Short-Term TSLA Price Movements - 2016

[sunhelm]

AH SP spike to $242! Algos must have picked up "500,000 in 2018" and "capital raise"

and look "cash flow from core operations was nearly breakeven" and cash from model 3 reservations are not even here, listed as accounts receivable as credit card settlement occurs in April.

 

[mrdoubleb]

Customer deposits going from $283M to $391M in one quarter!

I am not sure I can even explain this, so opening the floor for ideas.
1, By end of Q1 all Founders and Sig Model X should have been delivered in the US so I expected a big drop for this number
2, Later in the ER Tesla says virtually none of the M3 deposits were counted against Q1 financials as the credit card transfers did not complete in time for that.

But if both 1 and 2 are true, and deposits still went up by almost 40% then I am truly speechless.

What am I missing? This is too good to be true.

 

[hockeythug]

As thrilled as everyone with the outlook, but would like to pick up on this:

'Our GAAP cash outflow from operations during the quarter was $250 million. After adding $242 million of cash inflows from vehicle sales to our bank leasing partners, our cash flow from core operations was nearly breakeven.'

This is the same metric that was controversially concocted last ER to demonstrate how the hockey stick was turning upwards, and now it's at ($8m). What do people make of this?

I wouldn't look at cash flow anymore now that they created a new excuse of moving 500k production up two years. They are also playing cash shell games with their credit lines.

 

[Gerasimental]

I'm just going to be playing devil's advocate here, and picking up on things I consider potentially problematic. My next one is this:

'Overall, our non-GAAP Automotive gross margin declined 90 basis points over Q4 due to an increase in delivery mix of Model X, which carries a lower margin during its ongoing production ramp phase.'

when it said earlier:
'Average Q1 Model X prices were about 30% higher than for Model S.'

There's too much going on for me to do the maths right now, but this suggests, I think, very high additional COGS for Model X due to production problems. Again, what do people make of this?

 

[Gerasimental]

I wouldn't look at cash flow anymore now they created a new excuse of moving 500k production up two years.

Sure, but we have no idea how much of that has been implemented, and how cash-intensive the early-stage implementation is. I hope we hear about this on the CC.

 

[techmaven]

As thrilled as everyone with the outlook, but would like to pick up on this:

'Our GAAP cash outflow from operations during the quarter was $250 million. After adding $242 million of cash inflows from vehicle sales to our bank leasing partners, our cash flow from core operations was nearly breakeven.'

This is the same metric that was controversially concocted last ER to demonstrate how the hockey stick was turning upwards, and now it's at ($8m). What do people make of this?

The issue is that people in the media haven't really done a good job of trying to explain Tesla's business model and how it is materially different from other automakers. With a major differences in revenue recognition, vehicle leasing, and loan guarantees, the comps are understandably more complex. However, Tesla's #1 goal is to have enough cash to build the Model 3 in big numbers. That's the stock price.

 

[sundaymorning]

Let me paraphrase Elon:
the battery industry is one of the shaddiest. Everyone claims to have the next lithium leapfrog. We are no longer interested in meeting these people and their claims, if you have something, just send us a working cell, period.

On the other hand I acknowledge that yes, a Farg can leap. When you say "so and so company will leapfrog Tesla", I envision you training a frog with a AAA battery tied to its back and jumping over a Tesla logo. Definition of leapfrogging Tesla.

 

[Seesaw]

when it said earlier:
'Average Q1 Model X prices were about 30% higher than for Model S.'

There's too much going on for me to do the maths right now, but this suggests, I think, very high additional COGS for Model X due to production problems. Again, what do people make of this?

I take it that the X costs more to build than S due to ramping up of production. It will settle once production hits its stride

30% higher price shows X could end up being quite lucrative

 

[FredTMC]

Recap: I'm on record folks.

I firmly believe TSLA will trade higher after ER this Wednesday. Certainly by next Friday.

Why?

1) Q1 REV miss is already known and priced in.

2). Q1 Bottomline profit. Market did NOT care last quarter with the BIG miss ($0.87/share).

Big catalyst will be Guidance/Outlook:

3). Guidance for 2016. They'll reaffirm again (IMO).

4). Details on Tesla Energy and future guidance. Big story may be TE Gross Margin surprise ($470/kWh msrp pricing vs old $250 baseline)

5). Color on out-year guidance: 2017-2020. Any acceleration on production targets (e.g. 1M in 2020 and faster YoY ramp) will be hugely positive.

6). Capital Raise questions. Some analyst will ask...

7). Uber-like Service / autonomous fleet. Adam Jonas will ask. Adam wins.

