July 1, 2017 is a target for suppliers and what not. Elon himself said to not expect cars on that date. But it's the internal goal to basically have everything ready. Sadly nothing ever is on schedule (he admitted this) and this date won't stick, but it's a hard line in the sand where they start looking at suppliers and what not and realize what will be working and what needs serious scrutiny. Expect cars 8 weeks after that.
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July 1, 2017 is a target for suppliers and what not. Elon himself said to not expect cars on that date. But it's the internal goal to basically have everything ready. Sadly nothing ever is on schedule (he admitted this) and this date won't stick, but it's a hard line in the sand where they start looking at suppliers and what not and realize what will be working and what needs serious scrutiny. Expect cars 8 weeks after that.
IMPORTANT
For anyone following the Julian Cox DTU thesis here on TMC.
I have now had a chance to look at this carefully and I believe it is correct to say that the entire DTU thesis underpinning from here on out is a scrubbed launch. That does not mean I was wrong or that that any alternative thesis presented here is correct. Simply that trading any thesis trade must stop when the underlying material assumptions change - and they have changed materially from what could have been, to what is.
What this means is that the reasons for the stock to do what it does from here on out, whatever they are, will be materially different following this ER from what could have been because it is now impossible to surprise the shorts with a cash flow positive and profitable Q2 plus Q3 guidance, then Raise Money on an epic Squeeze, then rearrange guidance, then spend it on Model 3, in that order - in a sequence that would mirror previous masterful TSLA squeeze-raises in 2013 and 2014.
Tesla conceded the data on the initial M3 reservations at unveil and in the following weeks, which I felt on balance was acceptable without totally destroying a setup for Q2 ER shock and awe along with the upgraded long term guidance on the 500K in 2020 to a million in 2020 which they just conceded and then some by advancing the 500K to 2018. Furthermore and most importantly the Q1 shareholder's letter clearly walks back Q4 guidance of a cash flow positive 2H and clearly states that they plan to ramp 2H operating costs also - so no Q3 / Q4 profits either.
I truly hate to say it but this is not Musk on his A game - basically gave away a guaranteed and epic short squeeze in what looks like a totally unforced sequencing error. This looks like the true cost of the Model X and a divorce + sleeping bag + depressive feelings about the prospects for humanity that only a carbon tax can save - all on his nerves. SH*T and double SH*T.
Right now the stock is up 2.67% from yesterday's dip at the close on sliding after hours trading BUT $3.82 down on the entire day from the previous day's close. I see a lot of hubris around here. I think maybe too much. The Tesla business and its forward looking prospects are clearly incredibly strong at this juncture (as was forever the case) however what has happened here is essentially to transition from the Model X spending spree to the Model 3 spending spree without taking pause to scalp the bejesus out of the shorts in between and have them pay for the entire deal. For which I am truly very sorry to see as an opportunity missed which is most incredibly frustrating both for Tesla and personally. This also pretty much takes $400 in 2016 off the table unless some new reason emerges. Maybe we see $300 this side of December, maybe we don't. $500 - $1000 in 2018 - sure. Not so bad either.
So as for the SP. I have done what I can to call it to here step by step without missing a beat and nobody lost a penny that paid attention. For money not lost on trading long down from $255 to here I hope people that listened are happy about that (obviously nicer if the truth and the trade was in the opposite direction). That and practically all of the entire giant V that preceded it.
Just OMFG I wish I could have had just 10 minutes with Musk before this went down like this just to present the alternative option and know for sure he thought of it and what he's done was somehow better - and maybe another 10 so that he could cheer up about that eff*ng carbon tax thing.
So now we have an 18-24 month slog with the bears and some wonderful technological marvels to marvel at along the way, hopefully some new perfect storm to go with it until the bears finally can't deny the existence of hundreds of thousands of Model 3s.
From that Tesla Ultra Bull, Julian Cox
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Thanks... but didn't he also say 100k-200k vehicles produced in the second half of 2017? So even if we go with low estimates (allowing for delays, etc), say 100K vehicles, that means over 5.5K vehicles a week (18 weeks). They are at < 2k/week today. I think they have to be building these in advance of 7/1, or this doesn't seem plausible.
The more this ER sinks in, the more it feels like it was designed to set up for the capital raise.
