Q3 2015 Report & Conference Call

[anon]

feel free to point me in the direction of the one that wasn't new? The other two I've completely disregarded, came off as an attempt to manipulate the stock.

There are three (if you include the copy of the Facebook post) here, plus one was told late December to Mid January:
http://www.teslamotorsclub.com/showthread.php/56368-Signature-delivery-now-mid-late-January
I had remembered incorrectly - only the one from late December to Mid January had history on TMC.

I would be careful about disregarding the others - I have done this a few times before (e.g. Eds here, other people with other stocks elsewhere) and regretted it. I think that something like Twitter is a much more likely outlet for people looking to manipulate the stock, rather than a post on TMC.

- - - Updated - - -

Also, although the first person to post about January had only just joined on that day, the second person joined over a month earlier, although admittedly he had not posted before. Just doesn't look like manipulation to me.

 

[anticitizen13.7]

I would be careful about disregarding the others - I have done this a few times before (e.g. Eds here, other people with other stocks elsewhere) and regretted it. I think that something like Twitter is a much more likely outlet for people looking to manipulate the stock, rather than a post on TMC.

I have been disturbed in recent weeks by the immediate attacks on people who post negative experiences concerning dealings with the company. While I realize that this is yet another trying time for Tesla Motors, the situation is nowhere near dire, and I agree that the reflexive reactions aren't helpful.

One possibility I am considering is that this quarterly report will result in no movement in the stock price at all. The general mood around TSLA seems very poor right now. Sustaining any kind of extreme feeling, whether elation or sorrow, is pretty difficult. Reversion to the mean may be in the cards.

 

[DarrenHD]

I think that's correct.

It will be very interesting to learn what they will mention in the Q3 Shareholder Letter about the 2015 annual guidance of 50,000 - 55,000?

Will they reduce it to a level of below 50,000 or not, that's the main question, I think.

Here is my take....

1)If they reduce the 50K number to below 50K, the stock will tank
2) If they keep the 50K number but admit of Model X ramp behind schedule, stock will tank
3) If they keep the 50K number and say Model X ramp to really start Late Q4 stock will hold steady or decline slightly (eg. nothing new from last quarter's call)
4) If they keep the 50K number and say Model X ramp, no problems, ramping late Q4 as stated in last quarter, stock may rise
5) If they exceed 50K number and admit no problems with Model X ramp and admit healthy Model S demand, stock will rise
6) If they keep the 50K number and say Model S demand solid, Model X demand higher than anticipated, stock will rise

anyway...my guess is on option #2. Probably I'm wrong but oh well

One thing I would LIKE to see, as a shareholder, is a little bit more ENERGY in the conference call. If I recall last conference call was like attending a wake. ENERGY, please. Sound UP-BEAT. Not dead-body.

 

[sub]

There are three (if you include the copy of the Facebook post) here, plus one was told late December to Mid January:
http://www.teslamotorsclub.com/showthread.php/56368-Signature-delivery-now-mid-late-January
I had remembered incorrectly - only the one from late December to Mid January had history on TMC.

I would be careful about disregarding the others - I have done this a few times before (e.g. Eds here, other people with other stocks elsewhere) and regretted it. I think that something like Twitter is a much more likely outlet for people looking to manipulate the stock, rather than a post on TMC.

- - - Updated - - -

Also, although the first person to post about January had only just joined on that day, the second person joined over a month earlier, although admittedly he had not posted before. Just doesn't look like manipulation to me.

So your standard of evidence is less than mine, check. What I have seen posted and by who is not enough for me, that does not mean the information is incorrect however, I'm just not going to make financial decisions based on it.

 

[dandurston]

I don't have a great feeling about this quarterly report. I sold all my shares today and I hope to buy back in for less than $213 after the ER.

I think Tesla is going to drop guidance to 48K units, delaying a break even in cash flow for at least a quarter. I think think there is a lot of good news about the model X in the pipeline for the next year (reviews, truck of the year etc) but I don't see the stock doing much between now and the end of the year.

 

[ssq]

Here is my take....

