A Dhandho Investor Posted October 23, 2018 Share Posted October 23, 2018 Andrew Left went from shorting and suing Tesla to this... https://www.cnbc.com/2018/10/23/short-seller-who-is-suing-tesla-changes-his-mind-tesla-is-destroying-the-competition.html "Citron is long Tesla as the Model 3 is a proven hit and many of the TSLA warning signs have proven not to be significant," said Left in a blog post Tuesday. "Plain and simple – Tesla is destroying the competition." "TSLA is not just pulling customers from BMW and Mercedes but also from Toyota and Honda. Like a magic trick, while everyone is focused on Elon smoking weed, he is quietly smoking the whole automotive industry," Left said. Guess that after his failed SNAP call he saw another potential candidate with high short interest for a quick trade. Some remarks: - yoy declines in other brand sales "If it were pent up demand, those car classes wouldn’t be exhibiting such sharp declines year over year": seems perfectly normal to me as reservation holders can easily be people that previously were driving another brand and just waited for the M3 instead of buying the same brand. - "A strong quarter removes the overhang of a necessary capital raise": I don't know whether he has taken a look at the B/S, but Tesla definitely needs at least 2b to keep the lights on - "It transitions Tesla from a “proof of concept” story to a “TAM / how much can this grow” story, attracting a whole new growth-oriented investor base": as if Tesla has never been a growth story stock? - "Short interest is at the same (high) level as five years ago though risk is heavily skewed to the upside in the near-term": if by near-term he means earnings release this Wednesday, I can concur with his point of view Btw there is almost no possible way to come up with his 599 price target at 500k deliveries and 20% margin - you have to assume like a 120k average selling price to arrive at that number. Luckily some people are also doing actual DD: https://twitter.com/ValueExpected/status/1054768949835923456 Link to comment Share on other sites More sharing options...
Dalal.Holdings Posted October 23, 2018 Share Posted October 23, 2018 Btw there is almost no possible way to come up with his 599 price target at 500k deliveries and 20% margin - you have to assume like a 120k average selling price to arrive at that number. Luckily some people are also doing actual DD: https://twitter.com/ValueExpected/status/1054768949835923456 So the only way to $599 price is for TSLA to make $12B in profit a year (ie. a rapidly growing company like TSLA valued at a laughable P/E of 8??) Link to comment Share on other sites More sharing options...
rb Posted October 23, 2018 Share Posted October 23, 2018 You'd have to figure that growth slows as profit grows. At $12B in profit it likely won't be a rapidly growing company. Link to comment Share on other sites More sharing options...
Dalal.Holdings Posted October 23, 2018 Share Posted October 23, 2018 Trying to value this thing on a P/E basis at this stage (literally exponential growth in sales with no quenching of demand thus far) is not likely to be a productive endeavor. Link to comment Share on other sites More sharing options...
pcm983 Posted October 23, 2018 Share Posted October 23, 2018 what's the current reservation number? Link to comment Share on other sites More sharing options...
ERICOPOLY Posted October 23, 2018 Share Posted October 23, 2018 The company has stated that they believe the storage business will grow to be the size of the car business. It is almost never mentioned. Link to comment Share on other sites More sharing options...
Investmentacct Posted October 23, 2018 Share Posted October 23, 2018 Andrew Left went from shorting and suing Tesla to this... https://www.cnbc.com/2018/10/23/short-seller-who-is-suing-tesla-changes-his-mind-tesla-is-destroying-the-competition.html "Citron is long Tesla as the Model 3 is a proven hit and many of the TSLA warning signs have proven not to be significant," said Left in a blog post Tuesday. "Plain and simple – Tesla is destroying the competition." "TSLA is not just pulling customers from BMW and Mercedes but also from Toyota and Honda. Like a magic trick, while everyone is focused on Elon smoking weed, he is quietly smoking the whole automotive industry," Left said. Guess that after his failed SNAP call he saw another potential candidate with high short interest for a quick trade. Some remarks: - yoy declines in other brand sales "If it were pent up demand, those car classes wouldn’t be exhibiting such sharp declines year over year": seems perfectly normal to me as reservation holders can easily be people that previously were driving another brand and just waited for the M3 instead of buying the same brand. - "A strong quarter removes the overhang of a necessary capital raise": I don't know whether he has taken a look at the B/S, but Tesla definitely needs at least 2b to keep the lights on - "It transitions Tesla from a “proof of concept” story to a “TAM / how much can this grow” story, attracting a whole new growth-oriented investor base": as if Tesla has never been a growth story stock? - "Short interest is at the same (high) level as five years ago though risk is heavily skewed to the upside in the near-term": if by near-term he means earnings release this Wednesday, I can concur with his point of view Btw there is almost no possible way to come up with his 599 price target at 500k deliveries and 20% margin - you have to assume like a 120k average selling price to arrive at that number. Luckily some people are also doing actual DD: https://twitter.com/ValueExpected/status/1054768949835923456 Fixated in numbers on what were. We discussed few months back here, this item which has been created ; should produce BMW profit margin at Toyota Volume. Link to comment Share on other sites More sharing options...
