Feb 20, 2013
DaveT From the call it sounded like Elon Musk is firmly in control and very confident on the future of Tesla. 2013 is a done deal with 20k+ cars. This year they're work on efficiency and cutting costs. And they're looking to build demand for 2014. They could try to pump out 30k cars this year but that would probably be moving too fast. So, I like the cautious approach.
I'm thinking the stock won't dip too much tomorrow (ie., will stay above 36). Just my guess.�
Feb 20, 2013
Alpha I'm very happy with earnings. If stock dips below 36, I'll be buying some more!�
Feb 20, 2013
blakegallagher I am guessing due to orders around the world? pretty much all of the reservation numbers referenced here are US reservations�
Feb 20, 2013
Citizen-T I was happy with the report. Everything was pretty much in-line with what I expected except that I wanted to hear the target was going up to 30k. That said, I accept Elon's argument for why they are going to sit at the current rate for now. Though, if I read between the lines, they still want to increase production, they just don't want to commit to it yet.�
Feb 20, 2013
blakegallagher I think the stock will rebound from after market lows .... just about everything seemed very positive to me .... the 30 percent cancellation rate sucked but it does not really matter .... as the wait list is dropped the rate will shrink to near zero when the wait time for a car approaches a few weeks. The average employee work time of ~67 hours down to ~50 hours is incredible. That to me was one of the most telling parts of the call.�
Feb 20, 2013
smorgasbord With very careful wording. Elon didn't say no new reservations, he said stores closing. Which means that online orders continue. Plus, you need to add in the people under 8000 who were skipped due to 40kWh, red, or air suspension.�
Feb 20, 2013
Norbert Due to orders on the internet based on word of the mouth.
Seems some people misunderstood this and made snarky comments.�
Feb 20, 2013
Objective1 Maybe I don't hear well, but after saying "a majority" are going for 85 KWh, I thought I heard someone in the background talking to him, and then he said "30%." If I heard right, that implies that 55% are 60 KWH.�
Feb 20, 2013
DriverOne I remember seeing something about 120A chargers (related to Model X?)�
Feb 20, 2013
ChrisC Will this conference call audio eventually make it to the public where I can hear it? I don't want to have to register on TM's site to listen to the webcast there.
EDIT: thanks guys�
Feb 20, 2013
Norbert Besides saying "majority" once or twice, he also said explicitly "more than 50%". I don't remember him saying 30%, but maybe 30-something is the number for the 60 kWh pack.�
Feb 20, 2013
Beavis yes, it will take a couple of days.�
Feb 20, 2013
Citizen-T It often gets onto YouTube, I'd search there.�
Feb 20, 2013
Norbert The recording is already available. You just need to type in name and email. Not necessary to set up an account with password or so.�
Feb 20, 2013
mulder1231 Morgan Stanley's analysis of Q4 earnings report: operating profit miss; outlook intact; reservations may disappoint.
Overall, compared to Morgan Stanley's estimates, the numbers were quite OK, and I don't expect them to change their current $47 price target.�
Feb 20, 2013
brianman Aside from not matching potentially arbitrary projections of analysts, was there any bad news in the report or the call? I don't recall seeing or hearing any.�
Feb 21, 2013
Norbert In terms of the things I cared for, and had expectations about, it was better. For those who look at the quarter summary numbers, some numbers *were* (but aren't anymore in Q1) below the expectations (from those people who had expectations about them).
Points from my point of view:
a) most importantly, Tesla is already profitable (as of Q1 2013, half of which has passed already).
b) production has settled at a steady rate (at the target level).
c) Supercharger technology itself will have some advancements in the coming months, with a more or less official intent ("ideal") to build them at a distance of 150 miles or less.
d) demand for 2013 is not in question. Clarification that Tesla does not intend to have, or push for, a long waiting list. Therefore this number is not a measure of success (anymore).
e) big expectations for sales in Asia.
f) Model X sales expectations (> 70% of Model S) are higher than I expected
f) I welcome the intent to optimize Model S production, and making sure customers are happy with delivered cars, before pushing the limits of capacity above targets
g) expectations for future Model S volumes above 20,000/year appear to have become more realistic. I might have had slight hopes for more in 2013, and wasn't sure about 2014. The fact that it appears to be the other way around (increasing volumes especially in 2014) is only good for the future.
h) assurance that Tesla has enough cash left
i) assurance that Tesla has realistic plans and knows what to do
j) more than 50% of customers opt for the 85 kWh battery. This is good for driving progress in battery technology.
