Short-Term TSLA Price Movements - 2016

[theschnell]

Model 3 reveal & reservations effect on stock price

Question. How much impact will model 3 reveal and reservations have on the stock price in the short-term? It seems in the past, many of us here on TMC have expected various reveals to have an outsized effect on the stock price, and have been disappointed. Will the model 3 reservation numbers, even if very large, impact the stock price significantly, or is the market only concerned with financial progress at this point and most else is noise. Just curious of opinions on that.

 

[dha]

Will the model 3 reservation numbers, even if very large, impact the stock price significantly, or is the market only concerned with financial progress at this point and most else is noise. Just curious of opinions on that.

These aren't really separate issues. A large number of reservations is very material to the company's financial health and progress.

 

[Zhelko Dimic]

I am as anti-SUV as you can imagine. I spend about 10 day a year on driving events (racetrack), and drive an older Porsche 911. I take kids to school in it and do grocery runs.
I think that 2-seater Mercedes SL 55 AMG is ridicilously preposterous and loose, BMW 3 series feels like a spongy truck, and... Let's not continue, I'm running out of comparisons. And yet...
My wife wants a 7-seater to occasionally schlep her twin sister and all kids - which is reason we have smallest 7-seater in NA, Mercedes E-class Wagon (I call it Titanic).

What's the point of this story?

Yesterday, my 4 year old twins have seen XM pictures for the first time. There was noise, yelling, ruckus, excitement...

Result is that it's obvious to me now, that my next family car is an SUV (!!??) with the 'wings'. If and when I can afford it.
I never saw appeal before, yet this made me appreciate effort gone into those falcon doors.

It's such a sweet thing to justify yourself an expensive car because wife and kids adore it

 

[BornToFly]

A significant percentage of Wall Street does not believe in the Guidance that Tesla gave yesterday for 2016. They think that 30,000 Bolts will be a problem for Tesla. With 100,000 Model S owners, many of which will order a Model 3 for a family member, and with each owner knowing several people that want a Tesla but can't afford one now, I think 200,000 reservations in the first month is conservative. That will hit Wall Street in the face like a nuclear bomb. I believe an Epic short squeeze will start before the end of April.

 

[theschnell]

A significant percentage of Wall Street does not believe in the Guidance that Tesla gave yesterday for 2016. They think that 30,000 Bolts will be a problem for Tesla. With 100,000 Model S owners, many of which will order a Model 3 for a family member, and with each owner knowing several people that want a Tesla but can't afford one now, I think 200,000 reservations in the first month is conservative. That will hit Wall Street in the face like a nuclear bomb. I believe an Epic short squeeze will start before the end of April.

This is similar to what I have been thinking, but I am now starting to doubt the impact. I appreciate your vote of optimism. I do remember all the bears demand concerns, and those should have been laid to rest for anyone who is objective. Now the bears storyline has transitioned to profitability of lack thereof. I'm just wondering if that narrative will take hold in the market and drown out this potential proof of Model 3 demand, or if the overwhelming demand will overshadow the profitability narrative. I think you're probably right that the demand picture will be a game changer if it materializes as you suggest, which I think it probably will. It will kill the narrative of low demand due to low oil prices. Will be interesting to watch, and I am also trying to decide if I will pick up some calls in the next few weeks. That has been my plan for several months, but as the date approaches I'm starting to waver on the idea a little.

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These aren't really separate issues. A large number of reservations is very material to the company's financial health and progress.

In the very short-term they are separate issues in my opinion. In the medium to long-term, clearly they are much more correlated.

 

[AlMc]

Interesting 'Max Pain' graph starting tomorrow. Very little difference from about 115 to 135

 

[larmor]

I agree, the street didn't take user and experience into account. Example are aapl and nflx. Nflx could survive just with kids videos alone. 35k for a car without going to gas station, oil changes and longer lasting yet stylish...
I think they sell out of m3...

A significant percentage of Wall Street does not believe in the Guidance that Tesla gave yesterday for 2016. They think that 30,000 Bolts will be a problem for Tesla. With 100,000 Model S owners, many of which will order a Model 3 for a family member, and with each owner knowing several people that want a Tesla but can't afford one now, I think 200,000 reservations in the first month is conservative. That will hit Wall Street in the face like a nuclear bomb. I believe an Epic short squeeze will start before the end of April.