1)If they reduce the 50K number to below 50K, the stock will tank
2) If they keep the 50K number but admit of Model X ramp behind schedule, stock will tank
3) If they keep the 50K number and say Model X ramp to really start Late Q4 stock will hold steady or decline slightly (eg. nothing new from last quarter's call)
4) If they keep the 50K number and say Model X ramp, no problems, ramping late Q4 as stated in last quarter, stock may rise
5) If they exceed 50K number and admit no problems with Model X ramp and admit healthy Model S demand, stock will rise
6) If they keep the 50K number and say Model S demand solid, Model X demand higher than anticipated, stock will rise

anyway...my guess is on option #2. Probably I'm wrong but oh well

One thing I would LIKE to see, as a shareholder, is a little bit more ENERGY in the conference call. If I recall last conference call was like attending a wake. ENERGY, please. Sound UP-BEAT. Not dead-body.

This => 6) If they keep the 50K number and say Model S demand solid, Model X demand higher than anticipated, stock will rise
+ Model X ramp later in Q4 due to supplier constraint.

 

[SebastianR]

Here is my take....

1)If they reduce the 50K number to below 50K, the stock will tank
2) If they keep the 50K number but admit of Model X ramp behind schedule, stock will tank
3) If they keep the 50K number and say Model X ramp to really start Late Q4 stock will hold steady or decline slightly (eg. nothing new from last quarter's call)
4) If they keep the 50K number and say Model X ramp, no problems, ramping late Q4 as stated in last quarter, stock may rise
5) If they exceed 50K number and admit no problems with Model X ramp and admit healthy Model S demand, stock will rise
6) If they keep the 50K number and say Model S demand solid, Model X demand higher than anticipated, stock will rise

anyway...my guess is on option #2. Probably I'm wrong but oh well

One thing I would LIKE to see, as a shareholder, is a little bit more ENERGY in the conference call. If I recall last conference call was like attending a wake. ENERGY, please. Sound UP-BEAT. Not dead-body.

All of the above but add to it a note on being cash-flow positive: if that's reached (almost reached) I see a positive indication, otherwise I think sentiment will be quite bad. I'm not convinced they achieve that (and - as a long term investor am not too concerned with that right now) - so quite frankly I'm preparing myself for a buying opportunity

 

[anon]

All of the above but add to it a note on being cash-flow positive: if that's reached (almost reached) I see a positive indication, otherwise I think sentiment will be quite bad. I'm not convinced they achieve that (and - as a long term investor am not too concerned with that right now) - so quite frankly I'm preparing myself for a buying opportunity

I fully agree with this. My biggest concern is that Model X delays may mean that even Q1 next year is still not cashflow positive.

 

[anon]

Another thing has just occurrred to me: there has been a lot of discussion about whether or not Tesla can make 50k. However, that's not really the point at the moment; the more relevant question is, if it is now unlikely that they will make 50k, will Elon admit to that at this point? I'm not sure. As he has alreeady reduced guidance once, I feel that he might not want to reduce guidance again at the moment if there is even a remote chance that they might still make it.

 

[uselesslogin]

So forgetting guidance completely what if Tesla is non-gaap profitable? You think that is crazy? They lost $60 million last quarter. The analysts expect similar this quarter and part of the reason the loss isn't widening is Tesla has already guided for $30 million in ZEV credit sales for Q3 vs. $14 million in Q2. But last Q3 they sold $76 million in ZEV credits.
Here is the recent pattern:
Q3 2014 $76 million
Q4 2014 $66 million
Q1 2015 $51 million
Q2 2015 $14 million

So I would therefore not rule out the possibility of even non-gaap profitability this quarter. Especially since Tesla might have been able to sell more ZEV credits in Q2 but chose not to. I'm not saying it is likely either as I have pretty much given up trying to predict the ER but I won't be leaving my position. I'm just ready to buy more if we drop.

 

[NigelM]

Opinion: the number of Xs is rapidly becoming irrelevant at this point, the car is out there and the 2015 X delivery number is going to be low. The critical subject will be the level of incremental S sales achieved through the referral program and Tesla's ability to reproduce that should they need/want to.

 

[Benz]

Will they mention in the Q3 Shareholder Letter that they will continue with the referral program?

How (not) likely is that?

 

[SebastianR]

So forgetting guidance completely what if Tesla is non-gaap profitable? You think that is crazy? [...] I'm not saying it is likely either as I have pretty much given up trying to predict the ER but I won't be leaving my position. I'm just ready to buy more if we drop.

