TSLA Market Action: 2018 Investor Roundtable

[Zaxxon]

How do we know this is always the case? Perhaps the transaction worked for you that way, but that need not be the universal experience. This is why we need Tesla to confirm these numbers.

I'm not sure why you think there is variability here. It's quite explicit in the order process and does not leave room for different experiences. If someone instead chose to first refund their reservation, they'd then be unable to order a 3 (at present). Additionally, this would result in significant additional card processing fees for Tesla. It's similar to saying that you feel that people ordering an S today in the US may or may not pay a $2,500 order payment. It's a uniform process for all buyers.

Nope. 450k+ was confirmed in May, after the conference call. Data about 23% refunds said most were in April. If so, those refunds failed to diminish net number of reservations. The end.

No. From the Q1 shareholder letter, emphasis mine: "Model 3 net reservations, including configured orders that had not yet been delivered, continued to exceed 450,000 at the end of Q1"

Again, I think this cancellation report is a mountain out of a molehill. But let's be specific and objective with our theories and data.

 

[Esme Es Mejor]

No. From the Q1 shareholder letter, emphasis mine: "Model 3 net reservations, including configured orders that had not yet been delivered, continued to exceed 450,000 at the end of Q1"
.

“Tesla has roughly half a million reservations”
— 5/4/18
Elon Musk on Twitter

I believe I read a more exact number right around then, but that’s what I found with a quick search.

 

[jhm]

I'm not sure why you think there is variability here. It's quite explicit in the order process and does not leave room for different experiences. If someone instead chose to first refund their reservation, they'd then be unable to order a 3 (at present). Additionally, this would result in significant additional card processing fees for Tesla.

You may be correct. But I've worked with enough transaction level data to know that it is very easy to misinterpret things, to not capture the full scope for the real transaction. I work as a statistician in banking. So you are seeing my data skepticism at work.

 

[Zaxxon]

“Tesla has roughly half a million reservations”
— 5/4/18
Elon Musk on Twitter

I believe I read a more exact number right around then, but that’s what I found with a quick search.

Thanks. I missed that one.

You may be correct. But I've worked with enough transaction level data to know that it is very easy to misinterpret things, to not capture the full scope for the real transaction. I work as a statistician in banking. So you are seeing my data skepticism at work.

I definitely appreciate the skepticism!

 

[2virgule5]

How do we know this is always the case? Perhaps the transaction worked for you that way, but that need not be the universal experience. This is why we need Tesla to confirm these numbers.

Well, it's been the case for my first M3 in January, then the second one in April, then 2 more people at work that were first day reservation holder and a couple of online friends in the West coast. Few anecdotal evidences do not make a trend... but why on earth would the process be any different for others?
Overall, if we give some credence to this analysis, it is quite bullish for a car that barely no one has driven yet, and that Tesla has been anti-selling for a while.

 

[Waiting4M3]

Nope. 450k+ was confirmed in May, after the conference call. Data about 23% refunds said most were in April. If so, those refunds failed to diminish net number of reservations. The end.

I agree, production/sales/reservation/margin #s are the ones that count, the rest is just noise. What does it matter if there is some churn, as long as the reservation list is growing, Tesla is production constrained, and there is no demand issue. I trust that Tesla has the data on the reservation churn rate, and is in the best position to evaluate their future M3 production plan.

 

[jhm]

We should also be a bit worried about the ability of a third party to snoop into "anonymized" data and be able to spy on as specific vendor, Tesla in this case. These data should be used only for general research purposes, not to reveal non-public information on any specific counterparty. So basically this whole report is a violation of Tesla's privacy. As a bank employee, I would be fired immediately for this sort of data breach (summarizing transactional activity of a named client).

 

[EinSV]

Some good thoughts above on the cancellation issue. Also, we can get a little perspective from history.

For Model X there were an estimated 27,000 reservations around the time the configurator opened. Tesla Model X Reservations Approximately 27,000 Worldwide (This was net of ~15% cancellations at the time, similar to Model 3)

Tesla sold 46,535 Model X in 2017 -- its second full year -- 70% more than total reservations when the configurator opened. Tesla Model X - Wikipedia

The numbers for the Model S are even more extreme -- about 10,000 reservations when deliveries started have grown to over 50,000 Model S/year now being sold. Tesla Model S Waiting List Is 11 Months

Assuming a comparable ratio of reservations to sustainable demand as the Model X would net 765,000 Model 3 orders in Year 2 (2019) (1.7*450,000).

Elon suggested Model 3 demand could reach 700K/year or more, and I think that is going to prove to be right. Demand is a non-issue at this point.