Dalal.Holdings Posted October 23, 2018 Share Posted October 23, 2018 Lol...Toyota volume. Let’s not get carried away. Don’t think they’ll sell 10M vehicles a yr anytime soon. The point is at their margins (which seem like they might be higher than even many luxury players), they don’t need Toyota volume. Anyway, this doesn’t seem like a slam dunk short play like many seem to think. Link to comment Share on other sites More sharing options...
Investmentacct Posted October 23, 2018 Share Posted October 23, 2018 Lol...Toyota volume. Let’s not get carried away. Don’t think they’ll sell 10M vehicles a yr anytime soon. The point is at their margins (which seem like they might be higher than even many luxury players), they don’t need Toyota volume. Anyway, this doesn’t seem like a slam dunk short play like many seem to think. Stand Corrected. Meant to say Toyota Corolla USA Volume. Link to comment Share on other sites More sharing options...
CorpRaider Posted October 23, 2018 Share Posted October 23, 2018 Anyway, this doesn’t seem like a slam dunk short play like many seem to think. Agree with that. Seems like he could raise a fk ton of equity if he wants. Probably should do it before UBER, LYFT, Palantir, and all the other unicorns try and get into cash/IPO before Q2 2019. Is anyone else confused by the Dhando v. Dilal back and forth? haha. Link to comment Share on other sites More sharing options...
Spekulatius Posted October 23, 2018 Share Posted October 23, 2018 Omg Tesla emailing people who were gonna pay $35k to market to them higher end versions at $45k or more? What a travesty. What’s next—social media based targeted ads? Let’s hope they don’t resort to creating dealerships where the “dealer” puts on a whole bunch of last minute markups to the MSRP and subsequently rips you off on every servicing/repair interaction (a.k.a. The standard for the auto industry). Upselling "can be simply exposing the customer to other options that were perhaps not considered ". https://en.wikipedia.org/wiki/Upselling I believe they waited to start these emails until they had a $45,000 offering because it magically gets to their $35,000 reservation price point after the tax credits. It isn't unreasonable to think that some buyers may have a budget of $35,000 and not realize there are $10,000 in potential tax credits. I was being sarcastic. This practice of attempting the upsell is not nearly as shady as some of the common practices in the “traditional” auto industry. I realize that you were being sarcastic about the shady practices from "traditional" dealers but in doing so I felt as though it was distracting attention from a likely justified reason for them to send these emails. The $35,0000 reservation holders have been frustrated with the waiting time so attempting to offer them another configuration that they may be pleased with was possibly the primary motivation. $45k is a whole lot closer to the $35k price point than $65-70k, so I think some customers will take the offer. I don’t think there is anything shady about upselling, since it is pretty clear what you are buying and how much it costs upfront. Link to comment Share on other sites More sharing options...
arcube Posted October 23, 2018 Share Posted October 23, 2018 Is anyone else confused by the Dhando v. Dilal back and forth? haha. Lol. Yes! Link to comment Share on other sites More sharing options...
Grant Posted October 24, 2018 Share Posted October 24, 2018 I've used the Wayback Machine to tally the number of Tesla service centers. Here are some data points from the U.S.: Date, center count, cumulative deliveries 2018-09: 75, 394,027 2017-12: 69, 261,662 2016-04: 70, 122,158 2015-04: 48, 66,845 The size of Tesla's fleet is vastly out-pacing its service center growth. Obviously Tesla has been making up for this with mobile ranger units. Does anyone have any idea how cost-effective these are? My impression is they are perhaps viable when servicing high-ASP cars, but will not be viable for servicing lower-ASP Model 3s. Regardless of whether or not the rangers are cost-effective, it appears Tesla will still need to significantly expand its service centers in order to keep its Model 3 fleet serviced. Ergo I expect service problems to damp demand for the car. Combined with the tax credits tapering off in January, I remain bearish for 2019. Until then I'll continue selling puts (to $TSLAQers I'd imagine) covered by my short position. When Tesla gets real leadership and allows third-party service and repair I'll revisit this. Link to comment Share on other sites More sharing options...
Cardboard Posted October 24, 2018 Share Posted October 24, 2018 https://www.cnbc.com/2018/10/24/tesla-reliability-slips-to-third-worst-in-us-consumer-reports-says.html Cardboard Link to comment Share on other sites More sharing options...