In summary, there was a lot of assurance that Tesla has made it to a sustainable mode of being, is laying a good foundation for the future, while improving what needs to be improved.
Usually I enjoy hearing more about future products and developments... I take it that Elon simply didn't consider this the right point in time to talk about those (except for hinting at upcoming Supercharger technology advancements).�
Feb 21, 2013
AnOutsider That would be awesome. Back to full charge in 45 minutes? Also might be a precursor to (hopefully) 120kwh packs in the x.�
Feb 21, 2013
Right_Said_Fred On point j) you can add that Tesla likely makes more money on the sale of a 85 kWh car than on the sale of a 40 or 60 kWh car. That's another good thing of getting a higher percentage of orders for the big pack than they expected. What I missed is the percentage of Performance cars. It's my impression that this is also pretty high, and maybe higher than expected. The Performance should have a higher margin too.�
Feb 21, 2013
brianman To my recollection, they didn't give a number but rather just pointed out that the Performance option was chosen more often than expected. Given that Tesla's statements (such as the 25% profit number) are pretty agressive, news that "people are spending more than we expected per car" should bolster the financial outlook regardless of the specific Performance percentage.�
Feb 21, 2013
Right_Said_Fred ... and if they add some much wanted options like park assist, center console, electrically folding mirrors it's even easier to get to the 25% (and at the same time attract more customers). That's one thing companies like Mercedes, BMW and Audi are good at: getting people to buy a car and then having them pick extra options worth 30-40% of the car.
I don't want Tesla to go that far, but they could definitely work a bit more on their margin and at the same time take away some of the second thoughts people might have on buying the car. I know that the lack of park assist, even if only as an option, is not going down well in Europe (with its tight parking spots).�
Feb 21, 2013
GSP Hard to say what Elon is really thinking here, but I took it to mean less costly and more efficient Supercharher installations. If Tesla can connect directly to the utility medium voltage (10-15kV) lines, and eliminate a 500 kVA transformer, they could get their Supercharger network installed for less capital. EPRI has built a proof of concept CHAdeMO charger that does this.
GSP�
Feb 21, 2013
sp4rk Sorry, I don't "buy" this. Momentum maybe, but, for every sale, surely prospects are going to insist on a test drive? And a test drive is handled at a "store". Who, in their right mind, aside from a serious early adopter would spend $80k+ without sampling the product?
I found, on the call, that Elon completely avoided the question of reservation numbers, cancellations, etc.�
Feb 21, 2013
brian45011 For the next two weeks, it can be heard by dialing 855 859-2056 conference ID 99105830.�
Feb 21, 2013
Norbert I think that simply referred to the stores as a means of attracting customers (as opposed to pure word-of-mouth), and that he said that because some articles were claiming that Tesla's store concept weren't going to work as well as dealerships. It is surely unrelated to whether or not stores are the only means of providing test drives.
One of the points was that Tesla isn't trying to have a long reservation list (anymore). He did say the average waiting time is 5 months right now. Theoretically that should mean that the longest one is about 10 months, and that in this long time, at least another 2 months worth of reservations can be relied on to come in, in addition to those needed to balance any cancellations.
