TSLA Market Action: 2018 Investor Roundtable

[dc_h]

What do you do when 100% of your portfolio are your core shares? And any new money you can bring is less than mouse nuts? And swapping to leaps is not possible without market time gap, as your broker enforces shares/options settlement date difference, i.e. will not let you sell shares, buy options on the same day?

It's a rhetorical question, just so you consider that your advice doesn't work for some people that are fully invested

I thought about out of money covered calls. Doubtful of a big breakout Wednesday/Thursday and possibly some retrenchment. Blowout sales seem wishful area for surprise would be China shipments already en route. I don’t think 60,000- 62,000 3’s sold will cause a huge rally, but 52,000-54,000 could cause pullback. Same on SX sales under 26,000.
I have a couple of calls likely to expire worthless, so hope I’m wrong, but lotto money at this point.

 

[dc_h]

I am also not sure how having about three days’ worth of production in inventory is bad. All indications are this will be an amazing quarter. Hopefully, once #s come out and once we get earnings, the FUD will be overpowered by the facts.

I’m pretty baffled by the numbers. 3000 and all cars not being sold by 12-31 released for sale, so nothing in transit in N America, so inventory should be down from Q3. Could be cars on boats to China and Europe, but Europe doesn’t sound legal yet so only China seems possible. Would love to see 6-10,000 cars in transit to China to beat potential tariff reinstatement. Production numbers also seem murky, with some reports making it sound like cars flying out of Fremont, but Troys reliable methodology showing flat production and flat deliveries. I don’t see how Troys numbers can’t be at least 5% low based on the combination of all the Vicky and other ad hoc production reports, but am I just seeing what I want to see?

 

[Curt Renz]

Amazing how people freak over 3 days of inventory. Why do so many people overreact and lose money? Oh well. I will just buy more TSLA and profit off from them I guess.

A few days ago I was told by a Tesla sales agent in Chicagoland that a high level of Model 3 inventory will be maintained after the year ends. Most orders will be delivered rather quickly from inventory cars in the most commonly requested configurations. It will be only requests for configurations not in inventory that will be made-to-order in Fremont.

This makes sense for high volume cars like the Model 3. The ability to receive almost immediate delivery should incentivize many potential buyers, especially those whose current cars have developed problems. Tesla is becoming a mainstream car company.

 

[EVNow]

Most orders will be delivered rather quickly from inventory cars in the most commonly requested configurations. It will be only requests for configurations not in inventory that they will be made-to-order in Fremont.

This makes sense. Even when I got 3 6 months back - Tesla was manufacturing cars in batches of a single configuration & color - and then assigning VINs. Assigning VIN to delivery took only coupe weeks - but configuring to getting VIN took quite a bit of time. This is needed for efficiency. But a consequence is that there will be inventory cars all the time, including quarter ends.

 

[UnknownSoldier]

Because Fred equates three days of inventory with peak U.S. demand.

Fred is a known idiot at this point but he might be a useful one. Laying traps for the bears is a very useful function.

If you want to avoid giving him clicks, use the genius method this guy figured out and link to the archive version of his trash posts instead of the real ones lol.

Electrek: Tesla has over 3,000 Model 3 vehicles left in inventory in the US : teslamotors

 

[MartinAustin]

What a garbage hit piece from Electrek/9to5/WrightsMedia.

3,000 cars would have been big news a year ago, and a disaster for Tesla two years ago. But after the 2018 ramp up... the sheer size of the production numbers is mind-boggling. If they are producing a thousand cars a day (S+X+3) That is 365,000 cars a year obviously... so unsold inventory at any given time - including at the sample moment of December 30th - could be in the low thousands. There will ALWAYS be unsold inventory moving through the system.

Coupled with this calendar period being the biggest holiday/vacation/"unavailable customer" time of the year, it shouldn't be a surprise that so many cars are left unclaimed at this as actual moment.

The blog post seems to infer that nobody ordered the cars, and/or they will sit around unsold for some period of time. I'm sure those 3,000 cars will all be sold by January 7th (and most by the end of today).

I went to Electrek to day to see that article. They also have a "cars coming in 2019" article which doesn't mention any Tesla car!!! Obviously they have signed up to advertise for other companies and de-emphasize Tesla. We must start grouping Electrek together with GreenCarReports I think. <sigh>

 

[Silent Ludicrosy]

This makes sense. Even when I got 3 6 months back - Tesla was manufacturing cars in batches of a single configuration & color - and then assigning VINs. Assigning VIN to delivery took only coupe weeks - but configuring to getting VIN took quite a bit of time. This is needed for efficiency. But a consequence is that there will be inventory cars all the time, including quarter ends.

