Short-Term TSLA Price Movements - 2016

[jhm]

Estimated 2720 model x for Q1 + 6300 for 9020 US estimate.

March 2016 Plug-In Electric Vehicle Sales In US Hit All-Time Record High

I think now that oil has bottomed out demand for EVs will resume growth. I do not think that oil must have a high price to do so. I suspect that the direction of price movements is what matters. So while gasoline was falling in price a certain segment of buyer motivated by gas saving lost interest. But with gasoline potentially on the rise, that sort of shopper will be concerned about where gas prices are going, even if they are currently low. So the gas savings argument becomes compelling for those seeking protection from future gas price hikes. I do not see this is a big deal for Model S and X buyers, but it does matter for the lower end EVs.

Global sales of plug-ins for 2015 were 550k. So this can resume growth at say 50%. Meanwhile, global auto sales were 74.4 million and grow about 3% annually. At these rates of growth, plug-ins could reach 2.8 million in 2019, while total sales reach 83.7 million. At this point, EV sales exceed growth in auto sales, and begin to deprive ICE vehicles growth.

So I am setting my sights on 2019 as the year of peak ICE new car sales, after which ICE enters structural decline. Now if new car growth rates accelerate, this could postpone the peak. A 6% growth rate could push the peak out to 2021. But that sort of growth rate could drive up the cost of gasoline and accelerate uptake of EVs. So the global peak likely happens before 2021. The fact that Tesla is pushing ahead with the Model 3 gives me greater confidence that the peak comes in 2019. Tesla will be blasting the market at that time and either competitors will be racing ahead with Tesla or consumers will be putting the brakes on ICE purchases. Either way growth in ICE will be hard to come by and will be even harder in 2020.

I'd also point out that I am looking at global auto sales which only grew 1.2 million or 1.66% last year in spite of declining oil prices. It may have been a banner year for US auto sales around 7%, but not so spectatular globally. Over the last 20 years, the annualized growth rate has only been about 3.1%. Declining oil prices were not sufficient to even sustain that long-term growth rate. Indeed, the causality may be the other way around. With low growth in global ICE demand leading to an oversupplied oil market. If so, this should be particularly worrisome to oil producers because depriving ICE about 1% to 2% points of growth may be sufficient to induce an oil glut. The sensitivity of the oil market to ICE sales may be much more delicate than displacement models suggest. The tricky issue is how oil producers form their growth expectations and collectively overshoot demand. A 1% overshoot can tank the oil market.

Regardless of these nuances, when EVs out sell average auto growth, structural decline begins for ICE, and demand formation for oil becomes even more tenuous.

 

[drinkerofkoolaid]

Partially hoping for a 4-5% drop and maybe a reiteration from Bank of America tomorrow.

Very confident Tesla's earnings report and guidance will be above expectations. Guidance, not deliveries, is what really matters.

Also, Tesla will have $300-$500 million in cash from deposits that wasn't expected.

Also, I think there is a reason it was publicized that Tesla is or was suing the Falcon wing door supplier.

Tesla sues supplier over falcon-door debacle - Roadshow

Maybe there was something to Elon's Tweet.

 

[anticitizen13.7]

But the bigger concern is that we are now 6 months into the Model X launch and they are still dealing with these issues. This will not instill confidence in the 3 ramp up and provides needless ammo for the bears and doubters in the Tesla story.

Given that the press release also says that Model X production is now at 750 vehicles/week, I think it is a bit overreacting to say that Tesla is still dealing with the same issues as a few months ago.

Going back over my post history, I have maintained that Q2 is when we will have the most certainty over whether Tesla successfully (or not) ramped up Model X.

 

[drinkerofkoolaid]

But the bigger concern is that we are now 6 months into the Model X launch and they are still dealing with these issues. This will not instill confidence in the 3 ramp up and provides needless ammo for the bears and doubters in the Tesla story.

The Model 3 isn't due to be released for at least another year. Also, the Model 3 will almost certainly be easier to produce than the Model X. Very confident Tesla learned a lot by producing the Model X that wouldn't have otherwise have been possible.

Another important thing to note. In the past week, Tesla has gained 30,000+ followers on Twitter.

 

[flankspeed8]

Also, Tesla will have $300-$500 million in cash from deposits that wasn't expected.

I don't think any of this will show up in the last quarter report as it is unlikely that funding, especially from credit cards would have been received prior to end of business day. I may be wrong. I wonder how much will be eaten up by processing fees? 2%?

 

[Papafox]

Interesting. Thank you for your insight. I could always go half in and make a decision at open tomorrow whether to wait for the remaining half.

Since I have learned from another TMC member that Elon won't update the M3 res numbers until Wednesday, you probably have some time to see how this plays out. I would watch after-hours trading and see the trend. It looks slightly downward now. I find after-hours trading is often a good indicator for what will happen at the start of regular trading the next day. I wouldn't be surprised to see a bit of a dip at opening, followed by a reversal at some point tomorrow. Hoping you have time to watch TSLA tomorrow and buy when the market signals a reversal.

 

[AlMc]

Fault is often not 100% this party or that party. Suppliers could easily have messed up, or Tesla could have failed to see that some suppliers were not up to speed on production.

OR....EM/TM kept changing small aspects of the design right up to the launch then told the supplier(s) that they needed 5,000 of the new component 'yesterday'. So, the supplier did not supply the needed components for a smooth ramp...but in that scenario is the supplier at fault?