�
Feb 21, 2013
Alpha Actually, things are fantastic! Tesla has enough resources to survive another quarter, quite easily and even make a profit. Meanwhile, thousands more of these terrific cars are going to hit the road, more superchargers will be installed (possibly with even better technology and faster charge times.) Word of mouth will spread as more people see and experience these cars. Barring some kind of serious catastrophe like a battery explosion (which I think is highly unlikely) I see some serious additional momentum building around Tesla over the next few months!�
Feb 21, 2013
K Hall It was later reported that there were 1,500 cancellations in Q4. Big deal! Unlike most companies demand is not their gap at this time.�
Feb 21, 2013
JRP3 BOA downgraded TSLA UPDATE: Bank of America Downgrades Tesla Motors to Underperform on Valuation | Benzinga�
Feb 21, 2013
DrJohnM CNBC about to interview E Musk�
Feb 21, 2013
Citizen-T This is dumb. The multiple they are using makes no sense for this type of stock.�
Feb 21, 2013
yngwie_2012 down 9,5% . what a reaction!!�
Feb 21, 2013
kinddog a buying opportunity gift from the heavens above. don't dilly dally....�
Feb 21, 2013
carrerascott I guess congrats to those who sold before earnings.�
Feb 21, 2013
aznt1217 getting punched like elon did with those czech tires.�
Feb 21, 2013
ckessel Hard not to be depressed about the stock, particularly because it seems completely irrational to me. Tesla comes out and says they're in great shape to be profitable earlier than many had forecast and the stock drops. Just a baffling mindset to me that folks would flee thinking earlier profitability means the company is less valuable than it was last week.
I think this rivals the "executives leaving" crater that happened a bit over a year ago, but that recovered the next day. This won't. I wasn't planning on selling for a while anyway, but it hurts losing 15+% of what's more or less my emergency cash.�
Feb 21, 2013
onlinespending Phew! Got very lucky. Bought some after hours last night at around 36. Was able to dump them all this morning at 37, before it took this latest dive.�
Feb 21, 2013
Citizen-T Easy to not be depressed about the stock.
1. Do not invest money that you need (emergency cash) in stocks. Especially not highly volatile highly speculative stocks.
2. Avoid being fully invested, especially at an all time high. These things happen, have cash ready to take advantage of them.
I'm not depressed in the least bit. In fact, I hope it comes down more so I can buy more.�
Feb 21, 2013
ckessel Define "need". I've never been in a situation and never seen anyone outside of millionaires that wouldn't need every dollar of cash if they had a catastrophic illness or even something like 6 month period of unemployment.
Yea, this line of thinking always just completely goes over my head. Why would I ever root against a company I've invested in? If I want the stock to drop, I should be completely divested and shorting it. If I think the stock is going up, I want to be completely invested. That maximizes expected value. If the goal is risk mitigation, that's different.
Mostly the depressed part is because the stock movement is just completely irrational to me by anything I'd think would make a meaningful measure on a company like Tesla (startup, everything is growth based rather than value based). I don't like it when things make no sense to me�
Feb 21, 2013
mitch672 Is too late to sell now, so might as well hang on. My 1,000 shares are in my IRA, so it's not money I need per se now, but it would have been nice to have sold it and had $5K more to invest, to increase my shares. I don't like seeing a $5K paper loss for no good reason, and nothing has changed for TSLA, it's just short term thinking and this myopic focus on current earnings that really irks me.
I have no doubt that TSLA will be worth multiples of it's recent high, if they follow through with the plan and become profitable.�
Feb 21, 2013
Volker.Berlin "Buy on rumour, sell on news." The market is irrational but it's surprisingly predictable.�
Feb 21, 2013
Citizen-T It's not a sports team.
You need to think about the stock market more like a supermarket. I like Coke, I don't want the company to go bankrupt. But when I go to the store today, I'm going to be hoping that it is on sale. Because I want more of it, and I'd rather not pay what I actually think it is worth. I want to pay less than that.�
Feb 21, 2013
Treker56 Hoping for a rebound in the next few days. Market is down overall today as well. Btw:
Tesla triggers short-sale circuit breaker - blogs.marketwatch.com/tesla-triggers-short-sale-circuit-breaker�
Feb 21, 2013
carrerascott Well, it was nice to add some under $35 today. Wasn't so nice for the rest of the portfolio to take a hopefully-temporary hit.�
Feb 21, 2013
ckessel I don't get the sports team reference.