Jurgis Posted October 24, 2018 Share Posted October 24, 2018 Possibly this should go to general AV/EV thread, but I did not find one. 8) GJOpen ( https://www.gjopen.com/ ) and Wharton are looking for new set of questions on predicting future of EVs and AVs. I answered their survey and suggested the following questions: AVs: In 2019 Waymo will officially start self-driving taxi service open to the public with no human driver present. In 2019 Tesla will drive using Autopilot coast to coast In 2019 Some auto manufacturer apart from Waymo will start self-driving car service with no human driver present (possibly not open to all public). EVs: Tesla worldwide sales for 2019 will be above 500K cars (US sales above 300K cars) EV worldwide sales for 2019 will be above 2M cars (US sales above 600K cars) EV battery cost falls 15% or more in 2019 I am not predicting the chances of these occurring. I am just suggesting these as questions for predictions. Feel free to go to GJOpen and submit your predictions when these or other questions are posted. 8) They also had these baseline long term predictions: Autonomous Vehicles (AVs) By year-end 2025, fully self-driving passenger cars--in certain geographic areas and conditions (i.e., Level 4)--will make up approximately 8.5% of global annual new passenger car sales. Note, there are currently NO Level 4 capable cars available for consumer purchase. Electric Vehicles (EVs) By year-end 2025, EVs (battery electric vehicles) will account for 11% of new passenger car sales. Note, this is a nearly an 8X jump from 2017 numbers. I marked that these will be exceeded. 8) Link to comment Share on other sites More sharing options...
Liberty Posted October 24, 2018 Share Posted October 24, 2018 Q3: http://ir.tesla.com/static-files/725970e6-eda5-47ab-96e1-422d4045f799 GAAP net income of $312M, non-GAAP net income of $516M Operating income of $417M and operating margin of 6.1% Free cash flow of $881M supported by operating cash flow of $1.4B $3.0B of cash and cash equivalents at Q3-end, increased by $731M in Q3 Model 3 GAAP and non-GAAP gross margin > 20% in Q3 Reaffirm expectation of continued GAAP net income and free cash flow in Q4 Link to comment Share on other sites More sharing options...
Dalal.Holdings Posted October 24, 2018 Share Posted October 24, 2018 Lol. Earnings just wrecked the "slam dunk" short thesis. Can't help but feel schadenfreude for those who root for this to fail. And I'm not even an investor in this. Link to comment Share on other sites More sharing options...
Grant Posted October 24, 2018 Share Posted October 24, 2018 I covered after-hours. Thanks to $TSLAQ'ers buying my covered puts for the last two months I think I ended up slightly green, but I'd be a lot better off if Elon hadn't of given only a two-day ER notice. No one expected 20+% Model 3 gross margins and a decrease in SG&A. The only near-term bear thesis remaining is accounting fraud. Link to comment Share on other sites More sharing options...
SHDL Posted October 24, 2018 Share Posted October 24, 2018 Well, what can I say other than wow, kudos to them. Unless there's a reason to believe their cash flows for the quarter are unsustainable (or outright fraudulent), it looks like they are well positioned to pay off their upcoming debts with internal cash flows (and more). Now who would have thought? Link to comment Share on other sites More sharing options...
A Dhandho Investor Posted October 24, 2018 Share Posted October 24, 2018 Impressive results to say the least indeed! Link to comment Share on other sites More sharing options...
Haasje Posted October 24, 2018 Share Posted October 24, 2018 The core auto looks really good. The other stuff does not look good. It doesn't feel right. The company was in production hell then in delivery hell and auto numbers are really good... You'd expect mediocre numbers at best that could be looked at favorably with lots of adjustments for non-recurring costs. Maybe they really cherry picked which deliveries (given their reserved list) to make (focusing on the highest margin kind). Now I really want to see the next quarter :) Link to comment Share on other sites More sharing options...
Dalal.Holdings Posted October 24, 2018 Share Posted October 24, 2018 A lot of stuff can seem "out of whack" when total revenue goes up 70% over a single quarter (or up about 130%--more than doubling--year over year). Easy to miss the forest for the trees. This thing isn't close to steady state. Link to comment Share on other sites More sharing options...
Gregmal Posted October 24, 2018 Share Posted October 24, 2018 Tesla has never been a numbers story. I wish the business well but find it odd that now all of a sudden when everyone begins obsessing over the numbers, that the numbers are great...Elon always seems to find one way or another to tell the story that people want to hear. Link to comment Share on other sites More sharing options...
ERICOPOLY Posted October 25, 2018 Share Posted October 25, 2018 The results were as guided. Link to comment Share on other sites More sharing options...
Dalal.Holdings Posted October 25, 2018 Share Posted October 25, 2018 Tesla has never been a numbers story. I wish the business well but find it odd that now all of a sudden when everyone begins obsessing over the numbers, that the numbers are great...Elon always seems to find one way or another to tell the story that people want to hear. Yeah, super odd--must be "fake news". Elon always somehow finds a way to do the impossible like making rockets land upright ;D Wonder why if he could "fake" this earnings release, he didn't go ahead and fake weekly sales (which people have been "obsessing over" for over a year now and are much smaller than he had forecast)...Fact is, they don't really need 10k Model 3's a week to make decent cash flow. Guess everyone fixated on how bad Elon "missed" his unrealistic estimates (anchoring bias) without realizing that TSLA could do very well financially even falling significantly short of them. (If people haven't noticed, Musk tends to set "unrealistic", impossible reality-distortion-field like expectations which don't necessarily need to be met in order to succeed). Demand for the Model 3 seems insatiable. And this is a small sedan in an SUV/crossover market. When the Model Y is ready, Tesla will crush it even more so. What a time to be alive... Link to comment Share on other sites More sharing options...
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