Not a bad idea. Wheels can be swapped and autopilot/FSD activated at the service center. I wonder how difficult it would be to defer seat/interior trim installation to the delivery service center. Then inventory would only be constrained by battery/paint combo.

 

[Right_Said_Fred]

We read a lot about the European ordering process for Model 3, but virtually nothing about China. Can they configure already?

 

[RobStark]

Okay, so how many service centers does Tesla have? How many Ford dealerships are there?

Tesla ~250 Service Centers. Tesla will sell ~250k units this year and ~400k next year.

Ford ~7500 Dealerships. Ford sells ~6.6M units per year.

 

[JollyRoger]

With half a weeks production inventory in stock I can not see how this drove down price?

Nice to see so many estimations on q4 report, as always I am pulling numbers out of thin air using little to no data.

My figure is 67460 production, not long to wait to find out!!

I expect to see a significant cost reduction I vehicle and battery production combined with savings in better design and automation of the model 3 in the Feb report.

I expected a 350 close today, but looks like I am off the mark on that one.

 

[kyzhk]

With half a weeks production inventory in stock I can not see how this drove down price?

Nice to see so many estimations on q4 report, as always I am pulling numbers out of thin air using little to no data.

My figure is 67460 production, not long to wait to find out!!

I expect to see a significant cost reduction I vehicle and battery production combined with savings in better design and automation of the model 3 in the Feb report.

I expected a 350 close today, but looks like I am off the mark on that one.

It was a rather poor judgement and wording from electrek. 3300 cars is about half a week of production, which is actually rather good compared to rest of industry. The slightly negative tone of the electrek article is baffling to me, does Fred really not understand this?

Quoting the absolute number (~3000) in the headline without considering also the production rate made it sounded like lots of cars and is used out of context.

BTW do we have similar figure on last day of last quarter?

In any case, Elon seems to be relaxed on twitter. This is the single most bullish indicator.

 

[oneday]

So if Tesla delivers 60,000 model 3’s this quarter that’s an average of 652 cars a day.

I would expect today to be an above average sales day. I would also expect more than half of all cars sold today taken from inventory cars.

Wonder if Fred’s inside source will update Tesla model 3 inventory after tonight, that would be very revealing. Not holding my breath.

 

[AndyH]

What I would whish for Tesla in 2019.

• May the stock price reach new highs and support levels, let the shorters wither away or set us flying to the moon.
  
• May all production goals be met, the European launch go well and the short range battery be soon available.
  
• May the Model Y be revealed to be drop dead gorgeous, the Pick-up at least teased and the first Semi to be built.
  
• May the upcoming chip for self driving be powerful and in it's own little way a revolution.
  
• May the ramp-up of solar tiles and batteries bring higher margins and lots of orders.
  
• May the breaking of ground and construction of Gigafactory 3 be uneventfully swift and that a location for an european factory is set.
  
• Most importantly of all. May everyone at Tesla be happy and safe, all the employees, the board and Elon. May they have had a merry good christmas and get a smashing new year. And a very special whish of well-being goes to the crew of the sister company's upcoming Dragon launches.

Ps. Best whishes to this forum too. I've learned a lot.

 

[Pezpunk]

okay fine, since everyone else is doing it, i will submit my official estimate: 59,218 (for the Model 3).

 

[tsunamiofhurt]

I have seen several alternative methods for determining Q4 production and delivery. @Fact Checking 's educated guess on the previous page looks reasonable. The caveat I would give to that methodology as a ballpark figure is that in Q3 the buyers were lined up a bit deeper, whereas in Q4 there's hussle to match some cars with buyers in the final days of the year, which could yield a number below the 86%. OTOH, the Fremont delivery center is working more efficiently than last end-of-quarter and trucking issues are greatly reduced. It'll be fun to see how it shakes out. I'm not at liberties to mention all the techniques I've seen, but almost all produce production and delivery numbers over 60K for M3, so I think we have a reasonable chance of being at least that high.

The other caveat is that VIN gaps have become more pronounced this quarter. So I wouldn't be surprised to see a decline in the Q4 VIN/delivery percentage.

As far as reactions to P&D reports, you're all welcome to do some random checking by finding the dates of such reports then checking out the daily Tesla charts, which go back to March, 2016. As a general rule, the P&D report has not been nearly as important as the ER for moving the stock price.

One really unusual quarter was 3Q 2016, when both the P&D report of Oct 2 (first day of trading was Oct 3) and the ER (first full day of trading Oct 27) were excellent but the shorts managed to eat away at the gains of these two days extremely quickly.

This has always perplexed me. I think the most extreme example was the decline in the SP we saw after the release of Q3 2018 deliveries, which were huge, and all but assured profitability. Really strange stuff.