I did play a ton of poker at one point amongst other games and concepts of maximizing expected value (EV) are pretty core to most any activity with a "score" (money essentially being your score). The concept of maximizing EV on a given play tends to be pretty black and white. It's not really specific to poker, but lots of people are familiar with poker. You're either pushing in everything on advantage or bailing out of a bad situation. Managing your bankroll is sort of the meta-game around individual plays akin to a portfolio of stock is the meta-game around plays on individual stocks.
With stocks, it can only go up or down so if you trust your vision on where it's going the EV play is to be completely in our out. The idea that you'd have $90 in a stock and $10 in cash and root against that $90 to maximize that $10 on a later stock purchase is hard for me to grasp why that makes any sense. Sell all $100 into cash if the expectation is it's going down to a better buying point later.
That'd be, presumably, one of several plays across lots of stocks so being wrong on one stock doesn't kill your portfolio. In poker, the related concept is bankroll management.
Obviously you're many orders of magnitude better with stocks than I am (which is why I don't buy or sell, I just sit on things for long periods) and I'm not remotely trying to claim you're mistaken. I'm sure you're not. I just don't understand why this half-in/half-out makes any sense to my brain trained in game theory and probabilities.�
Feb 21, 2013
SteveG3 ckessel, I'm not a fan of things not making sense to me either.
these are theories, but you may want to consider...
a. who does the pricing in the first hours after the earnings call? far more traders than investors.
b. what's good news to an investor is often not good to a trader (i.e. Elon saying 2013 target remains 20M, we want to focus on efficiency of production to improve margins, and quality of product. trader would have preferred to hear, "based on demand, our new target for 2013 is 25-30,000)
c. BOA report is part of this. agree with BOA report or not (I don't), it makes sense a downgrade would exacerbate a selloff. I'm optimistic some reports pointing out the positive overall picture from yesterday will be out today, or tomorrow.
d. frankly I see us over $36 later today. $37 within days if not tomorrow. we may have a 36-38 range until next news. (this is all barring a substantial market selloff).
e. I used to get real upset on these with another stock I held 12 years that I saw so much fundamental future promise. after a few of these getting under my skin, I would keep enough cash to do short term trading on what I felt were irrational overnight 5-10% moves. that worked very well for me, and like another poster suggested, I half looked forward to these knocks.�
Feb 21, 2013
Todd Burch Just bought some @ 35.12 today.�
Feb 21, 2013
dave Just bought more at 34.75. Hopefully it stops bleeding soon.
Tough to INCREASE my position in the stock after it's gone down so much, but that's how you play the game!�
Feb 21, 2013
ckessel So, out of curiosity looking into the eventual Q1 report. If the Q1 report says Tesla is profitable, but the profitability is short of "The Street", would the stock nose dive again on that?�
Feb 21, 2013
mitch672 I'm not sure thats a good move or not,the drop caused the circuit breaker to trip, tommorow it could go down another %10 (down $3.50 more), I wouldn't put beyond the realm of possibility. debating selling my entire position and waiting it out now.�
Feb 21, 2013
SteveG3 Warren Buffett once said in the short term the stock market is a voting machine, in the long term a weighing machine.
so, couldn't tell you what would be day of Q1 earnings report. but if Tesla more or less delivers for 2013 what Elon layed out yesterday I'd be surprised if Tesla isn't 40+ a year from now.�
Feb 21, 2013
gregincal In my opinion that's the sort of move that just loses you money. Sure it could go down more, but my mantra is still "if you're long, be long." Eventually it will go back up, and it can do it in a hurry. Sell now, and you lock in the lower price, and almost certainly miss the upward movement. If you believe in the stock, now is a time to buy, not sell.�
Feb 21, 2013
mitch672 wrong. my average price is $28.50, there is such a thing as "protecting profits" you already have. Would have been better to sell pre-earnings, or buy a put, but I still have SOME profits left. There is no telling how low this is going to go, we could be looking at $26-$29 range again. There are no fundamentals to even support TSLA at $10/share, in reality.�
Feb 21, 2013
jkirkebo I usually don't bother to sample, I'm quite content doing my research on-line. Like when I bough my $6000 Sony TV 1,5 years ago. Of course I could have driven quite a few miles to the store who had one on display, but I instead trusted the glowing reviews on-line. Good call, the 65HX920 is excellent. A keeper for 10+ years.