 

[everman]

Yeah, I don't have a solid grasp of exactly what features are most problematic, but anything that can get in the way of Tesla doubling production every 12 months needs to be very carefully considered.

Specifically regarding a P version, I wonder if the distinction between performance and nonperformance is really worth making. Does every model Tesla make need to treat performane as an option? Or can some models be higher performance than others? For example, the new Roadster, would in make sense to have a nonperformance version Roadster? Or is it simply that all Roadster are by definition high performance? Just thinking out loud.

Thanks JHM, very interesting thoughts. I definitely agree about the Roadster, as that product exemplifies performance. I think, however, that the sheer quantity of Model 3's that need to be sold indicates there should be a few 'strata of appeal' available for the largest range of buyers. The answer that those looking for performance ought to consider the Model S/X is simply not feasible. The appeal of those vehicles will always primarily be their size and luxury. There needs to be a performance option in the mid size along with full size. There is a massive segment of buyers that would never consider a $100k car, no matter the performance.

I think the most exciting factor to be seen with the unveiling of the worlds first third generation EV, will be the realization that performance is inherent to the drive train, and within reach to the Model 3 shoppers. That will be one of the most undermining factors to erode the viabilility and desirability of the encumbent offerings.

Thanks again for your considered thoughts on the matter. It is indeed a facscinating thought experiment. I can't wait for March 31st!

 

[Twiglett]

I agree, the street didn't take user and experience into account. Example are aapl and nflx. Nflx could survive just with kids videos alone. 35k for a car without going to gas station, oil changes and longer lasting yet stylish...
I think they sell out of m3...

Not so much sell out, but who knows how long it will take to clear the backlog of reservations.
If the reservation numbers are too high it could be long into 2018 or 19

 

[CHG-ON]

I think it will have a meaningful impact either way. Low orders could kill us. Big orders will help. But I am not sure they will help as much as low orders could hurt. They need to get their deliveries and initial quality up fast. I think it is really beginning to hurt them (us).

 

[Lump]

Meanwhile in Asia Japans Nikkei -5% & South Korea Kosdak halted after dropping -8%, US overnight futures still green for now.

 

[Fallenone]

I think big reservation number is half of the power for a turn around for the stock. For the other half I think it requires them to meet their guidance. Starting with early April release of Q1 delivery, followed by May Q1 ER showing continuous improvements on the cash flow part.

 

[Ohms Andwatts]

While the notion of people in lines going around the corner at the Tesla stores waiting to reserve a model 3, and of the Tesla website crashing makes for a dramatic statement, if it is realized, I suspect the effect on the stock might not be that overwhelming initially. The real explosion in consciousness and then the stock price, will be to see the correspondingly diminished purchases of BMW 3 series, Audi A4, and Mercedes C class. When the combined totals of those Tesla competitors show significant slowing of demand, the naysayers and the Tesla doomsayers will be slain.

 

[ratsbew]

There will be a truly huge number of reservations. I'm predicting 200,000 in the first 24 hours. Remember, Tesla is taking reservations from the global market. 1 Million reservations before the first delivery is highly likely. They will use this money to expand production capacity and may hit 500,000/year before 2020.

TSLA will be over 250 by the end of April.

 

[roblab]

. I think, however, that the sheer quantity of Model 3's that need to be sold indicates there should be a few 'strata of appeal' available for the largest range of buyers. The answer that those looking for performance ought to consider the Model S/X is simply not feasible. The appeal of those vehicles will always primarily be their size and luxury. There needs to be a performance option in the mid size along with full size.

This makes me think of all these little Honda and Toyota "performance" rice burner cars with the four inch chrome exhaust pipes and lots of noise. OOOOH! Speed! Power!

Any electric, just by being electric, has more performance than a gas car. Tesla doesn't make slow cars. I own a non-performance 90D. 60 mph in a little over 4 seconds is the weak sister, but it sure beats everybody else. I expect the Model 3 will be in the same performance group as all the other Teslas.