 

[ValueAnalyst]

Both $TWTR and $NFLX started rising 6 to 9 months in anticipation of their additions to the S&P 500 index today. As predicted in July of 2017, $TSLA will join in 1Q19, so the stock will start anticipating this right about NOW.

ValueAnalyst on Twitter

 

[SunCatcher]

"No matter how you look at the data, the main takeaway is still that the demand for the Model 3 is absolutely insane."

Nice read. Thanks for posting.

Electrek: "Like Tesla said, that’s also without an important display fleet. I also think that demand is going to increase with deliveries as more people are going to see the vehicle on the road and in the hands of their friends and family. The Tesla community is known for being ambassadors."

That's exactly how my wife and I see ourselves, and we're living our lives as though we're Tesla embassy personnel. Anybody tired of hearing about Tesla had better run when they see us coming, because our mojo is on fire after receiving our Model 3 last week and driving it like we stole it around our part of the state. This car is truly an engineering and manufacturing marvel. That fact simply cannot be overstated. The Game is Over for ICE.

 

[ggr]

TSLA's rise today seems to be in line with the broader markets, not Tesla specific. So the market completely glossed over the earth-shattering news of a wholly-owned Gigafactory in China, breaking decades of policy, and 11,000 TE projects in Puerto Rico. I just don't get some people. Most of them, actually...

 

[sweter]

We should also be a bit worried about the ability of a third party to snoop into "anonymized" data and be able to spy on as specific vendor, Tesla in this case. These data should be used only for general research purposes, not to reveal non-public information on any specific counterparty. So basically this whole report is a violation of Tesla's privacy. As a bank employee, I would be fired immediately for this sort of data breach (summarizing transactional activity of a named client).

This is a regular occurrence in finance and market research. Banks and retailers sell their anonymized databases for big buck so that agencies can create reports and sell them for even bigger buck. There are companies that gather anonymized databases from multiple big retailers and then merge them together trying to identify buying behaviours of customers. Those are worth millions.

 

[Dennisj00]

Certainly agree with that. More transparency around the deposit/reservations issue would be very helpful!

Why does any public company owe any more transparency to the general public?

 

[Zhelko Dimic]

Yes, the Q2 delivery update is going to be fascinating.

don't think so. I expect poor numbers
production exit rate for m3 and cash balance are the only two things that really matter.
everything else will be a mess...

 

[LordAstinus]

Why does any public company owe any more transparency to the general public?

Agreed. Given how much the scenario is changing by the day, why on earth would Elon concede that advantage to the click-bait media and short-sellers? They could manipulate any data he releases at will, given the fact that it's mutating quite quickly. The moment they have performance AWD for test-drive, it will have an impact in the distribution of the type of transaction (the recent test-drives in China facilitated a substantial amount of new reservations). The more TM3 on the hands on customers, the more ambassadors/free salesmen producing reservations. So the picture is likely to improve from a really good scenario to an impressive one.

If I was him, I'd release it only once:

a) The data is kind of stable.
b) I can frame the message.

I bet that there will be chances for that in the near-medium future.

 

[CuriousSunbird]

Why does any public company owe any more transparency to the general public?

I don't think they "owe" it, but it would make the analysis easier.

 

[CuriousSunbird]

I

don't think so. I expect poor numbers
production exit rate for m3 and cash balance are the only two things that really matter.
everything else will be a mess...

I would emphasize working capital over cash balance

 

[CuriousSunbird]

Both $TWTR and $NFLX started rising 6 to 9 months in anticipation of their additions to the S&P 500 index today. As predicted in July of 2017, $TSLA will join in 1Q19, so the stock will start anticipating this right about NOW.

ValueAnalyst on Twitter

Last I checked you need 4 quarters of positive earnings to get into the S&P500

 

[Zaxxon]

Last I checked you need 4 quarters of positive earnings to get into the S&P500

Correct.

To qualify for the index, a company must have:

• a market cap of $5.3 billion
• its headquarters in the U.S.
• the value of its market capitalization trade annually
• at least a quarter-million of its shares trade in each of the previous six months
• most of its shares in the public’s hands
• at least half a year since its initial public offering
• Four straight quarters of positive as-reported earnings.

Read more: The S&P 500: The Index You Need To Know | Investopedia The S&P 500: The Index You Need To Know
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[ValueAnalyst]

Last I checked you need 4 quarters of positive earnings to get into the S&P500

I know this was a discussion topic earlier, but no. Please see twtr financials here: TWTR Income Statement