accomplished in historical context. In the short run, the stock price is just an expectations game, but in the long run, the cumulative growth is what will be respected.

 

[Jayjs20]

I don't get what you're saying. Hypothetically if you borrow to buy more shares, and the stock increases over time more than the interest rate, mathematically you win. If Tesla does appreciate at 30% per year, as seems likely, and you are borrowing at 3% interest rate, you effectively come out ahead at the appreciation rate - interest rate = 27%. Plus, you may be able to write off the interest.

I realize if the stock goes down, you would lose by the depreciation rate + interest rate. = 33%.

Am I missing something?

He's saying, he's been burnt once going into margins and he doesn't want to be burned again.

Personally, while I watch TT007 lose more money than I'll ever have in 2 lifetimes by going into margins, TSLA dipping this low makes me wish I can buy options on margins.

 

[mongo]

He's saying, he's been burnt once going into margins and he doesn't want to be burned again.

Personally, while I watch TT007 lose more money than I'll ever have in 2 lifetimes by going into margins, TSLA dipping this low makes me wish I can buy options on margins.

Flip side is being margin two weeks ago when the bottom fell out... Always easy to wish you had more stock during a climb...

 

[avoigt]

Looks like we are get the reaction now many of us considered as reasonable for the numbers they released today versus the negative sentiment we have.

We just crossed the 8% plus today.... that may trigger more buyers and create a very uncomfortable feeling with shorts who though their dreams come true.

 

[Bobbyducati]

bought 20 $300 calls and sold em about 3m later for some nice $$$. and up 9$ since i bought shares earlier. its a good day! knock on wood....