And I'm afraid the "strata of appeal" you are intimating is Price, not Performance. As mentioned before, the "Rice Burners" owners spend thousands on all their *aftermarket* garbage, sold by the dealers at huge profits.

 

[everman]

This makes me think of all these little Honda and Toyota "performance" rice burner cars with the four inch chrome exhaust pipes and lots of noise. OOOOH! Speed! Power!

Any electric, just by being electric, has more performance than a gas car. Tesla doesn't make slow cars. I own a non-performance 90D. 60 mph in a little over 4 seconds is the weak sister, but it sure beats everybody else. I expect the Model 3 will be in the same performance group as all the other Teslas.

And I'm afraid the "strata of appeal" you are intimating is Price, not Performance. As mentioned before, the "Rice Burners" owners spend thousands on all their *aftermarket* garbage, sold by the dealers at huge profits.

I'm not sure what you mean. If the price is stratified, what is it that you are buying at that higher price? If not performance, then what? I'm sure leather, paint and sound system are in there, but how do we leave out performance?

 

[Quant]

Tesla stores will literally break for M3... Why: when i went to a preview of model S at fashion island store, at night, it was packed. When I saw model x preview in fashion island, store was packed.

If they make a car on par with bmw 3 series, the tesla store will break.

Yeah, I agree ! I don't know why they are doing this ? Maybe to get 5 PC of those wanting a Model 3 to be impatient and make an impulse decision to order an S or an X immediately? That's the only thing that could make sense. And, perhaps get media to cover the launch with throngs of people waiting in line like for Apple launches? Which would also make sense...get a lot of free media for the brand and the launch ?

 

[sub]

There may never be a ludicrous mode on the M3. All the power electronics will be less expensive. But I think the base car will have 0-60 in under six seconds. In the normal world, this would be a fast car.

I think model 3 will be around 5 seconds 0-60 for base model. My i3 is 7.2 claimed but I think it's quicker than that. Driving the i3 also makes me realize that paying the high cost for ludicrous is a waste of money if the budget is tight, It's rare that I can even stretch the legs of my i3 from a stop without risking a ticket.

 

[maoing]

It's weaker than most investors anticipate. Face to the reality. When entire market bounced big in the last 2 trading hours, TSLA sliding down.

Compared to rest of market, it was a superstar today. Look forward to your second post

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This is the perfect storm scenario as you said. Elon needs that more than everyone here to boost SP, then raise capital before bear market. But the key is model X execution. unless we see proof from model X delivery activity, don't hope too much on that.

So, obviously, macro concerns are still around and Tesla management has burned some credibility with some investors and analysts, so while people seem to be excited about 2016 prognosis, not everyone is ready to take it at face value.

I start to think Monday, April 4th 2016 may be the most important day for TSLA this year. Let me tell you why:

- Model 3 reveal on Thursday, March 31st, with some in-store reservations starting after that (only a few hours left of the day, probably)
- Then, just as all this starts to hit the news cycle, online reservations start on Friday, April 1st.
- If we have a huge response, we may get a tweet from Elon about it over the weekend and some more news coverage. If it's something major to brag about we may even get a PR about early numbers on Monday.
- Also over this same weekend, we should receive the Q1 delivery numbers. If they do hit 16k cars delivered, this will instantly validate the 2016 plan/projections. In other words: I believe there is a huge pent up upwards reassure on TSLA because of these impressive goals, but many are on the fence whether these are realistic. If Q1 goes as planned, that should make it very clear the X is in true mass production.​

In the above "perfect storm" scenario, I do see all time highs possible for TSLA - as unlikely as that may seem today.

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It might a sign that US market decouple with overseas markets, and it's a sign for bounce.

Meanwhile in Asia Japans Nikkei -5% & South Korea Kosdak halted after dropping -8%, US overnight futures still green for now.

 

[lango]

There may never be a ludicrous mode on the M3. All the power electronics will be less expensive. But I think the base car will have 0-60 in under six seconds. In the normal world, this would be a fast car.

There is no reason to not use tech they already developed that would have a big gross margin. I think a fully optioned 3 sec 0-60 s model 3 will happen but it will be expensive.