I'm sure I missed some things. I'm sure Elon will hold onto some things. Model3 part 2, Cap Raise plans, factory or GF2 plans etc

As Jesse said in his hangout with David, Analysts will be forced to update their Models and PTs based on stronger guidance.

Here I am... Shamelessly bragging.

Congrats to all the longs!

Huge thanks to Jesselivermore, DaveT, AIMc, others for keen insights.

 

[anticitizen13.7]

I'm just going to be playing devil's advocate here, and picking up on things I consider potentially problematic. My next one is this:

'Overall, our non-GAAP Automotive gross margin declined 90 basis points over Q4 due to an increase in delivery mix of Model X, which carries a lower margin during its ongoing production ramp phase.'

when it said earlier:
'Average Q1 Model X prices were about 30% higher than for Model S.'

There's too much going on for me to do the maths right now, but this suggests, I think, very high additional COGS for Model X due to production problems. Again, what do people make of this?

This does not surprise me.

Model X components are procured from suppliers in lower volumes than Model S components. Model X needs more materials than Model S. Model X has required more QC at the factory, and a lot of additional QC at service centers. Some delivered Model X have had to go back to service centers for days or even weeks for remediation. New revisions of components adds more expense.

From reading the Model X forum over the past 3 months, I can infer that X production and remediation has had a very high labor cost. I believe this will likely be resolved at some point, but it is almost impossible to deny.

 

[Seesaw]

Volume production of 3 in 2017 is very interesting... 2017 is not that far away

 

[techmaven]

I'm betting the lower margins have to do with the labor associated with rework. There is a cost to using the ABL too, do we know where that sits?

 

[StapleGun]

Volume production of 3 in 2017 is very interesting... 2017 is not that far away

Huge news for US reservation holders hoping for the tax credit. If they manage to push out USA car #200,000 to 2018 then all cars built before July 1st 2018 will get the full credit. Depending on how much of the 500k is built in the first half of the year and how many reservation holders are in the USA, it's possible that all current USA reservations holders will get the full credit.

 

[hockeythug]

This does not surprise me.

Model X components are procured from suppliers in lower volumes than Model S components. Model X needs more materials than Model S. Model X has required more QC at the factory, and a lot of additional QC at service centers. Some delivered Model X have had to go back to service centers for days or even weeks for remediation. New revisions of components adds more expense.

From reading the Model X forum over the past 3 months, I can infer that X production and remediation has had a very high labor cost. I believe this will likely be resolved at some point, but it is almost impossible to deny.

Yep. If they were waiting on a handful of parts to complete each car and the line was basically not active, direct labor idle time must have been through the roof.

 

[ludicrousspeed]

Not too much clarity on TE, but two points stood out for me:

"We remain on plan to make the first cells at the Gigafactory in Q4 2016"

"During Q1, we delivered over 25 MWh of energy storage to customers in four continents."

I was under the impression that GF cell production would be late summer/early fall. How do these two statements align with everybody's expectations?

 

[Seesaw]

My own little internal thought was that I expected Tesla to have a larger market cap than Oracle by 2021, I'm now thinking it will hit that goal by 2019.

Tesla Energy has huge potential upside and we haven't scratched the surface of Chinese and European vehicle production

 

[JRP3]

But if both 1 and 2 are true, and deposits still went up by almost 40% then I am truly speechless.

What am I missing? This is too good to be true.

Obviously this is because of the dropping demand that some people keep talking about....

 

[techmaven]

Yep. If they were waiting on a handful of parts to complete each car and the line was basically not active, direct labor idle time must have been through the roof.

No reason why the rest of the line isn't humming along even if some of the final assembly work has to be re-done/put off.

 

[sunhelm]

Unless you think Elon is a liar, all demand growth concerns should end due to this statement :

"we remain confident that we can deliver 80,000 to 90,000 new Model S and Model X vehicles in 2016. This is due to the growing demand we are seeing for Model S and Model X"

 

[electracity]

You are making a link between advanced cells and form factor that doesn't exist. It truly doesn't matter if the cells are cylindrical or rectangular. The cell chemistry matters and the form factor is a secondary concern. There are many cell chemistries made in multiple form factors. You can buy NMC in both cylindrical and prismatic. You can buy LiFePO4 that way too:

All of these are LiFePO4. Given that the Gigafactory is a ground up operation where one of the world's leading battery cell producers is a major partner, Tesla could choose whatever form factor makes the most sense to them.

I was making no link between chemistry and form factor. I am starting to think that everyone, including Tesla, may now believe that the best price/performance packs in the future will not be made from cylinder cells. Tesla made 18650 batteries work, but that doesn't mean the cylinder shape is optimal for their application. If they are going to change they wouldn't do it after building out half the gigafactory.