Short-Term TSLA Price Movements - 2015

[Krugerrand]

I find it highly amusing that every article written by someone who is short (or even just critical with no position) Tesla is usually trashed and disregarded, but articles written by TSLA shareholders are "accurate" and "fair".

I think there are likely some people amused by this falsehood.

 

[aznt1217]

Its not just DU failing. It is the perception that it keeps failing. There have been many reports where people have been on their 3rd or even 5th DU. If the issue has been fixed by Tesla, why are people seeing multiple replacements even now. It is certainly a good thing that DU is covered for 8 years, but if the most important part of the EV keeps failing, it does not give a lot of goodwill.

I know Elon talked about a simple change to fix DU issues about 3 quarters ago and it's still lingering meaning the issue has not been addressed fully. The man hours the SCs put here is enormous and may contribute to current displeasure in Norway and other parts.

Another note, Tesla sweetened the referral program a few days ago by offering powerwall for free for users with 5 or more recommendations. I think the initial reality distortion Elon used for referral program is waning and reasoning looks more and more likely towards demand generation. This does not give me a lot of confidence.

As I mentioned before. People have had their DU replaced when they noticed nothing because the service team was being extra cautious. "People" is a couple people on the forum who ring the bell and some survey participants. There are also those with flawless DU's they aren't reporting as much because they are too busy enjoying their cars.

Norway is a very specific case due to the nature of the logistics of batch shipping. They had a batch of cars that had unbalanced magnets that either needed full replacement or a shim.

 

[JRP3]

I'd also point out that a DU replacement because of a noise is not a "failure". Think of a noisy belt on an ICE, if it were faster and easier to swap the engine and get the customer on their way, then change the belt in the shop, you would not say the ICE "failed".

 

[Krugerrand]

As to the CR and weighing criteria. Just as CR may need to make a new rating system because of the S scoring 103 on a 100 point scale they may need to adjust the weight given to drive train failures/etc. as I agree that popping out/in a new DU is much simpler than a new transmission/engine.

This is an excellent point: Is CR set up with the proper scales and weighting systems to accurately assess, gauge and compare a car like the Model S against ICE's? I'm guessing not so much considering the 103/100 rating and even the previous 99/100 hinted at an issue.

Maybe V can give us some information about what the weighting differences are in the various reliability groupings?

Adding: We've also begun to see hints of this in the NHTS scoring as well. Why does that system only go to 5*'s when a vehicle like the Model S can score higher?

 

[pGo]

As I mentioned before. People have had their DU replaced when they noticed nothing because the service team was being extra cautious. "People" is a couple people on the forum who ring the bell and some survey participants. There are also those with flawless DU's they aren't reporting as much because they are too busy enjoying their cars.

Norway is a very specific case due to the nature of the logistics of batch shipping. They had a batch of cars that had unbalanced magnets that either needed full replacement or a shim.

Regarding demand, I don't think there is a long term demand issue with Model S. I do feel however, that there is a cap of about 50-60K MS and may go down a bit as MX becomes widely available. For past 90 days, knowing MX production won't ramp up as needed, Tesla is trying to generate more demand using referral program. I don't buy Elon's view that he's utilizing it for different reasons. If you disagree, I am fine with it. Offering powerwalls late to encourage referrals suggest they need more demand quickly to come as much closer as possible with the lower end which I strongly feel will be missed.

BTW, I was the first one on this board to mention that Tesla will lower guidance in last quarterly report. I reiterate that looking at current VIN assignments and pace of it, 50K target is guaranteed not possible. Referral program is supposed to bring demand forward and looking at current situation, I feel that new orders won't come at required pace to meet numbers. Once Referral program ends, Tesla needs new and better incentives (in terms of functionality, wow factors, design, or just cash) to keep current pace. Even then, 50K is a hard number. Additionally, we now have a strong point to consider that maximum 200 MXs will be delivered by early December based on MX thread details shared by a few users.

That being said, I have no idea where TSLA stands if Tesla lowers guidance. May be its priced in now, may be its not. Caution is required. At below 200, I feel that market expects the worst which in case may pop the stock.

 

[Yonki]

Is everyone aware of this article in Popular Science?

Meanwhile, let’s all just take a deep breath, accept the possibility that this may indeed be a tempest in a teapot, and not lose our collective **** every three days over this company.

This should be the new motto of the TMC Short-Term Thread.

- - - Updated - - -

Except they didn't say "****".

 

[Krugerrand]

There are also those with flawless DU's they aren't reporting as much because they are too busy enjoying their cars.

But if pGo takes the time, every single DU thread also has people saying, "X miles, no DU issues for me." And also has people saying, "Was in for tire rotating/annual check up and Tesla proactively swapped out my DU unit, even though I wasn't having any issues/noises."

 

[MitchJi]

The problem with Model X, which Elon has admitted, is that it is difficult to build...

I hate to say it, but if the car was designed such that it is difficult to mass produce, that is a major engineering mistake. I don't know which way this will go. If Tesla can sort out the production issues, TSLA will take off like a rocket. If Model X production drags, then all the rosy financials go out the window and shareholders are in for serious pain until Tesla Energy and Model 3 provide the next opportunity for a big earnings boost.