The Tesla store 60 miles from here has a Model S for test drives. I haven't been there to see it, nor test it. Probably won't set my foot there until my car is ready for delivery.�
Feb 21, 2013
Norbert I guess it's this
Stocks Hit by Lackluster Economic Data - TheStreet
plus this
UPDATE: Bank of America Downgrades Tesla Motors to Underperform on Valuation | Benzinga
which is mostly looking at the quarterly EPS and paper value.
This suggests
Tesla triggers short-sale circuit breaker - The Tell - MarketWatch
that the shorts might have increased again, after going down from 29 million to 26 million. Shorts eventually have to buy back.
I would't have sold even if I knew this happened, given that I would need to wait until it settles before I can buy back, and that I'd lose the 12 month status. I'd be too afraid it will soon go up again.�
Feb 21, 2013
Todd Burch It might not be the best move to make the most money. I'm a busy father and don't have time to watch the markets closely all the time. Having said that though, I play the markets *long enough* to sell above where I buy.
In 15 years of investing, I've never lost a dime in the markets. Not a penny, and it's all from waiting to sell until prices are up. My rate of return is usually around 5-10%. I don't set out to make the largest profit--that tends to increase risk, in my opinion--and I'm too busy to do full-on research and all that jazz. I don't claim to be the most savvy of investors. But by being patient and avoiding crazy moves, I've been pretty successful at coming out ahead.�
Feb 21, 2013
mitch672 That's fine Todd, but I am single, and a lot closer to retirement than you probably are (I am 53), so each person has to do what's best for them.
I have tried buying on downdrafts before, and "averaging down", usually doesn't work well for me. If TSLA makes another move to the downside, I am out.
P.S. Good choice of color (I also have 85KW, Dolphin Gray, 19" wheels, grey leather, pano, tech, sound studio, air, and dual chargers)�
Feb 21, 2013
Todd Burch We'll see how it goes. At the very minimum I'll hold until after the Q1 earnings report. My tendency is to be long...so as long as the stock builds healthily after that I'll probably stay in.�
Feb 21, 2013
Norbert If you are already thinking "long", I'd say that I'd expect the real increase in value of the company (not talking about the stock value for a moment) to come with Gen III, and afterwards, in a few years. And that the stock price might (not an expert) make that move as a more continuous movement between now and then (with ups and downs, of course).�
Feb 21, 2013
Beckler Can Regular Investors Beat The Market?
Maybe we should all just get out, permanently...�
Feb 21, 2013
drinkerofkoolaid I could be mistaken, but if I read the analysis from the Bank of America downgrade issued today correctly, the only reason they seem to give is they don't believe Elon about 25% margins, and think the Model S is too expensive. Their estimate of 10 cents per share (11million in profit) is a bit confusing.
if they were counting the EV credits as part of the 25% margins the estimates would make sense, but Elon explicitly said this was not the case, numerous times during the conference call. I see it as possible that they will earn $1-3 per share if EV credits are worth what I think they are. 20,000 Model S with an Average Price of 85,000 and 25% gross margins = about 400million profit. The EV credits alone could be 400million in profit. If operating expenses are 400 million for the year, and the 300million in debt is paid off, that gives them earnings of 100million, or over $1.
Am I missing something? My only guess is that they don't believe Elon can produce on his claims.
Jeffries seems to agree to some extent, and affirmed their target of $45. Does anyone have the detailed analysis?
Doesn't a miss by 10 cents only mean they spent 11million more than expected on something? They also seem to have explained the problem some buyers had mentioned about receiving the wrong tires, I think?�
Feb 21, 2013
augkuo That depends upon the price of TSLA and amount of the shortfall between Wall Street estimates and the report
Look at HP, up ~7% after reporting profits of -16% -
You are paying for the future earnings of a company by buying a stock - it's price is set by supply and demand, generally the big institutional investors who buy large chunks.