OTOH this is the first production and deliveries report that comes after a quarter with real gross margins not being masked/obscured by ongoing investment cycles anymore, all across the business.

So if the P&D report is a robust beat and Wall Street still doesn't recognize the obvious then my already low opinion of the so-called "efficient" markers will drop some more.

Also note that due to the Q4 guidance uncertainty a P&D report miss is a distinct possibility as well, which will be a big disappointment to many bullish investors.

In the "miss" case we should prepare for a January of FUD - which could overshadow the Q1 financials as well, because they'll claim that Tesla demand is shrinking...

The problem is that Wall Street expectations seem to be super high. IIRC consensus was ~65k and even Tamberino at GS is expecting 62-63k.

 

[kyzhk]

The other caveat is that VIN gaps have become more pronounced this quarter. So I wouldn't be surprised to see a decline in the Q4 VIN/delivery percentage.



This has always perplexed me. I think the most extreme example was the decline in the SP we saw after the release of Q3 2018 deliveries, which were huge, and all but assured profitability. Really strange stuff.


The problem is that Wall Street expectations seem to be super high. IIRC consensus was ~65k and even Tamberino at GS is expecting 62-63k.

Lol I guess they had a model that predicts negative profit margin. More car sold more losses!

 

[Zhelko Dimic]

I thought about out of money covered calls. Doubtful of a big breakout Wednesday/Thursday and possibly some retrenchment. Blowout sales seem wishful area for surprise would be China shipments already en route. I don’t think 60,000- 62,000 3’s sold will cause a huge rally, but 52,000-54,000 could cause pullback. Same on SX sales under 26,000.
I have a couple of calls likely to expire worthless, so hope I’m wrong, but lotto money at this point.

I got kicked out of NFLX, FB and AMZN on deep out of money covered calls early 2014, when all of these stocks had break-outs. And that's how I ended up in TSLA, missing on 2-4x that other stocks would have offered me. Now that I feel TSLA is due for break-out, I don't want to repeat mistake.
Don't get me wrong, I had a lot of success with many covered calls expiring worthless, it just eventually, one stumbles; I feel risk/reward is not in our favour on massive growth stocks like TSLA. I will still write covered call when I'm sure that I want to exit certain percentage of position at certain price...

 

[engle]

JollyRoger, I'm very bullish but actually happy we are not closing at $350 today!

This the only day since I opened my initial position in Fall, 2011 that I'm essentially "shorting" TSLA, since I'm on hold with Fidelity as I write this waiting to convert several hundred shares in a 401k to a ROTH IRA so any future sales will not be taxed when I retire. I'm "short" today only because today's "daily loss" will not be taxable to me in 2018. I will pay part of the 2018 conversion taxes due from the $7,500 IRS tax credit on the Model 3 Dual Motor I bought this year.

Agree on the cost reductions you predicted. When I toured the factory on 12/18/2018, I was extremely impressed by the Kuka and FANUC robot density on those parts of the Model 3 production line, as well as the speed of robotic arm movement on the lines that manufacture subassemblies. You don't see subassembly manufacturing in the video released yesterday. That's all I can share due to their NDA.

With half a weeks production inventory in stock I can not see how this drove down price?

Nice to see so many estimations on q4 report, as always I am pulling numbers out of thin air using little to no data.

My figure is 67460 production, not long to wait to find out!!

I expect to see a significant cost reduction I vehicle and battery production combined with savings in better design and automation of the model 3 in the Feb report.

I expected a 350 close today, but looks like I am off the mark on that one.

 

[Zhelko Dimic]

Yes, this is an added challenge if fully invested, but, fortunately, it does not mean the approach does not work.

There are times I am fully invested. I make a disciplined use of margin at those times... to buy trading shares and/or sell puts. The use of puts adds cash to my account, so, while increasing my use of my margin buying power, it actually offsets margin debt, and I tend to pay little to no margin interest on my small to non existent margin debt despite making ample use of these irrational dips for trading (which, fwiw, margin interest can be tax deductible).

Keeping this activity of trading shares/selling puts by use of margin to 20% or less of my buying power, I've not had sleepless nights about my investments. Bear in mind, I'd only max that 20% guideline after a 30-40% drop in the share price, as I buy trading shares/sell puts in steps during selloffs (that is, it's more conservative than use of 20% of margin buying power based on recent highs in the stock).

Registered accounts in Canada can't be margined. That's where my real money is.

Anyhow, your strategy is likely to work for many people, provided they can handle higher risk strategies.

 

[anthonyj]

Checked out one of the Paramus NJ storage lots. They did sell about 15 since I checked a few days ago, still have about 40ish left. Lots of dual motor. Store was busy but nothing like Q3. They still had a Model S and 3 in the showroom for sale