TSLA Market Action: 2018 Investor Roundtable

[Reality]

as a bear i must admit that these are much better numbers for the start of july than i expected

 

[bdy0627]

While we may be lamenting the phase-out of the US tax credit, we should not forget that "short range" Model 3 buyers will be eligible for $3750 during the entire first half of 2019. On a $35K car, $3750 is no small rebate, particularly when combined with rebates in some states. In California, where I believe most EV buyers receive a state rebate of $2500, the total subsidy per car will be $6250, thus bringing a base Model 3 down into loaded Camry, Accord, or Prius territory before even accounting for fuel savings. I see the glass as half full.

That said, it's hard to say whether Tesla will actually ship any base, $35K vehicles in 1H 2019 - this will depend on demand for higher-priced variants and the strength of Tesla's desire to ship some base cars for PR purposes. Personally, I think it might be best for PR to at least ship a trickle of $35K - $40K cars during Q4 2018 and 1H 2019, enough to satisfy the very earliest reservation holders who waited in line at Tesla stores.

I don't think there is much question about it at this point, they will be shipping the SR model 3 in Q1 2019 with perhaps a very small token amount in December 2018.

 

[Reality]

I spent the 45 minutes watching that April Hedgefund video on how awesome TSLA is to short. They have many reasons, but perhaps the biggest is that Tesla does not know how to manufacture cars at high volume profitably. Period. That's precisely what Tesla needs to disprove to shake off shorts. It looks like the high volume production has finally arrived given that Elon is indicating they will be out of hell next month with a sustained rate of 5,000/week. Next, they will need to demonstrate that they can do this profitably in a sustained fashion. That's certainly going to take Q3, 4, and Q1 2019. Even at that point, the bears will be expecting Tesla to collapse due to loss of demand from competition and the tax incentive going away. The other point will be that Tesla will then need to rely on primarily their base model 3 for profits, which will be negligible. To counter those arguments will likely require the rest of 2019. I'm really at a loss for where a true short burn would come in, since profits are already likely widely anticipated for the next 3 quarters. I just see lots of volatility.

i agree that this is the foundation of the entire short thesis, there are multiple components to it, but the thesis itself has never changed despite bulls claiming it has

 

[SW2Fiddler]

It's extremely unlikely that an inevitability like that would affect the price on a given day - it would have already been baked into the price long ago. If the government changed the tax law to scrap it, that would affect the price (based on reduced demand for the 1st 200,000 cars) but if the company is serious about selling 500,000 cars by 2020, that means it is banking on 300,000 people not caring about the tax break (and every customer after that)

The alternative narrative is that 400k people only signed up to buy the car thinking they would be the first 200k, beyond which there are no buyers which is (hopefully) not the case.

You're a smart guy. So... that misconceived narrative about the tax break going away immediately starting with car #200,001 is a GREAT example of why "the market" (essentially more Smart Guys) often has so little factual info "baked in" to prices - that said, if you didn't mean for your bolded text to imply my bolded text, I totally misread your post. Which I read as you believe the tax credit just ...stops Cold Tucker after 200K vehicles (Narrator: "It Doesn't").

 

[bdy0627]

as a bear i must admit that these are much better numbers for the start of july than i expected

Even some of us bulls are pleasantly surprised at these numbers. I admit that I thought it would be late August/early September before I expected to see production near 5,000/week sustained. We don't know yet if they can sustain these numbers, but it is starting to look like they may be able to much sooner than many thought.

 

[bdy0627]

It's extremely unlikely that an inevitability like that would affect the price on a given day - it would have already been baked into the price long ago. If the government changed the tax law to scrap it, that would affect the price (based on reduced demand for the 1st 200,000 cars) but if the company is serious about selling 500,000 cars by 2020, that means it is banking on 300,000 people not caring about the tax break (and every customer after that)

The alternative narrative is that 400k people only signed up to buy the car thinking they would be the first 200k, beyond which there are no buyers which is (hopefully) not the case.

Maybe so. With TSLA, it seems virtually impossible to know what is and what isn't baked into the price since there is such a polarizing way to interpret much of the data. I think it's fair to say that TSLA is currently trading on the widely accepted assumption that it will not be able to sustain 5,000/week production of the model 3. Should Tesla actually demonstrate that ability, it will be interesting to see what the market thinks that's worth in terms of the stock price.

 

[abasile]

I don't think there is much question about it at this point, they will be shipping the SR model 3 in Q1 2019 with perhaps a very small token amount in December 2018.

I agree that they'll ship the SR in that timeframe, but even then, Tesla appears likely to prioritize cars with more options. So we may see the $40K SR with premium interior, or the $44K SR with AWD and AutoPilot, before we see the $35K car. Again, though, it may be good to prioritize some $35K cars for "line waiters".

 

[ggr]

Nice runup into the close. Usually this is people getting wind of some good news before it's officially released. My guess is a press release to do with funding the Shanghai Gigafactory. Anyone heard anything?

 

[Nakata]

Bears are going to say it is a manufactured quarter like the only two previously profitable quarters. Tesla artificially delayed delivery of 15k cars in big loss Q2 to make Q3 look better. This argument will sound reasonable.

They will say the same thing after Q4. It will sound less reasonable.

They will say the same thing after Q1 2019. It will begin to sound hollow.

They will say the same thing after Q2 2019. It will sound ludicrous.

I think this is the only thing that matters.
All the other stuff is noise.

Just stay long. Good things come to those who wait!

 

[bdy0627]

Nice runup into the close. Usually this is people getting wind of some good news before it's officially released. My guess is a press release to do with funding the Shanghai Gigafactory. Anyone heard anything?

I think it followed the Nasdaq up near close, albeit in an exaggerated fashion.

 

[Mkorpal]

Design studio officially open to the public. Cash flow initiated.