If TSLA makes 20k cars and sells them with 25% gross margin, they'll make 500 million (assume $100k/model s). Their total operating expense last year was ~456 million so let's just say 50 million profit
for next year. 50 million profit/114 million shares of TSLA ~ 44 cents a share. Normally one would pay 10-20 times earnings for a stock ($8.80 max) but for "growth" stocks, the multiple can be much higher
(NFLX is 637!) . Because of such a high multiple, any little deviation from the "consensus" will whack these stocks down a bunch or make them shoot up like a rocket.
In general these stocks shouldn't comprise the bulk of your portfolio, you can have some (~20-25%) just to make life interesting
�
Feb 21, 2013
DriverOne Let me take stab at an explanation. The stock got downgraded and sank today not because of the good news contained in the report, and there was plenty of good news. So good, in fact, that you may decide to increase your investment - in which case a (temporary, you forecast) drop in the price is great news. You get in at a cheaper valuation even while you believe the company is actually stronger than before.
The drop came because of the bad news. To me, that was that they are holding production at 20K cars. Last year Elon was forecasting 20K as one of the goals for 2013, with 25% margin. But also with an indication that these goals could be beat, e.g. people started thinking 25-30K at 27% margin. It doesn't look like those optimistic numbers will be met; the goal for 2013 really is 20K and 25%. Hence a whack to the stock price.
Me, I sold some yesterday and I'll be buying it back in the mid-30s I hope, perhaps tomorrow. I just didn't have time today!�
Feb 21, 2013
CapitalistOppressor And, in fact, as a big time Diet Coke drinker I try to time my big purchases when it's on sale. If I'm out and need a fix I purchase the absolute minimum required, because I know that if it's full price right now, it very likely will be on sale soon. Fortunately I don't have a caffeine addiction to satisfy when it comes to purchasing securities, so I can withhold from purchasing for any length of time necessary.�
Feb 21, 2013
tlo Funny to see people upset about an "irrational" drop to 35. Despite the drop, the stock is still above January levels. We just enjoyed a pre-earnings run in the past month.
The fact that there seems to be good support at 34-35 is a good sign. This is after a disappointing earnings report. Yes, I do think the earnings report was disappointing because TSLA missed expectations on net loss, cars delivered, and cash flow. TSLA's state at the end of Q4 was indeed a little worse than street expectations. Forward guidance was positive, but that doesn't matter as much (for now), and it is possible they can fall short of guidance again.�
Feb 21, 2013
CapitalistOppressor I didn't bother doing a deep dive on their note. But I don't have a huge problem with a $30 target.
Just a few months ago the big time Wall St types took a close, hard look at Tesla and valued it at ~$28 based on assumptions and goals that were basically met and validated in the most recent report. For me, that puts a floor under the stock at around that price because I'm fairly sure that the smartest of the smart investors will buy loads of the stock at that price as long as Tesla continues to execute according to its plan.
That's the floor I see. The further from that floor you get, the less likely the stock can sustain the price. As Tesla continues to execute, quarter by quarter, that floor will come higher. The normal trading range should be well above the floor as long as the company is doing well, and especially because it has "potential". For me, that justifies a trading range of anywhere between $30-$40 and my inclination is to buy when its near the bottom of that range and sell when it's near the top.�
Feb 21, 2013
Norbert The stock price is to some degree a balance between those who think the company will go bankrupt, and those who think it will become a large yet cost-effective auto manufacturer, in a decade or two.
Today had huge volumes (> 9 mill). I'm thinking today had a lot of trades by those who look at quarter numbers, instead of those who look at the future and see either huge failure or huge success. If so, then things might calm down in the next few days, towards something different.�
Feb 21, 2013
drinkerofkoolaid I absolutely agree. I honestly don't see how the greater than expected loss from the quarter is a sellable negative for any informed investor. This selling is likely panic by retail, and I'd consider the churning to be a good sign. 9x volume with a base at $35 is a good sign. (I know very little about technical analysis and could very easily be mistaken). If you look at the block trades from today, only retail was selling. Institutional buyers were jumping on board 20.2million in block buys. Less than 400k in block sells.