The more this ER sinks in, the more it feels like it was designed to set up for the capital raise.
jesselivenomore
Member
What was expected:
Raise in production ramp. Like I discussed with Dave, this was the obvious and inevitable move. The alternative of keeping the 500k 2020 target meant new 2018 Model 3 orders would have to wait multiple years before taking delivery. There was no chance of that. Not to mention Elon basically already spelled it out on twitter.
What was unexpected:
They announced the ramp, and the need for a capital raise, but have not yet raised capital. I thought they would complete a capital raise and announce this production ramp in one fell swoop. That would provide clarity for not only their production plans going forward, but also their financial plans - causing the stock price to instantly recalibrate adjusted for new production targets and dilution. Instead, without a capital raise yet, the question on every analyst's mind and the focus of the conference call was: when will there be a capital raise and how much? This uncertainty is contributing to the muted reaction from the stock price. Without clarity of their ongoing financial situation, it is tough for the market to determine how good a news is this production ramp. How big of a capital raise will it take to get to 500k in 2018? $1B? Great. $2B? Good. $5B? $8B? Remember, this is not just for tooling, but also the necessary build out of service stations and superchargers, not to mention Gigafactory. Without knowing how much dilution is needed, the market cannot yet quantify this news.
Can they really do this?
There is skepticism over Tesla's ability to execute their plans. First off, I don't think this is the primary reason the stock isn't up much, that has more to do with the confusion over capital raise and no more free cash flow. But let's talk about Tesla's ability to execute. After all, they just missed Q1 deliveries by 1200 on a mere 16k. They missed last year's guidance by 5k on 55k. And they missed the prior year by 3k on 35k. How can a company who has so consistently missed their own targets be trusted to deliver on this new massive 500k goal?
I have two things to say about that:
1. It doesn't matter, because most people didn't believe their original 500k 2020 goal to begin with. Both Goldman Sachs and Morgan Stanley modeled for 250k in 2020, and had current price targets of 240 and 320 based on that. Even if Tesla does not get to 500k in 2018, they are changing their plans, they are not sitting on their hands - this means these analysts will have to change their models. If they thought 500k in 2020 was unbelievable and would prefer to model for 250k before, they must think 1M now is even more unbelievable, but still they can't keep their original 250k model unless they assume Tesla is doing nothing. If they change their 2020 model to 500k, what happens to their 240/320 price target?
2. Let's talk about Tesla's credibility. It's true that Tesla has missed their targets for a couple of years now, by about 10% off each time. So that is the extent of their credibility based on reality: they have achieved 90% of what they say. So if they keep up with that and have a run rate of 450K by 2018, that will still be roughly 100% above current analysts' 2020 targets. In fact, the biggest misjudgment that Tesla has ever made was neither of these missed targets. It was their initial Model S projection of 20k a year. They missed that by about 300%(which was what caused the initial delay in Model X ramp as they focused on overwhelming Model S demand instead). Their second biggest misjudgment was making the same mistake twice and underestimating Model 3, but now they are rectifying that. FWIW I made a thread on this back in December: Is Tesla underestimating Model 3 demand?
So when it comes to credibility I suspect the market will figure it out quickly. But to truly digest the news the market will need concrete numbers on the capital needed.
Raise in production ramp. Like I discussed with Dave, this was the obvious and inevitable move. The alternative of keeping the 500k 2020 target meant new 2018 Model 3 orders would have to wait multiple years before taking delivery. There was no chance of that. Not to mention Elon basically already spelled it out on twitter.
What was unexpected:
They announced the ramp, and the need for a capital raise, but have not yet raised capital. I thought they would complete a capital raise and announce this production ramp in one fell swoop. That would provide clarity for not only their production plans going forward, but also their financial plans - causing the stock price to instantly recalibrate adjusted for new production targets and dilution. Instead, without a capital raise yet, the question on every analyst's mind and the focus of the conference call was: when will there be a capital raise and how much? This uncertainty is contributing to the muted reaction from the stock price. Without clarity of their ongoing financial situation, it is tough for the market to determine how good a news is this production ramp. How big of a capital raise will it take to get to 500k in 2018? $1B? Great. $2B? Good. $5B? $8B? Remember, this is not just for tooling, but also the necessary build out of service stations and superchargers, not to mention Gigafactory. Without knowing how much dilution is needed, the market cannot yet quantify this news.
Can they really do this?
