Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[Dutchie]

New/updated dates I will be adding to the milestones thread:

• Semi production starting end 2020
• GF4 live in 21
• GF4 announcement Q4
• Megapack Q4
• MY production of 1000/week by summer 2020
• OTA to improve power on S, X, and 3 in a few weeks, 5% for 3, 3% for S and X, improvements for single-pedal driving
• V3 roof launch today
• Feature complete Q4 (no change)
• FSD capable end 2020

Let me know if I have missed any.

Small one: Software update coming next week or week after for better smart summons in which experience of 1+ million smart summons is incorporated

 

[lklundin]

And what was this about one pedal driving? Like they're going to OTA full one pedal driving?

Well, if they can promise an OTA with a Model 3 5% power increase, then they may very well be able to also introduce a setting for increased regenerative braking - allowing for one-pedal driving a larger fraction of the time.

Btw, in the past few days various media headlines looked to me like Tesla was being set up for a miss on quarterly expectations, so I was close to reducing my TSLA holding during the run-up. So now I am very happy with my buy-and-hold strategy.

 

[cs_umd]

Just finished watching the CNBC bit with Gene. The reactions of their panel are hilarious. They were all practically saying the same thing "Oh wait for the call.....something could happen...you never know"

So easy to see that they were hoping for some bit of news like another Exec departing the company to try and paint something bad for Tesla.

I have been reading this forum for years, but never posted before. Thanks everyone for all the information, analysis, and insights.

Loup Ventures founder Gene Munster reacts to Tesla earnings

The level of negative bias seen at CNBC when it comes to TSLA is obvious most of the time, but sometimes it is subtle. In that piece with Gene Munster, Melissa says that GF3 “looks like it’s ahead of schedule” according to the “newsletter” (at ~9:05 in the video) and says “if we can take a look at those pictures, Gene” and then they proceed to show the pictures from the previous quarter’s update letter (at 9:21) instead of the ones from this quarter’s presentation which show parts and vehicles in every stage of production at GF3 — from stamping to general assembly.

 

[Artful Dodger]

What does this mean for SP500 inclusion?

Still some 700M red in the 4 quarters.

If I have my maths right, it means that if we can AVERAGE $124M GAAP profit over the next 2 quarters (Q4'19+Q1'20) then we'd meet the S&P requirements for profitability for inclusion anytime beginning April 2020.

Just in time for Model Y? I think so!

Cheers!

 

[Causalien]

I actually finally found the major cause for a bug today due to the change in mood. There's still Trump, the trade war causing big problems, but I am less irritated at the prospect of digging deep into something really thorny to get things going because one of my worries is completely gone. Tesla worry is two fold for me. One is the financial impact on asset price. The other, more hard to swallow impact is this general sense of injustice. Of this upside down world heading into the wrong direction and the frustration that those who care now for the future is actually winning.

I am pretty sure this lifting of spirit will happen to other supporters of Tesla as well, even if they are not in related field, it'll make the ecosystem stronger.

 

[Earlian]

Back for the party. Bought stock a week ago, while i decided not to listen to doubts anymore and made that decision simply on the q3 delivery numbers. Even with the losses this year, my trust got back by itself and got rewarded.

Love how Elon Musk also got off Twitter some days before the call. Spreads confidence.

Congrats to all Tesla Supporters!

 

[Fact Checking]

Can anybody confirm whether there was any other deferred revenue beyond the 30M for summon? Or do we not know this yet (waiting for 10Q)?

Unlikely, because despite Smart Summon recognition, deferred revenue actually rose from Q2, from $884m to $1,045m.

As @EVNow recently commented, the Q3 EBIT improvements over Q2 were mostly from sustainable sources, like S/X ASP recovery, CoGs and opex reductions - and Q4 is lining up to be even better.

Very impressive quarter!

 

[Fact Checking]

MY production of 1000/week by summer 2020

In the ER call Elon said "1k/week Model Y volume production by the middle of next year" - which pins down the guidance to end of June, i.e. end of FQ2'2020.

 

[Artful Dodger]

Tasha Keeney on CNBC:

Tesla soars on earnings

Here's Tasha's segment: "Tesla soars on earnings"

 

[AlexS]

this is why I don't like too many say.com questions and analysts left out

 

[Singer3000]

Another little titbit - this was the first quarter since March 2018 that customer deposits increased. Only by $34m but it's pretty good evidence that they hit the ground running with demand in Q4.

 

[Antares Nebula]

Unlikely, because despite Smart Summon recognition, deferred revenue actually rose from Q2, from $884m to $1,045m.

As @EVNow recently commented, the Q3 EBIT improvements over Q2 were mostly from sustainable sources, like S/X ASP recovery, CoGs and opex reductions - and Q4 is lining up to be even better.

Very impressive quarter!

Think you guys are right. See also Gene Munster's note today:

Tesla's Profitability Strengthens Case for Sustainability | Loup Ventures

"The business model is slowly shifting to high-margin software. Tesla recognized $30M in deferred revenue related to Autopilot this quarter. We had expected deferred revenue recognition closer to $100M. Recognizing less high margin revenue in the near-term is a positive, as it leaves room for future margin improvement. Tesla currently has just under half a billion in unrecognized revenue on the books. To illustrate potential margin improvement, at a 100k/quarter delivery run rate, every ~$60M in FSD deferred revenue recognized adds about 1% to auto gross margins."

 

[Antares Nebula]

@Fact Checking @EVNow (or anybody else):

How are you guys determining S,X ASP recovery / higher than thought in current models (e.g., 91k in EVnow's model)?