It's not that hard to figure out. They can't get the windshields and second row seats. It's painful for short term investors. Not a long term problem.

Current Status:

Nope. No email with a tentative date. Since I expect that Tesla would notify me with enough time to finalize any financing, if necessary, I find the reported dates suspect - and more likely the result of an over-eager delivery specialist, doing their best to communicate with a customer, but perhaps not with the latest info. (Sorry to be a wet blanket...)

And to be clear, Tesla has been very responsive to any emails I've sent. I'm not complaining about communication.

 

[Gerasimental]

Regarding demand, I don't think there is a long term demand issue with Model S. I do feel however, that there is a cap of about 50-60K MS and may go down a bit as MX becomes widely available. For past 90 days, knowing MX production won't ramp up as needed, Tesla is trying to generate more demand using referral program. I don't buy Elon's view that he's utilizing it for different reasons. If you disagree, I am fine with it. Offering powerwalls late to encourage referrals suggest they need more demand quickly to come as much closer as possible with the lower end which I strongly feel will be missed.

BTW, I was the first one on this board to mention that Tesla will lower guidance in last quarterly report. I reiterate that looking at current VIN assignments and pace of it, 50K target is guaranteed not possible. Referral program is supposed to bring demand forward and looking at current situation, I feel that new orders won't come at required pace to meet numbers. Once Referral program ends, Tesla needs new and better incentives (in terms of functionality, wow factors, design, or just cash) to keep current pace. Even then, 50K is a hard number. Additionally, we now have a strong point to consider that maximum 200 MXs will be delivered by early December based on MX thread details shared by a few users.

That being said, I have no idea where TSLA stands if Tesla lowers guidance. May be its priced in now, may be its not. Caution is required. At below 200, I feel that market expects the worst which in case may pop the stock.

X Sig 171 has estimated delivery of Nov16, there is second hand information that an X sig holder in the 500s has been given late November. IF these turn out to be true, we may see a lot more than 200 MX delivered in 2015.
As per the wait times thread, all markets have delivery times of December or later, with most already into January. It appears that by the beginning of November, they will all be in January. Meeting, or getting close to, guidance depends on production and delivery performance, not on short-term demand.

 

[pGo]

But if pGo takes the time, ever single DU thread also has people saying, "X miles, no DU issues for me." And also has people saying, "Was in for tire rotating/annual check up and Tesla proactively swapped out my DU unit, even though I wasn't having any issues/noises."

I do a lot of reading on TMC and there are a lot more non-issue users than the ones with issues. However, my friend who has recently booked for MX and has no idea about TMC called me last night that should he cancel his MX reservation due to the DU issue. He feels scared putting 100K where the most important part of the EV is not the most robust. Do you think I should send him the links of good experience people shared on TMC?

As Tesla gets out of the early adopters and bring in the rest, it will face issues like this. Some people here just won't realize the issue.

- - - Updated - - -

X Sig 171 has estimated delivery of Nov16, there is second hand information that an X sig holder in the 500s has been given late November.

X Sig 171 has the estimated "PRODUCTION COMPLETION" date of Nov 16. That too, the sales rep said to take with a grain of salt. This user does not live in CA. An earlier VIN (102 or 110) was given approximate early December delivery. This could mean December 1-15 or may be even late in Tesla term.

 

[ev-enthusiast]

Where is that music coming from? Any news?
I got used to selling pressure, but green candles?

Update: Looks like there is some unexpected progress with autopilot in Europe!

 

[JRP3]

He feels scared putting 100K where the most important part of the EV is not the most robust. Do you think I should send him the links of good experience people shared on TMC?

You should certainly explain to him that very few drive units have actually failed, most have simply been replaced because they were noisy. Big difference.

 

[mrdoubleb]

It's tricky to say if a DU failing is equivalent of an ICE failing. It is and it isn't. Not sure if you've seen the video of how the drive units are made but it's infinitely cheaper to ship because it's so compact and the reusabilty of it is incredible. It's literally a Tesla coil that is wound up like yarn. An S Class engine going bust is infinitely more difficult to fix and tricky to diagnose because it's like you break one part... something else gets affected. A DU failing is the equivalent of a full engine failure... because that's all it is. The problem that I mentioned is "over care" because the part would work but it would be noisy. Instead of Tesla opening the casing and inspecting it's far easier for them to drop a new watermelon sized motor in and be done with it.

That`s what I meant too. I remember they were replacing DUs because of noise that caused no mechanical failure and I was wondering if this CR statistics counts such actions as an engine failure too.

 

[pGo]

You should certainly explain to him that very few drive units have actually failed, most have simply been replaced because they were noisy. Big difference.

That's what I did and also shared how some people have completed over 100K miles in the last few years without issues.

I think the issue is perception that DU is bad even if its not a total failure and just some milling noise. What I don't get is the issue went out of hand because of multiple failures for some users and they became vocal. If I am not a die hard fan, I would have less patience to digest going to SC and now feel depressed resell value due to CR's rating. Tesla has a task to educate people that DUs are no longer an issue and have been addressed. May be, they need a DU robot in tesla stores mimicking normal usage and recording miles without a problem (IKEA and other stores have robots putting weight in chairs to show durability).