�
Feb 21, 2013
kenliles Looks like it had a hard time staying below $35. As well it should given the clarity with which things are forming. Great car, great customer feedback, great media feedback, production rate and quality demonstrated sufficient, no immediate or apparent recall requirements, cash flow and now profit picture bottomed, most if not full year sold out, early charging structure a success, stores and service center open and succesful, winning dealership battles, cash reserve and demonstration of cash raising ability for GenIII when needed.
So many of the 'Tesla going out of business' and basic survival questions now put to bed. I think we should see a new level of bottom to the stock in the $33 range, up from that $28 level.�
Feb 22, 2013
zingbow Let's see "tesla price" how to go at google trend:
http://www.google.com/trends/explore#q=%22tesla+price%22&cmpt=q�
Feb 22, 2013
Bardlebee I lack any type of good experience in investing. But I have a feeling we will see a quick rebound from this drop...�
Feb 22, 2013
vfx I like how he calls out J Peterson.
Getting Tesla Wrong - TheStreet�
Feb 22, 2013
agelston Does anyone actually know how much they get in EV credits per model S?
The only numbers I could find were from 2010. And I don't think they can be right. Cause if they are then EV credits total about 15k/car.
?Edit:Actually might have found it
Getting 6k/car from their 2011 10-k numbers. Which is alot�
Feb 22, 2013
JRP3 Mr P made an appearance in the comment section.�
Feb 22, 2013
smorgasbord Yeah, but this line is incorrect:Go visit Wikipedia. The TOTAL number of 7-series vehicles made from 1997 to 2010 is under 700K. Even adding for 2011 and 2012 it's still under 800K.
And that's before the silly 100% market share thing in Silicon Valley.
And the car isn't carbon fiber.�
Feb 22, 2013
JRP3 A reasonable Seeking Alpha piece from a former skeptic:http://seekingalpha.com/article/1216601-it-will-be-bullish-if-tesla-meets-its-goals�
Feb 22, 2013
SteveG3 I did notice this. and as to JPs comment, I also noticed JP now can see a scenario of Tesla becoming a viable business enterprise. Not that I expect him to stop trying to Broder public opinion of Tesla any time soon.
JPs comment:
"Tesla finished the year with an estimated working capital deficit of $14 million, just as I predicted it would. This morning JP Morgan forecast a year-end working capital deficit of $160 million. I continue to believe another couple hundred million of new financing is essential for Tesla to become a viable business enterprise."
�
Feb 22, 2013
VoltAir ZEV credits
Hello. I�ve been lurking here as a TSLA trader for more thana year.
I am a Volt owner, but not a Tesla owner/reservation holder. My work experience is around complex energy systems in design, operations and management, which has led me to concentrate my options trading efforts around energy and related fields. It�s been a little more fruitful than more passive index investing, though hardly exceptional. Some of the pragmatic thinking on this thread has been really helpful, so thanks for all the upside you�ve given me.
If you wouldn�t mind indulging me, I will have a question from time to time. You won�t see my posts outside of investor issues since as a non-owner/res holder I can�t justify participation in enthusiast topics. Expect me to post at a low frequency, without an argumentative stance.
_________________________________
My current question is around ZEV credits, the discussion of which took front and center for a few minutes during the call since they accounted for a material fraction of the Gross Profit in Q4. I know in the past Tesla has made significant gains, to the tune of $13M or so. Here are my questions:
(1) In the absence of the upcoming 10-K, any guesses as to the Q4 2012 revenue/margin numbers from credits?
(2) Are they entered as �Automotive Sales� or �Development Sales�?
(3) CEO and CFO both waved off discussion on the topic, and the 8-K indicated there wasn�t much to expect in the future. How much would you expect here as potential upside over the next few years?
(4) Any ideas as to the current market price of a credit?Also, does the Model S count as a Type III (4 credits)?
(5) Who are the potential credit purchasers?
(6) Does the potential value of credits show up anywhere on the balance sheet? (I did a doc search in the last four filings, and �ZEV credits�only appears in the Risk section.)