Edit* as someone who practically can never get this car, it was fun to play around with and dream. Kind of tempting to just do it tough.

 

[sunhelm]

What a true leader. I don't want to sound corny but I get teary eyed every time I read about him talking sincerely about the debt he owes the people at Tesla and the initial buyers. And when those shorts and media try to talk down to a man that's so deeply caring than anyone on the planet, and try to paint him into an evil, manipulative piece of sh*t like Chanos, I am just furious. I truly wish they all burn in hell, lose all their sh*t and sleep on the streets.

Indeed. Read about a National Geographic article about Greed vs. the Common good. It's quite the social experiment but basically it describes a trait similar to what Elon does and calls it altruistic punishment - folks who give up their own resources in order to balance out against his peers that behave selfishly ((e.g., the GM's who have their own private elevators).

 

[Bet TSLA]

No. The bear argument is that they're in such a cash hole that even if they're able to crank out profitable cars, they won't be able to generate enough cash.

At the end of Q1, they were at -2.2B net working capital with 2.35B in planned CapEx. That's a 4.5B current budget shortfall.

They need to sell a lot of Model 3s to fill that budget shortfall. Even at a generous 25k contribution per car, they need to sell 180,000 Model 3s by February 2019 (when 1.2B in debt payments are due).

Mod: @FirebirdAlpha complains about his posts never being seen. Here is a beautiful example of a post that would never have seen the light of day. $1.2B / $25k = 4,800. Just slightly less than the claimed 180,000 above. Just over a week's current steady state production. --ggr.

And that's a 25k contribution per car. How many customers are buying the performance / AWD version? And how many are waiting for the 35k model 3?

Oh, sorry, that's a boring, bone-headed question. Not cool. Sorry.

Hey @ggr: No, it's 48,000. Seriously, an order of magnitude error in a mod correction?

 

[mongo]

Hey @ggr: No, it's 48,000. Seriously, an order of magnitude error in a mod correction?

Yes, there was a typo, But the underlying message/math was correct, 48k << 180k.
Corrected version:

Mod: @FirebirdAlpha complains about his posts never being seen. Here is a beautiful example of a post that would never have seen the light of day. $1.2B / $25k = 48,000. Just slightly less than the claimed 180,000 above. Just over a week's current steady state production. --ggr.

 

[oneday]

Yes, there was a typo, But the underlying message/math was correct, 48k << 180k.
Corrected version:

Mod: @FirebirdAlpha complains about his posts never being seen. Here is a beautiful example of a post that would never have seen the light of day. $1.2B / $25k = 48,000. Just slightly less than the claimed 180,000 above. Just over a week's current steady state production. --ggr.

I think his 180,000 was referring to what he called a $4.5B budget shortfall. But either way his post is nonsense and his claim has been debunked at least a few times before.

 

[Bet TSLA]

Yes, there was a typo, But the underlying message/math was correct, 48k << 180k.
Corrected version:

Mod: @FirebirdAlpha complains about his posts never being seen. Here is a beautiful example of a post that would never have seen the light of day. $1.2B / $25k = 48,000. Just slightly less than the claimed 180,000 above. Just over a week's current steady state production. --ggr.

Thanks for trying to be helpful, but you're just making it more obvious how wrong the correction was. It's ten weeks current steady state production. The correction was ten times wrong, while the original error was less than 4 times wrong in the opposite direction.

 

[winfield100]

It's extremely unlikely that an inevitability like that would affect the price on a given day - it would have already been baked into the price long ago. If the government changed the tax law to scrap it, that would affect the price (based on reduced demand for the 1st 200,000 cars) but if the company is serious about selling 500,000 cars by 2020, that means it is banking on 300,000 people not caring about the tax break (and every customer after that)

The alternative narrative is that 400k people only signed up to buy the car thinking they would be the first 200k, beyond which there are no buyers which is (hopefully) not the case.

there have been whole threads here and elsewhere dealing with the --->PHASE OUT<<<--- of the US federal tax credit over at least the last two years. The --->only<--- people I have ever interacted with who cling to the "car 200,001 and you are out of luck with a tax credit, have little to no understanding about EV tax credits (i have used them prior, it is form 8936 About Form 8936 | Internal Revenue Service ). the pre or post 6/30/2018 (it was originally 4/30/2018 in many discussions prior).
The only thing i can say, since you quote the Budda, is "what is the sound of one hand clapping" as a suggestion

except to edit and add, here is a thread on TMC with 75 posts stated in 2014, and you are alread a member Expiration of $7,500 federal tax credit w/Model 3

 

[Lessmog]

I just wanted to trigger someone. I hope that wasn’t you

Personally, I think this criticism of Wooloo is getting a little overboard. Full disclosure - I asked him to participate on this thread. There is no way to weed through this thread efficiently and get the gist of what has been discussed. In 30 minutes, you really can't even read through much more than a few pages of mostly noise these days. Give him a break on that. He has an in your face style. He doesn't have an agenda against Tesla. He anticipated the stock trading down on the Q2 deliveries news, which I thought could have been helpful to balance some of the extreme enthusiasm going on here after the delivery news leaked, causing an AH rise in the stock.

Sorry for being retarded (=late) but sometimes I pretend to have a "life" beside here
But that bold passage did actually trigger my response. As a self-confessed troll, don't expect much of a response from the bigger goatees.
On the other hand, trusted member bdy ran to the defense so the invisibility button is only hovered over. (Dosh Garn, meant to write something hoovered. Anyway. Suck is life.)

 

[EVMeister]

Suck is life.)

That's unfortunate.

 

[Lessmog]

That's unfortunate.

Yah, tell me about it. No actually, I'm good. A bit low on the dry powder. Trying to make it up on humour. Lip, you see. Upper kind.