 

[hershey101]

Slightly miffed that my sell order didn't get triggered in the morning for $.80 difference but they are Jan '17 @$250s so I have some more time to get rid of them.... (barely breaking even since I bought them last time we were up here). Surprised by the miss, but going to wait until we head back to $200 before buying.

 

[anticitizen13.7]

OR....EM/TM kept changing small aspects of the design right up to the launch then told the supplier(s) that they needed 5,000 of the new component 'yesterday'. So, the supplier did not supply the needed components for a smooth ramp...but in that scenario is the supplier at fault?

That's a distinct possibility as well. I don't think there's any way for retail investors to know what really happened.

 

[hoang51]

Since I have learned from another TMC member that Elon won't update the M3 res numbers until Wednesday, you probably have some time to see how this plays out. I would watch after-hours trading and see the trend. It looks slightly downward now. I find after-hours trading is often a good indicator for what will happen at the start of regular trading the next day. I wouldn't be surprised to see a bit of a dip at opening, followed by a reversal at some point tomorrow. Hoping you have time to watch TSLA tomorrow and buy when the market signals a reversal.

I hope that the overreaction in the afterhours are temporary just for today, because Tesla still maintained guidance for the full year. The selloff is unwarranted.

 

[jhm]

When life hands you avocados, make guacamole Dig in!

Viva la Tesla!

 

[ludicrousspeed]

I still maintain that Q2 is where we see the goods delivered.

Couldn’t agree more. From strictly a historical perspective:

-For about 3.5 years, TSLA traded in a fairly broad range of about $17-$34 per share.
-Model S Founders vehicles were first delivered at the very end of Q2 2012.
-3 quarters later, in Q1 of 2013, Tesla realized a material S ramp and knocked the Q1'13 financials out of the park.
-This caused the historical price run up in TSLA and moved the stock to new all time highs.

-For almost the past three years, TSLA has traded in a similarly broad range.
-Model X Founders vehicles were first delivered at the very end of Q3 2015.
-3 quarters later, in Q2 of 2016, Tesla may finally realize benefits from the X ramp and seriously surprise on the Q2'16 financials.
-If they're able to manage CapEx/R&D, Tesla has another chance to become GAAP profitable for the Q and move to new all time highs.

 

[Lump]

OR....EM/TM kept changing small aspects of the design right up to the launch then told the supplier(s) that they needed 5,000 of the new component 'yesterday'. So, the supplier did not supply the needed components for a smooth ramp...but in that scenario is the supplier at fault?

Ed's predictions persisted late into Q1.

 

[Papafox]

I hope that the overreaction in the afterhours are temporary just for today, because Tesla still maintained guidance for the full year. The selloff is unwarranted.

Good point. If I were to bet, I'd expect lower TSLA price for at least the first hour and then a reversal at some point in the day when people realize the stock has bottomed out and is ready to ease upward again. Meanwhile, I would keep an eye on after-hours trading and use it as a barometer.

 

[drinkerofkoolaid]

There are many many reasons Tesla should go much higher once analysts begin to account for everything that has changed since last year.

1) Since last year, the stock has been distributed among a lot more people and firms.
2) 500,000 deposits 1 year before the release is a Green light to suppliers that Tesla's current expectations are very conservative and easily achievable.
3) Any analyst with a shred of credibility has said Tesla is worth $1500 - $2500 per share if Tesla can sell 1-2 million vehicles annually. No analysts expected Tesla would have 500,000 deposits for the sedan version of the Model 三 by May/June 2015.
4) Tesla is continuing to open more stores. Model S and Model X sales aren't likely to be anywhere near a peak until least 2019 or 2020.
5) I can think of many more reasons however I'll save those for another moment.

 

[sunhelm]

So, Q1 lesson can be summarized as:
- maintain your S(wag)
- trick out your GF
- count your money 3's
- but never, ever, forget your X

 

[tanner]

Good point. If I were to bet, I'd expect lower TSLA price for at least the first hour and then a reversal at some point in the day when people realize the stock has bottomed out and is ready to ease upward again. Meanwhile, I would keep an eye on after-hours trading and use it as a barometer.

I hope that's exactly what happens. My problem is that I'll want to get in before it reaches its lowest... LOL!

 

[surfside]

Slightly miffed that my sell order didn't get triggered in the morning for $.80 difference but they are Jan '17 @$250s so I have some more time to get rid of them.... (barely breaking even since I bought them last time we were up here). Surprised by the miss, but going to wait until we head back to $200 before buying.

interesting -- i had a sell order at the end of the day for the january 2017 $250s that didn't hit either -- was going to derisk by selling a portion of my 2017 leaps. as you say -- oh well -- just going to have to wait a little longer to roll these...

surfside

 

[drinkerofkoolaid]

As Elon regularly says, if even one part is missing, Tesla can't deliver a vehicle. The Model X is a very complex vehicle. I'm very confident Tesla will go into detail about the supply kinks, and if any of the kinks are relevant going forward during the conference call.

It might have been a good thing that Tesla delivered fever than expected Model X since It probably costs Tesla a lot more to build a Model X than a Model S. Supplier issues probably made is easier for Tesla to increase margins for the Model S and focus on preparing the Model 3.

Guidance for next quarter and revised expectations for Model 3 sales are what matters. Also the $300-$500 million in cash Tesla can account for from Model 3 deposits.

 

[Sancho]

Now that the numbers are in, the analysts can do their upgrades. They will be far more influenced about the run rate in the last weeks of the quarter which will carry into Q2, than about problems that caused a few more weeks delay in the ramp of Model X. Everything now points to good times ahead. Their target prices should start moving north, and that will move the stock.