Many thanks to all here and good luck in your trades.�
Feb 22, 2013
anticitizen13.7 I think people may be expecting too much stability from the share price of a company that is still relatively new. Investment in Tesla should be done on a 10+ year horizon, because there are inevitably going to be a lot of ups and downs.
Does anyone remember what AAPL was like in the 1980's?
I think that a significant number of speculators were hoping for a stellar Q4 report, which would pump up the stock as people rushed to buy. When the #'s didn't meet "analyst" expectations, the speculators sold in droves because they knew there would be no post-report run up of share price. This is exactly the kind of "market noise" that serious investors should ignore, because it doesn't reflect much if any reality about the company. Investors should ignore speculators.
The Q4 report showed some good and important things: establishment of stable production rate that meets goals, lowering of costs going forward as the supply chain gets more efficient, and a customer base that is growing. This is not as exciting as $x.yz earnings per share, but it is the most important for investors. This is a company that now has a very high chance of success, because the building blocks of success are in place. A year ago, there were still serious questions about whether Tesla could establish a mass production line and deliver production mass production vehicles to paying customers. I don't think there's any question left that they've done it.�
Feb 23, 2013
aronth5 Interesting perspective on why Tesla is not like GM/Ford etc.
Anton Wahlman from the street. http://www.thestreet.com/_nasdaq/story/11847967/1/heres-the-only-company-more-misunderstood-than-apple.html?&cm_ven=nasdaq&cm_cat=free&cm_ite=na
"The only thing that matters in this report is that they have accelerated profitability by 9 months (4Q13 to 1Q13) while maintaining the 2013 sales goal of 20,000 cars. This is a clear incremental positive.
Everything else is noise ..."�
Mar 7, 2013
derekt75 I'm still interested in how service contracts affect things.
When Tesla asks us to pay for our service contracts, they'll probably receive some $10 million in cash over a couple months.
I imagine that on a GAAP basis, this somehow needs to be amortized over the life of the service contract, but on a non-GAAP basis, they suddenly have $10m more in the bank, right?
$10m isn't a huge %age of their revenue, but it could be the difference between a positive cash flow and a negative cash flow.
Anyone know for real how that works?
When are we going to need to pay, anyway?�
Mar 7, 2013
NigelM I'll take a stab at it.,,,Seeing as we're paying in advance for a service not yet provided it should be treated as future revenue, This would be the case because there is a measurable liability (the cost of said service) which should probably be recognized on the balance sheet. IIRC it doesn't make a difference whether we're talking US GAAP or IFRS. In other words advance payment for a service plan will be treated largely as a balance sheet item and will generally not affect revenue (P&L) in the short-term. It is very nice to have from a CF perspective and will be recognized on the CF statement.
When they ask us to.�
Mar 8, 2013
kenliles that sounds right- so would it be a double entry of asset against liability? then over a linear time, reduction in liability? If so, then service costs as performed over time would be an operational cost, no?�
Mar 12, 2013
NigelM Yes. As the liability is reduced (service is provided) then the advance payments can be recognized as revenue.�
Mar 12, 2013
Bradleybang Service Contracts are treated like insurance. Thats my industry.
When the service contract is sold
a cash Asset in the amount of premium(your cost) is debit (increase) and
a liability credit (increase) is 100% booked as unearned premium. Sometimes shown as Service Waranty in liabilities.
Say the contract is a 3 year contract (36 months).
Each month 1/36th of premium for the contract is income credit (increase)- shown as earned premium or Service Revenue in income statement and
the liability of unearned premium is debit (decrease).
Thats how the income side is done.
As service is provided they become expenses. Say a part is needed for replacement. Asset of inventory is credit (decrease) and service parts expense is debit (increase).
Service labor , overhead will also be accounted for as service expenses.
In the end, earned premium - service expense = service profit (loss)
Most mfg will not disclose this breakdown in their consolidated financials. However, a good firm will track and try to make a profit on the service. Sometimes a mfg will buy insurance from a 3rd party insurer.�
Mar 13, 2013
kenliles I figured the service must be an expense somewhere; interesting how it's handled like insurance
thanks�
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