TSLA Market Action: 2018 Investor Roundtable

[kbM3]

However, if the demand increases significantly, an increase in production would be justified and would lead to an increase in gross profit.
Also, consider that an overall drop in prices for all the models they sell in China may (actually, will) shift demand toward top-spec, higher margin versions. So, without really doing anything other than adjusting pricing in China, Tesla can sell higher-margin cars and improve its revenue numbers.

Tesla has stated it is not easy to increase S&X production. The manufacturing lines and supply chain are all optimized at 100k/year.

 

[Tslynk67]

Tesla to rally 50% because media negativity is ‘increasingly immaterial’: Baird

The deluge of recent negative media coverage on Tesla is missing the real story, according to one Wall Street firm.

Baird reiterated its outperform rating for Tesla shares, predicting the electric car maker will make significant progress in raising its Model 3 production volumes.

"Negative headlines have increased substantially in the past month and, in our opinion, increasingly immaterial reports have dominated news cycles," analyst Ben Kallo said in a note to clients Wednesday. "We think we have hit a peak in negative coverage/sentiment, and believe shares could appreciate significantly with execution, which should coincide with an improvement in sentiment."

The analyst reaffirmed his $411 price target for Tesla shares, representing 49.5 percent upside to Tuesday's close.

 

[Chocochip]

Tesla has stated it is not easy to increase S&X production. The manufacturing lines and supply chain are all optimized at 100k/year.

I agree, but I believe the commentary from the management in one of the recent conference calls was something to the effect that a marginal increase in production would require the same marginal increase in part orders to all their suppliers, which have in turn optimised their production lines for the current output, so costs overall would increase significantly. My argument is that if Tesla sees a significant and sustained increase in demand, they could conclude that a step increase in production - to, say, 120k/year or even 150k/year - would be justified; this would, of course, only happen once the Model 3 production ramp reaches semi-steady state and they're in the optimisation stage.
I fully accept we may never see this, at least not until a major facelift / interior update.

 

[Hogfighter]

Tesla to rally 50% because media negativity is ‘increasingly immaterial’: Baird

The deluge of recent negative media coverage on Tesla is missing the real story, according to one Wall Street firm.

Baird reiterated its outperform rating for Tesla shares, predicting the electric car maker will make significant progress in raising its Model 3 production volumes.

"Negative headlines have increased substantially in the past month and, in our opinion, increasingly immaterial reports have dominated news cycles," analyst Ben Kallo said in a note to clients Wednesday. "We think we have hit a peak in negative coverage/sentiment, and believe shares could appreciate significantly with execution, which should coincide with an improvement in sentiment."

The analyst reaffirmed his $411 price target for Tesla shares, representing 49.5 percent upside to Tuesday's close.

Ben must be following the Hog Negativity Index!!

 

[aubreymcfato]

Of course it's a software issue. A recurring documented problem with Tesla is that their software QA is total crap and their software dev cycle seems to lack regression testing, among other major process problems. I have called this out before in less saftey-critical areas. Tesla has amazing hardware engineering, but their software engineering is frankly third-rate. Sorry, have to call it the way I see it. Still very long... Other automakers have even worse software engineering.

Could it be that they are a bit self-complacent about this?
Musk has said many times that Tesla is very good at software, comapred to other auto-makers.
Maybe they made the same mistake they did with batteries: they think they are better than everyone else so they don't try as hard as in other departments.

 

[Tslynk67]

Ben must be following the Hog Negativity Index!!

Which self-respecting analyst or investor wouldn't?

 

[TrendTrader007]

While I agree that the price will rebound, a news-based analysis says it will probably not make a big move until Q3 numbers come out and show profit... Or at least until Q2 deliveries are leaked, but more likely Q3.

At this time I’ll take anything over any further price declines

 

[jbcarioca]

As we think of TSLA china prospects in context of market sentiment we should not forget:
Panasonic Factory in Dalian, China Begins Mass Production and Shipments of Automotive Lithium-ion Batteries | Headquarters News | Panasonic Newsroom Global
A handful of analysts are beginning to understand that battery supply is the critical impediment to BEV scale.
Long delivery lags for both Bolt and the Hyundai variants both show the critical limitations fo inadequate sourcing.
Panasonic has built their Chinese factory in Dalian, the traditional favored location among Japanese firms, even call centers, due to the high proportion fo Japanese speakers there, among other things. Since Tesla's own factory is nearly certain to be in Shanghai it is good that cheap and easy ocean shipment from Dalian to Shanghai. Given taht the Panasonic plant is built for prismatic production ti remains to be seen what they'll do for Tesla.
Either way Panasonic is well-positioned to be Tesla's China-source for batteries at the beginning, and Panasonic has publicly said they want to supply Tesla in China.
Unlike almost everyone else other than Chinese makers themselves, Tesla will not have batteries as a China production constraint.

We are very close to the broader market stumbling onto this crucial Tesla advantage. When that happens we'll see upward price pressure. That will be within a few weeks MHO.

EDIT: I totally forgot to mention that there is already Supercharger in Dalian, one coming in Yantai, and a nice drive from Yantai to Shanghai. This is happening!

The triggers will be:
-M3 production hell definitively finished;
-Formal China factory approved;
-Q2 results showing massive improvement, probably not cash flow or GAAP positive, but GM positive on M3.

All the other positive developments from TE and other things will be positive contributors but will pale to those three above.
I believe that enough that I've been steadily buying more TSLA for the last days.