 

[avoigt]

This is what we all have waiting for and as usual it happens when no one expected it to happen not the bears and not the bulls.

Congrats to all longs my last purchase was below 190 sh and I did know its been a bargain.

That surprise ER catches all manipulators and people betting against obvious good development in the last quarters rightfully on the wrong foot be it retail investors or large hedge funds. Not good standing on just one foot so I expect some will loose balance in the next days. To be honest I have zero regret for those hating Tesla and spreading lies, FUD and misinformation because of greet to loose all they have and wish this for them to be a lesson in life they learn from.

If you want to understand a company don't listen to other people or the media or emotions but use their products and look at the people managing the company. The stock price will always take care of itself - its just a question of time.

There is a ton of positive within the numbers to analyze but beside the strong results from Q3 I am even more positive about a lot of indications that they indeed may have turned a corner now and can benefit from different aspects of the business they did invest in for years as well as future outlook. No doubt there are challenges ahead that may weight on ER in Q1 and Q2 but after, that should be it mainly and while Tesla is printing money shorts will wonder how all that did happen.

- The obvious is CF, Profit, GM, revenue etc
- Only a fraction of FSD referred revenue has been allocated yet to its in fact recurring with growing fleet
- S&X demand is growing which is very important for profit but they are niche versus 3 and Y therefore loose relevance
- Y started trial production and supposed to sell more than S,X,3 combined (wow just wow)
- GF3 earlier than expected, most of us know but not the world really
- Model Y a quarter earlier than expected (this is huge)
- Energy back on growth path and still heavily underestimated
- Storage demand strong and solar too
- Shortage of Cells confirmed as the bottle neck in the past for Energy so no demand issue
- GF4 to be announced this year which is the next lever
- 360k units this year certain which means +500 for 2020 is also certain as planned
- FSD feature compete on track for EOY (that huge)
- FSD released with no interaction of driver EOY 2020 (that is huge)
- Accident rate for AP now 1:9 which is just amazing and an order of magnitude difference
- I could continue

Also I liked that they did what I believe is the right step downplayed the cost advantage of the Y versus the 3. For me there is not a single reason to believe the Y to be at the same cost level at a later point in time but I agree at the ramp phase costs may be equal of what the 3 is today. With this they backed in future opportunities to surprise. I have seen this at different places in the ER therefore they may have now learned how to deal with WallStreet

Under-promising and Over-delivering!

@Fact Checking where is your UFO now ?

 

[Artful Dodger]

Actually, not so: "funding secured" increased the price from ~$365 to ~$380, only +4%.

True, because the vast majority of the jump in the SP that morning occurred after the Int'l Biz. Times broke the story of the Saudi $2B investment in TSLA.

But you won't hear that from the Media, or from the SEC.

The Saudi story broke at 12:18. I posted this comment on DISQUS shortly thereafter:

'The Tweet' came from Elon at 12:48 pm ET, as you can see the SP was already flying high at over $360 and it stayed near there until the SEC halted trading.

The final run up to $380 happened after trading resumed hrs later for the last 15 min of the session.

Jus' sayin'.

 

[Fact Checking]

What does this mean for SP500 inclusion?

Still some 700M red in the 4 quarters.

But the worst quarter (Q1'2019) will roll off the 4 quarters average in Q1, making S&P 500 inclusion in May-June 2020 a high probability event, because Q4+Q1 profits only have to reach $265m, and Q1 has to be profitable (by any small margin):

Post ER call update of my S&P 500 inclusion probability estimate:

• Order rate is even stronger so far, and they said they'll be production constrained in Q4: 100k deliveries secured IMO.
• S/X demand is stronger and they are increasing production in Q4: this is a very good source of margins.
• There's a few other things as well (FSD, pickup truck, GF3 rampup) - but just these two factors ensure $265m Q4 GAAP profits IMHO.
• Q1 is less certain - will GF3 have ramped up by then? If yes then small profits look possible.

So I'm increasing the odds of Q1 S&P 500 inclusion in the May-June 2020 timeframe to about 70% - it will mainly depend on GF3 ramp-up progress.

Not advice.

Subject to the usual caveats that predictions 7 months into the future carry.

Not advice.

 

[Fact Checking]

@Fact Checking where is your UFO now ?

You were right and UFOs are real!!!!

Yeah, agreed - if Q3 results are a loss - which looks likely at this point - then I'd expect the negative sentiment to resume.

Updated meme:

 

[Artful Dodger]

Proof that Tesla Investor Relations runs a tight ship with no leaks: even Cathy Wood, one of the most important institutional investors, didn't suspect profitability.

(Or Cathy performed an epic act of misdirection: they bought calls from the TSLA shares they sold?)

Hah, that's NOTHING! Zack Kirkhorn sold 150 shares at $262 on Oct 17, 2019

SEC Filing | Tesla, Inc.

 

[Fact Checking]

Hah, that's NOTHING! Zack Kirkhorn sold 150 shares at $262 on Oct 17, 2019

SEC Filing | Tesla, Inc.

I'd call that an act of epic trolling, if his selling plan (probably) hadn't been cast into stone and filed with the SEC ~6 months ago already!

 

[Fact Checking]

@Fact Checking @EVNow (or anybody else):

How are you guys determining S,X ASP recovery / higher than thought in current models (e.g., 91k in EVnow's model)?

Zack mentioned it during the ER call, but you can also estimate it based on the disclosure that Model 3 ASP was "flat" from Q2 into Q3. (Which allows solving the equation for Model S/X ASP.)