There is skepticism over Tesla's ability to execute their plans. First off, I don't think this is the primary reason the stock isn't up much, that has more to do with the confusion over capital raise and no more free cash flow. But let's talk about Tesla's ability to execute. After all, they just missed Q1 deliveries by 1200 on a mere 16k. They missed last year's guidance by 5k on 55k. And they missed the prior year by 3k on 35k. How can a company who has so consistently missed their own targets be trusted to deliver on this new massive 500k goal?
I have two things to say about that:
1. It doesn't matter, because most people didn't believe their original 500k 2020 goal to begin with. Both Goldman Sachs and Morgan Stanley modeled for 250k in 2020, and had current price targets of 240 and 320 based on that. Even if Tesla does not get to 500k in 2018, they are changing their plans, they are not sitting on their hands - this means these analysts will have to change their models. If they thought 500k in 2020 was unbelievable and would prefer to model for 250k before, they must think 1M now is even more unbelievable, but still they can't keep their original 250k model unless they assume Tesla is doing nothing. If they change their 2020 model to 500k, what happens to their 240/320 price target?
2. Let's talk about Tesla's credibility. It's true that Tesla has missed their targets for a couple of years now, by about 10% off each time. So that is the extent of their credibility based on reality: they have achieved 90% of what they say. So if they keep up with that and have a run rate of 450K by 2018, that will still be roughly 100% above current analysts' 2020 targets. In fact, the biggest misjudgment that Tesla has ever made was neither of these missed targets. It was their initial Model S projection of 20k a year. They missed that by about 300%(which was what caused the initial delay in Model X ramp as they focused on overwhelming Model S demand instead). Their second biggest misjudgment was making the same mistake twice and underestimating Model 3, but now they are rectifying that. FWIW I made a thread on this back in December: Is Tesla underestimating Model 3 demand?
So when it comes to credibility I suspect the market will figure it out quickly. But to truly digest the news the market will need concrete numbers on the capital needed.
According to the TMC, someone has reached to Tesla and confirmed the 190ish per kWh cost for their battery.
But during the call, Elon Musk and JB declined to comment on the cost of cells.
Can someone help me to reconcile the opposite attitude from the two official channels? Could it be possible that the 190ish number is not reliable?
But during the call, Elon Musk and JB declined to comment on the cost of cells.
Can someone help me to reconcile the opposite attitude from the two official channels? Could it be possible that the 190ish number is not reliable?
When you are raising money you would typically rather go to the open market. After this CC, Tesla could literally raise $500m in the space of an hour after market close. If they wanted to raise $1B they may need to take a few hours.
So basically no need to go to a SWF which would take more time and may not actually end up in a deal. if the Norwegians don't already own Tesla then it is for a reason. If they do, they could basically call Elon to say - If you need a few hundred million just let me know.
This sounds glib, but really this is how it works.
It is hilarious to see the articles on Yahoo finance. The usual suspects like LA Times continue to ignore all the incredible news from the earnings report and the conference call, and are trying to drive the SP down. Hopefully that will give me more time to get cash for more stock before the price gets much higher.
Yep thats my plan tomorrow first thing. They have been down a bit. I expect the tesla related lithium to jump by the end if day.
Falcon 9 rocket exploded on June 28, 2015. Elon Musk said the company became "complacent" before the explosion. Six months later, on Dec 21, 2015, SpaceX successfully landed the rocket on the ground and another four month later, they landed a rocket on the sea.
Tesla called the design and production of Model X "hubris" in a statement released on April 4. I am really hoping amazing things will happen once again for Elon Musk's company.
Tesla called the design and production of Model X "hubris" in a statement released on April 4. I am really hoping amazing things will happen once again for Elon Musk's company.
FredTMC
Model S VIN #4925
The one catalyst needed and expected (by me) is PRICE TARGETs raised by the analysts. Their DCF models are clearly now too conservative and require getting reset higher. Even bear analysts need to reset higher. Tesla WILL do capital raise and steer towards SUBSTAINALLY higher production.
sundaymorning
Active Member
Lets put some facts into perspective.
1. Tesla just acquired a lease on a huge commercial property next to Nummi.
2. Tesla will be holding a job fair expected to hire in the thousands very soon. Does anyone here remember the date?
3. Gigafactory is on schedule.
4. Model 3 reservations above 400,000.
5. Tesla has just made a public call for all manufacture experts to join the team.
6. They guide for 500k by 2018.
7. Model S/X demand up strong 45%
Conclusion: If it looks like a duck, walks like a duck and quakes like a duck, then it must be......