 

[Leo9]

The triggers will be:
-M3 production hell definitively finished;
-Formal China factory approved;
-Q2 results showing massive improvement, probably not cash flow or GAAP positive, but GM positive on M3.

All the other positive developments from TE and other things will be positive contributors but will pale to those three above.
I believe that enough that I've been steadily buying more TSLA for the last days.

Seems unlikely. GM on M3 will still be negative in Q2 according to Tesla:

This is primarily based on our ability to reach Model 3 production volume of 5,000 units per week and to grow Model 3 gross margin from slightly negative in Q1 2018 to close to breakeven in Q2 and then to highly positive in Q3 and Q4.

 

[K_Dizzle]

Seems unlikely. GM on M3 will still be negative in Q2 according to Tesla:

If a 1000 model 3 units per week will be P and the rest a mix of AWD and First product the margins should be through the roof in Q3

 

[jbcarioca]

Seems unlikely. GM on M3 will still be negative in Q2 according to Tesla:

If a 1000 model 3 units per week will be P and the rest a mix of AWD and First product the margins should be through the roof in Q3

I agree with both of you. The great unknown is the model/option mix. Given quoted P deliveries of 12-16 weeks there may well be too few to raise the ASP enough to produce positive GM. The rate of production bottleneck removal and availability of the front motor may well be teh crucial issues. Nobody knows today.

My optimism is based on expectation that AWD and P will not be very major problems. They were not for the 85D and P85D, and the earliest builds were very good, mine built in late Dec 2014 as an example. Why would Model 3 P and D be harder?

 

[sundaymorning]

Tesla to rally 50% because media negativity is ‘increasingly immaterial’: Baird

The deluge of recent negative media coverage on Tesla is missing the real story, according to one Wall Street firm.

Baird reiterated its outperform rating for Tesla shares, predicting the electric car maker will make significant progress in raising its Model 3 production volumes.

"Negative headlines have increased substantially in the past month and, in our opinion, increasingly immaterial reports have dominated news cycles," analyst Ben Kallo said in a note to clients Wednesday. "We think we have hit a peak in negative coverage/sentiment, and believe shares could appreciate significantly with execution, which should coincide with an improvement in sentiment."

The analyst reaffirmed his $411 price target for Tesla shares, representing 49.5 percent upside to Tuesday's close.

I love Baird & Kallo.

 

[Chickenlittle]

Why reduce prices if Model S and X are production limited?

Ok against my better judgement, I will respond. Tesla made commitment not to sell their cars at higher prices in China except for taxes/tariffs and exchange rates. Other car companies were marking up their prices/profit in China because they could. The price decrease reflects a decrease in tariffs not their gross margin

 

[mongo]

If a 1000 model 3 units per week will be P and the rest a mix of AWD and First product the margins should be through the roof in Q3

The 1k/wk limit is for white interior Ps. They can make more in black. But that doesn't help Q2 if they start P /D sales in July (what the discussion was about 2 posts before, I think).

 

[Tslynk67]

Forgive my ignorance, but when they talk about gross margin on M3, is this purely the cost of producing the cars bases on the raw materials, labor, etc., or is this this also including tooling and production setup-up spending?

 

[ggr]

Aren't insiders supposed to file form whatever with the SEC and disclose planned sales for the year in advance and that sort of thing? Unless they planned when to have the short squeeze a year ago, in which case I sure wish I was an insider.

Yes, it's called a 10b5-1 safe harbor. There is no specific time that it has to be set in advance, just that if the executive routinely has access to non-public material information, it has to be in place far enough in advance that they cannot plan things like "sell on May 23". The actual terms of sales can be quite formulaic, too. For example, someone noted that one of the execs normally sells some shares each month but didn't this month (don't remember details, don't have time to look them up), but the trading plan might say "I'll sell 500 shares on the second tuesday each month so long as the price is above $300", or "I'll place a $300 limit sell order" or something like that. The charts could actually support such an idea, we often see quite flat trading around some even numbers.

 

[jbcarioca]

The 1k/wk limit is for white interior Ps. They can make more in black. But that doesn't help Q2 if they start P /D sales in July (what the discussion was about 2 posts before, I think).

There has been a wide variety of speculations here and otherwise regarding delivery volume shifts in Q1, with almost all of them oriented to gaming the US Federal tax credit phaseout. I find it plausible that such a thing could be happening but, if so, Q2 would be very strange and Q3 would be a massive blowout. In the meantime most US deliveries would be stalled. That seems equally strange to me. Frankly, I am fascinated to know what really happens.

Whatever happens I find it exceedingly likely that Q3 will be a phenomenon to behold. Thus, I'm continuing to buy.

 

[luca]

Donald J. Trump‏Verified account @realDonaldTrump 54m54 minutes ago
There will be big news coming soon for our great American Autoworkers. After many decades of losing your jobs to other countries, you have waited long enough!

3,520 replies5,422 retweets21,874 likes

 

[K_Dizzle]

The 1k/wk limit is for white interior Ps. They can make more in black. But that doesn't help Q2 if they start P /D sales in July (what the discussion was about 2 posts before, I think).

Is the white interior exclusive to P? I’m Assuming a AWD with premium interior order white seats. But I could be wrong

 

[Tslynk67]

Is the white interior exclusive to P? I’m Assuming a AWD with premium interior order white seats. But I could be wrong

And I guess there'll be some want a P with black interior...