That's a good point - on being non-gaap profitable, the long-term investor in me hopes they are not: they just did their capital raise so they don't need more cash (I hope), they have a bunch of bad news out there, so why sacrifice future growth by "saving" this quarter and being non-gaap profitable? (Specifically I don't want R&D costs drop at the expense of missing a Model 3 deadline). If they chuck out all bad news at once, we would also be getting a nice buying opportunity.

Then again, maybe they feel the need to show that they can accomplish some goals and try to demonstrate that R&D for the Model X is over by lowering that kind of costs... And they probably want to still make sure future convertible debt is bought. So who knows what they will announce. We will see

 

[replicant]

Will they mention in the Q3 Shareholder Letter that they will continue with the referral program?

How (not) likely is that?

The referral program is more for customers than shareholders or analysts (I hope so). Tesla should refrain from making such an announcement today.

 

[ItsNotAboutTheMoney]

Opinion: the number of Xs is rapidly becoming irrelevant at this point, the car is out there and the 2015 X delivery number is going to be low. The critical subject will be the level of incremental S sales achieved through the referral program and Tesla's ability to reproduce that should they need/want to.

Opinion: the number of X will be known to be low. More important is net cashflow in Q3, news on current X run rate and a guess on how to gauge Elon's overoptimistic estimates for X production ramp.

 

[Benz]

The referral program is more for customers than shareholders or analysts (I hope so). Tesla should refrain from making such an announcement today.

Well they mentioned it in the Q2 2015 Shareholder Letter:

"Our new referral and pre-owned car programs expose more people to the benefits of driving electric vehicles. The Tesla referralprogram is an experiment we recently introduced to see if there is a way to return the cost of our sales to our customers. If aTesla owner refers a friend to purchase a new Tesla, the friend will receive $1,000 off the purchase price of their Tesla, and theowner making the referral will receive a $1,000 credit to be used for Tesla service, accessories or another Tesla vehicle purchase. We will see how this works and there are certain limits, but the cost of this program reflects our typical customeracquisition costs, so it makes sense for everyone."

So why not this time?
They could mention it again, right?

 

[StapleGun]

So forgetting guidance completely what if Tesla is non-gaap profitable? You think that is crazy? They lost $60 million last quarter. The analysts expect similar this quarter and part of the reason the loss isn't widening is Tesla has already guided for $30 million in ZEV credit sales for Q3 vs. $14 million in Q2. But last Q3 they sold $76 million in ZEV credits.
Here is the recent pattern:
Q3 2014 $76 million
Q4 2014 $66 million
Q1 2015 $51 million
Q2 2015 $14 million

So I would therefore not rule out the possibility of even non-gaap profitability this quarter. Especially since Tesla might have been able to sell more ZEV credits in Q2 but chose not to. I'm not saying it is likely either as I have pretty much given up trying to predict the ER but I won't be leaving my position. I'm just ready to buy more if we drop.

Keep in mind many cars sold in Q3 will see $2000 less revenue due to the referral program. If it's 75% of cars, then that's about $17 million less revenue assuming the mix is the same as Q2.

 

[pGo]

Keep in mind many cars sold in Q3 will see $2000 less revenue due to the referral program. If it's 75% of cars, then that's about $17 million less revenue assuming the mix is the same as Q2.

Tesla mentioned in the Q2 report to expect asp to decline by more than 100 basis point.

 

[SW2Fiddler]

Will they mention in the Q3 Shareholder Letter that they will continue with the referral program?

How (not) likely is that?

So why not this time?
They could mention it again, right?

The referral program was "extended" once after its introduction, in that owners were later allowed to exceed 10 referrals. Also the PowerWall incentive was introduced at the 5-referral level.
However, two of the states in the US prevent any payment to individuals for facilitating a car sale; TM reacted by doubling the Buyer's discount for using a Code from those two states, thus introducing a considerable disparity... I believe this prevented an easy, automatic extension of the program past 31 October. If we see a referral program again, it will be different and introduced after somewhat of a cooling-off period...

 

[uselesslogin]

Tesla mentioned in the Q2 report to expect asp to decline by more than 100 basis point.

They also mentioned Q2 margin was down 100 basis points due to currency changes. I think for a lot of Q3 cars the price increase is in so it could even it out. Still I'm not expecting much from this call.