Short-Term TSLA Price Movements - 2016

[dirtyofries]

By that definition, every car sold by dealers is a 'floor model', as you can go to a dealer and test drive any car on the lot. Are all the cars in dealer lots floor models?
You don't sell a car right off the assembly line. It needs some bare minimum track testing.

That's being intellectually dishonest when it comes to Tesla, and you know it. They don't keep a massive inventory lot of vehicles like a traditional manufacturer.

He's clearly differentiating between cars coming off the line and cars that have had some role in the showroom process.

All that said, clearly sales was going further than he's comfortable with. I hope we see it corrected so they can maintain their clear stance on the subject.

 

[uselesslogin]

I don't mind the screw up. I mind the fact Elon had to tweet about it. He should have looked into it quietly before tweeting. Oh well.

 

[dha]

I don't mind the screw up. I mind the fact Elon had to tweet about it. He should have looked into it quietly before tweeting. Oh well.

I love that he tweeted about it. Some well-known FUDsters had already caught onto the Reddit post and were ready to have a field day with it. Elon clearly outlined the policy and nipped those stories in the bud.

 

[dirtyofries]

I don't mind the screw up. I mind the fact Elon had to tweet about it. He should have looked into it quietly before tweeting. Oh well.

His style is seemingly to get out in front of these things if he can so he can control the direction of the narrative. Makes it harder for people to claim Tesla was hiding something.

 

[myusername]

So here's a strange but serious question:

why don't they just stop producing/selling the MS/MX line for the time being and focus on the GF/M3?

let's say they sell a whopping 25k cars this quarter... with a... let's say $85k ASP (which might end up being high)... that gets them gross $2.1 billion (which checks out proportionally to Q2 revs)... considering the discounting that's going on... even if they achieved 20% GM... that'd get them $425 million... considering general production costs... increased warranty costs... increased service center demand... and it's chewing into the 200k Federal tax credits available...

i'd imagine the real world capital this quarter would contribute to the production of the M3 or gigafactory might realistically be in the $100 million to $150 million range after it's all said and done.

they just did a $2b cap raise and then they're going to ask for a $3 billion cap raise by the end of the year?... that pretty much makes this quarter's contributions to their goals pretty much nothing... even if Q4 ends up being 30k cars delivered... it's still pretty much peanuts compared with the required capital to complete the GF/M3.

this to me seems strangely reasonable.

 

[AlMc]

Maybe the demo vehicle was no longer available, for whatever reason and Tesla rather then canceling the sale and potentially stranding the customer gave priority to the customer and offered more than what was promised, due to extenuating circumstances?

Still, based on the email. This is against EM's stated policy.

My guess is 2-300 cars (probably 75's) got delivered to US customers from the factory at discount even though they were essentially brand new. ~1% of world-wide quarter deliveries. I guess that is small.

Yes, small. But still against what the stated policy is/was.

That's being intellectually dishonest when it comes to Tesla, and you know it. They don't keep a massive inventory lot of vehicles like a traditional manufacturer.

He's clearly differentiating between cars coming off the line and cars that have had some role in the showroom process.

Just to be clear. Do you consider a car that has not been driven outside the test track at Fremont that is sitting in the Service center lot to be 'part of the showroom process'? Based on the email, I believe EM would not agree (IMO)


Again, we can all parse this any way we like but IMO, EM is not trying to find wiggle room (and he should not). If it is a new, undamaged, non test drive car the price should be the same whether it is sitting in a service center parking lot of coming off the assembly line. Whether you ordered it online or just picked it up *new* on the service center lot.

 

[geneclean55]

Its a very clear letter from Elon which I like. My only concern is that I feel like i am getting an inside scoop on company policy/ethos when reading it. But then it dawns on me that Elon is probably writing it for the general public as much as he is for the company personnel.
I wonder how they feel about that.

 

[MitchJi]

My thoughts exactly! The million dollar question...which metric?
He can't just be referring to delivery numbers can he? That is pretty much already expected by everyone at this point in time.

IMO production numbers and the financials are the most important numbers.

 

[Intl Professor]

It isn't only the WSJ. Almost all newspaper quality has gone down last 10 years. Eg The Economist.

I think the NYT has responded better than most to the threat of other media. I particularly enjoy reading the Sunday Magazine which is almost New Yorker quality in content, style, and writing. Ten to twenty years ago I couldn't stand the Magazine and, of course, was disappointed in foreign coverage, particularly the lead up to the Iraq war which I mentioned elsewhere.

 

[SuperDragon]

Did he delete the tweets?

 

[Ameliorate]

Did he delete the tweets?

I still see them, - Tweets with replies by Elon Musk (@elonmusk) | Twitter

 

[MikeC]

So here's a strange but serious question:

why don't they just stop producing/selling the MS/MX line for the time being and focus on the GF/M3?

let's say they sell a whopping 25k cars this quarter... with a... let's say $85k ASP (which might end up being high)... that gets them gross $2.1 billion (which checks out proportionally to Q2 revs)... considering the discounting that's going on... even if they achieved 20% GM... that'd get them $425 million... considering general production costs... increased warranty costs... increased service center demand... and it's chewing into the 200k Federal tax credits available...

i'd imagine the real world capital this quarter would contribute to the production of the M3 or gigafactory might realistically be in the $100 million to $150 million range after it's all said and done.

they just did a $2b cap raise and then they're going to ask for a $3 billion cap raise by the end of the year?... that pretty much makes this quarter's contributions to their goals pretty much nothing... even if Q4 ends up being 30k cars delivered... it's still pretty much peanuts compared with the required capital to complete the GF/M3.

this to me seems strangely reasonable.