1. Tesla just acquired a lease on a huge commercial property next to Nummi.
2. Tesla will be holding a job fair expected to hire in the thousands very soon. Does anyone here remember the date?
3. Gigafactory is on schedule.
4. Model 3 reservations above 400,000.
5. Tesla has just made a public call for all manufacture experts to join the team.
6. They guide for 500k by 2018.
7. Model S/X demand up strong 45%
Conclusion: If it looks like a duck, walks like a duck and quakes like a duck, then it must be......
FredTMC
Model S VIN #4925
F.U. LA Times and F.U. WSJ.
Nothing has illuminated my sense of bias in the media (and special interest) more than watching the coverage of Tesla Motors over the last four years.
Makes me sick.
Only benefit (and I've enjoyed it) is that it provides me a competitive advantage of investing before the reality becomes obvious.
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Nitpicking here.
1. The property is still under construction
2. Not in the thousands, hundreds. Some would also be temporary positions. Job fair is on May 7.
5. The called, but how many and how qualified individuals would heed the call remains to be seen.
Stop it. I know you're excited but you also need to sit down and think this through carefully. Q1 letter wipes out FCF positive Q3 and Q4, Q3 Non-GAAP, and Q4 non-GAAP and GAAP Profit guidance. The revenue line on the DCF goes up with upgraded 2018-2020 guidance, but so does the capital hurdle and implied risk of getting there in the immediate. Yes Tesla is great but this is not a picture of you having a competitive advantage over squat, this is a picture of you suffering from hubris and confirmation bias.
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sundaymorning
Active Member
1. Any idea when the new facility will be done? If Nummi can produce 900,000 as an internal goal, the new facility may be there to take us over 1million by 2020-21.
2. Sounds good enough for an X ramp.
5. When Tesla calls, people usually answer. Basing this on talent outflows from likes of AAPL into Tes. "Exciting news on production manager hire" to be announce soon (quote from Elon).
FredTMC
Model S VIN #4925
It's below $190. I confirmed directly with Jim Evanson.
it's simply that today tesla didnt want to speculate if they'd be 30% lower still after GF. I don't blame tesla for not speculating further. That's another time down the road
dandurston
Member
Tesla confirmed it's below $190. On the call someone wanted more detail than that, which Elon didn't want to give. He wasn't denying the 190 figure.
sundaymorning
Active Member
I would have to disagree. Waiting for cash flow positive could be months away, the time to strike iron is asap. Tesla still has all the competitive advantages right now, they need to accelerate production plans in order to keep that advantage. Also having intellectual property and maintaining a lead on that property gives them advantages, waiting for cash flow positive would mean putting M3 on the back burner for who knows how long. All things considered, I'll take the path drawn out by our leader, Elon. Excitement is what drives the stock. There's no room for pessimism.
It is prudent for Tesla to only do "just in time" funding for bigger items. We don't want another irrationally exuberant startup that growth-spends itself into chapter 11. Tesla is going to be very vulnerable to macro conditions during this expansion phase. A sharp downturn will put a big question mark over the short term ability to stay solvent. I think what Elon is demonstrating is called "patience". Sure they set out a very ambitious goal but they don't need to be reckless about achieving it, thus all the talk about self-funding build-up of Gen3 production.
The more they can demonstrate their ability to execute on this plan (GF opening and actually producing cells, finished beta of Model 3, etc.) the better terms they'd be able to get.
To me it looks like the logical explanation for what is going on is either they simply don't need money yet and think that they can get better terms with less risk later down the road, or they already have something lined up and don't need to go on the open market for funding.
Edit: I guess one more possibility can be mentioned: they really need money right now and essentially what's currently on the ground is what they have to offer, so they will then simply take what the market has to offer. Didn't sound like that to me but it's there.
The more they can demonstrate their ability to execute on this plan (GF opening and actually producing cells, finished beta of Model 3, etc.) the better terms they'd be able to get.
To me it looks like the logical explanation for what is going on is either they simply don't need money yet and think that they can get better terms with less risk later down the road, or they already have something lined up and don't need to go on the open market for funding.
Edit: I guess one more possibility can be mentioned: they really need money right now and essentially what's currently on the ground is what they have to offer, so they will then simply take what the market has to offer. Didn't sound like that to me but it's there.
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1. Not sure. From the original news it just say it's one of the largest industrial development. It could be almost done, could be a couple of months. Strictly speaking, it's still a leak as neither side of the deal made official comments yet.
2. Yes I think the job fair is more for X ramp.
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