 

[farzyness]

Where is that music coming from? Any news?
I got used to selling pressure, but green candles?

Update: Progress with Autopilot in Europe?!

There's gotta be a point where large buyers start to seize the cheap prices for a stock that:

-Is going to be Cash Flow positive within 3-6 months
-Has by far the best self-driving tech in the industry (which was uploaded to cars in the fleet) which is self learning
-Has a completely separate Energy arm that is just starting to ramp
-Has potentially a ridiculous amount of cash coming in from the reveal of Model 3 sometime in March 2016 (i.e. October in Tesla time)
-Has untapped amounts of buzz from its Model X launch
-Has potential for a yet unannounced, but completely possible, Uber-like service in the works

And plenty other reasons.

 

[mrdoubleb]

Look at the bottom of the article:

I find it highly amusing that every article written by someone who is short (or even just critical with no position) Tesla is usually trashed and disregarded, but articles written by TSLA shareholders are "accurate" and "fair".

It is not about that at all. I had a specific example and you are generalizing. This article accurately lists risks/areas of concerns investors will need to watch out for in the ER. It goes through a laundry list of claims and promises the company made in the Q2 ER and points out where we should be looking for updates on these.

1, It talks about the Cash Flow. Bears love to pretend Tesla had 2Bn of profits sitting in its bank accounts and is now spending that frivolously on casinos and prostitutes. In fact Tesla raised 2Bn to be spent on investing in products/infrastructure/services and - shocker, stop the press! - it is spending it on those things. This article accurately lists the details of that spending, but simply says: Tesla promised it would turn free cash flow positive by Q1 and investors should watch out for indications if that is on track.

2, It talks about Tesla Energy and the goals Tesla set in the Q2 ER. It goes on to identify which section in the ER investors have to watch to see if those goals are being met. It also lists this business as potentially critical for Tesla`s future.

3, Finally it talks about demand and lists all the growth claims Tesla made in Q2 and highlights areas where investors should be looking for updates on that.

I really see no bias, but for shorts any Tesla article that does not start every paragraph with "the sky is falling" may sound bullish.

 

[ev-enthusiast]

There's gotta be a point where large buyers start to seize the cheap prices for a stock that:

-Is going to be Cash Flow positive within 3-6 months
-Has by far the best self-driving tech in the industry (which was uploaded to cars in the fleet) which is self learning
-Has a completely separate Energy arm that is just starting to ramp
-Has potentially a ridiculous amount of cash coming in from the reveal of Model 3 sometime in March 2016 (i.e. October in Tesla time)
-Has untapped amounts of buzz from its Model X launch
-Has potential for a yet unannounced, but completely possible, Uber-like service in the works

And plenty other reasons.

I expect additional owners to tell that they got a delivery window in November soon.
What is your expectation about first delivery dates (H1 or H2 of November, earlier, later)?

 

[JRP3]

I think the issue is perception that DU is bad even if its not a total failure and just some milling noise. What I don't get is the issue went out of hand because of multiple failures for some users and they became vocal.

I agree with that. The fixes that Elon initially claimed solved the problem evidently did not.

 

[sub]

Has the green today scared away the Bears? If so it seems it's only temporary, they always return on bad news days. It's always encouraging to me to see how weak their arguments are, gives me more confidence in TSLA.

 

[The Blue Owl]

I can quote my answer here. Your original point was about margins and Apple being able to "disrupt" (music, smartphones, tablets, maybe watches soon...) sectors and/or extract high margins with a relatively small market share (Macs vs PCs..).

I maintain that the CE and other tech sectors are very different from the car sector. Let's use the Apple-Tesla analogy:



One simply can't disrupt the car sector within a few months or even years (as is common in tech sectors, e.g. in smartphones, to use a popular recent category example so often quoted by bullish analysts).

The car sector is fundamentally different on a timeline scale (car replacement cycles, used car market...) and in terms of required cap-ex per unit of revenue and operating profit.

It will take TSLA another decade to just reach a market share of about 1% in the passenger car sector - and that's assuming an absolute best-case scenario for TSLA and EVs in general.

You're making an unrelated point about market share and timelines. I said nothing about "disruption", nor did I imply Tesla will ship cars at iPhone volumes.

My assertion was, and is, that there is no inherent reason why Tesla's margins must fall as the company matures and the competitors release their own EVs. Your quote does not offer a rebuttal, other than saying that the car market is different from the computer and consumer electronics markets.

Well, of course they are different. I am making a more general observation that the conventional wisdom used to be that in the insanely competitive PC or cell phone markets margins must always fall due to commoditization and increased competition. Nevertheless, Apple did the supposedly impossible and not only attacked the existing giants on their own turf, but it obliterated them, all the while increasing their margins (they're still increasing). Margins did drop for everybody else, just as conventional wisdom predicted, but that is no wonder, seeing as all these companies were imbued with conventional thinking.

The same conventional wisdom dictates that Tesla cannot maintain high margins because of competition from today's dominant players. This assertion is not self-evident and your quote does nothing to support it.