It seems reasonable because you're short. I don't think any long sees the logic in idling a factory in order to stop producing their main revenue source.

 

[mmd]

Its a very clear letter from Elon which I like. My only concern is that I feel like i am getting an inside scoop on company policy/ethos when reading it. But then it dawns on me that Elon is probably writing it for the general public as much as he is for the company personnel.
I wonder how they feel about that.

He is probably indicating to potential buyers that there will be no more discounting, so people will custom order again. Without this, fence sitters will just wait for next end-of-quarter sale.

With this email, I see new sales tricks emerging.
"Hey, let's put a tiny scratch under the bumper and offer a big discount to move the metal".
"Hey, let's drive it 20 miles, make it a floor model and offer up nice discount"
"Let's mess up the paint under the hood."

 

[Drivin]

Its a very clear letter from Elon which I like. My only concern is that I feel like i am getting an inside scoop on company policy/ethos when reading it. But then it dawns on me that Elon is probably writing it for the general public as much as he is for the company personnel.
I wonder how they feel about that.

Of course he is writing it for the public: congrats on the great quarter so far. then have it show up on twitter. LOL.

 

[drinkerofkoolaid]

But demos/floor models have always gone for less than custom orders (which have never been discounted). They are just going for a bigger discount this quarter. Older, lightly used stuff is always going to sell for less than a brand new custom order. I believe there were very few plastic-wrapped inventory cars being sold at a discount (demo refreshment cars because many stores sold everything, including all floor models to show customers!). I don't think this means Tesla changed the sales model, they just put literally everything up for sale for a quarter.

In fact, the massive amounts of inventory were already pulled from the website, days ago. Also, any discounting/lease terms are not valid unless delivery is actually taken by EOQ. Together, it is a pretty strong indicator that this was a one-off, IMO.

Couldn't agree more. Your post sums up the situation perfectly!

 

[myusername]

It seems reasonable because you're short. I don't think any long sees the logic in idling a factory in order to stop producing their main revenue source.

but they are achieving virtually nothing with these low volumes... as a short... going into this weekend... i'm thinking: "what does it mean if Tesla delivers 18k/20k/25k etc.?"... and with this line of thinking... the answer is nothing... it's purely symbolic.

 

[tander]

So here's a strange but serious question:

why don't they just stop producing/selling the MS/MX line for the time being and focus on the GF/M3?

let's say they sell a whopping 25k cars this quarter... with a... let's say $85k ASP (which might end up being high)... that gets them gross $2.1 billion (which checks out proportionally to Q2 revs)... considering the discounting that's going on... even if they achieved 20% GM... that'd get them $425 million... considering general production costs... increased warranty costs... increased service center demand... and it's chewing into the 200k Federal tax credits available...

i'd imagine the real world capital this quarter would contribute to the production of the M3 or gigafactory might realistically be in the $100 million to $150 million range after it's all said and done.

they just did a $2b cap raise and then they're going to ask for a $3 billion cap raise by the end of the year?... that pretty much makes this quarter's contributions to their goals pretty much nothing... even if Q4 ends up being 30k cars delivered... it's still pretty much peanuts compared with the required capital to complete the GF/M3.

this to me seems strangely reasonable.

That would be interesting if they did that. But then again the S/X should be able to pull in hundreds of millions in cash each quarter from here on out, which is nothing to sneeze about even when you are raising billions. What I wonder if at some point they'll start lowering their prices each year like Ford did, although the market reaction would need a parachute.

 

[theschnell]

but they are achieving virtually nothing with these low volumes... as a short... going into this weekend... i'm thinking: "what does it mean if Tesla delivers 18k/20k/25k etc.?"... and with this line of thinking... the answer is nothing... it's purely symbolic.

Since when was nearly half a billion dollars per quarter considered nothing but symbolism? You have got to be completely joking me. They are also demonstrating (or attempting to demonstrate depending on your viewpoint) that they can ramp up production etc on real cars so the market will invest based on current execution. But whatever, this response is probably a waste of time.

 

[MP3Mike]

Huh?
As of January 2016, Apple had 43.3% of Smartphone subscribers.
This is up 0.3% from the October numbers.
comScore Reports January 2016 U.S. Smartphone Subscriber Market Share

Maybe in the US, but I assume he was talking about globally. Which I see Apple, as of Q2 2016, only has 11.8% of the global market share.

 

[3Victoria]

So here's a strange but serious question:

why don't they just stop producing/selling the MS/MX line for the time being and focus on the GF/M3?

Wow, I will grant you strange part, but the serious-- nada. So, you are suggesting they turn a profitable quarter into a complete loss? All expense and no income. Wow, just wow. It wouldn't even change the rate limiting steps in the Model 3 production.