Thứ Ba, 3 tháng 1, 2017

Analyst Reports/Targets part 2

  • Feb 27, 2014
    DaveT
    Short-Term TSLA Price Movements - 2014

    Actually I'd expect the GS and BofA ML reports to be quite good. They just don't view TSLA's competitive advantage like bulls/believers do. But they'll make some really good points about the risks and challenges ahead for Tesla. They'll have much more conservative forecasts and that results in much lower price targets. Though BofA's price target of of $65 seems a bit too grumpy.

    I think we're at a disadvantage with short term trading if we don't have access to these reports and aren't able to evaluate them prior to market open. I don't think everyone here needs to read them but at least a few people should and let others know the general content/arguments in the reports and how strong the reports are.
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  • Feb 27, 2014
    bonnie
    I have the B of A report. Highlights are (don't shoot the messenger):


    • Gigafactory will make the company even more capital intensive
    • Gigafactory is not giga demand
    • Competition exists for stationary storage demand
    • Pollution risk vs. potential job creation (yes, really)
    • Extremely overvalued stock
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  • Feb 27, 2014
    FluxCap
    I'll do my best to contribute to that effort as a client of Morgan Stanley, but Dave -- I have to tell you, your own analysis is balanced, insightful, and superior to many professional analysts covering Tesla Motors at major institutions. Don't put too much weight on their analysis vs. your own other than to consider that they will obviously have more eyeballs paying attention to theirs.

    And I'm not aware of any algos/bots that scan for DaveT analysis and trade on it, though that would be a nice business venture I'd invest in. :)
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  • Feb 27, 2014
    Theshadows
    Wonder what they rate Halliburton and Chesapeake energy? You want to talk about pollution risk vs job creation. You don't even have to visit a drilling site in northern PA, just drive through a town they are in.
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  • Feb 27, 2014
    FluxCap
    Giga demand? Poor Johnny Petersen. Still talking about DEMAND for Tesla Motors products when the demand curve is in the stratosphere.

    Another analyst who needs a hug. Or some Preparation H.
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  • Feb 27, 2014
    DaveT
    How many pages is the report?
    Do they give figures on gigafactory capital requirements going forward?
    Do they detail competition for stationary storage?
    How are they concluding valuation on the stock and what projections and valuation method are they using?
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  • Feb 27, 2014
    bonnie
    Well I knew the highlights wouldn't be enough. Sent you a pm.
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  • Feb 27, 2014
    DaveT
    Actually it's more to try to gauge how their reports will affect short term sentiment. For example, reading MS's 50-page report and seeing their figures and analysis, one can conclude that it could significantly impact sentiment, especially for the next trading day.

    For GS and BofA reports, since I haven't read them I don't know how long they are, how comprehensive, and the full details of how they present their arguments. So, it's tough to judge the full impact on short-term sentiment. This is a big disadvantage for those of us trying to trade short-term options.
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  • Feb 27, 2014
    Chickenlittle
    i dont believe todays action reflects boa report. i believe the majority of the market doesnt appreciate the significance of the factory. they see company taking on more debt to build new factory in future. dont try to educate me on the importance, i do appreciate it. i suspect the market just views it that way. they also dont believe it will help the next qtr which seems to be most peoples horizon. i mean, look at the title of this thread. will help over time. i am just happy price not slipping much.
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  • Feb 27, 2014
    DaveT
    Goldman Sachs is so big and respected on the street that they're able to affect sentiment profoundly. They have a ton of high net worth clients (individual and institutional) and their report went out to all of them last night or this morning.

    The question is how well the report is written and presented. Without knowing that, we're in the dark.
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  • Feb 27, 2014
    30seconds
    I'm waiting for the call with BMW, VW, GM or MB management when an analyst says something like "We think your i3/ eGolf/ Volt 2.0 / B class can really allow you to compete in the rapidly growing BEV market, but where are you going to get the batteries from? Or do you not really believe in EV and are just throwing Billions of shareholder $$ down to satisfy regulatory requirements?"
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  • Feb 27, 2014
    davecolene0606
    Booked profit @257.87 and 253.68 back in @ 250.00 ..... :)

    whew! ;)

    As for the generalities on the B of A report:

    pollution vs employment: see Elon statement re virtually zero waste and ability to reclaim almost all raw materials + pwred by sun/wind so forget that one.
    gigafactory doesn't equal demand: seriously lacking any vision on worldwide demand for S,X and GenIII not to mention storage.
    competition for storage: sure their referring to pumping water/thermal, again, zero vision here.

    Can't wait to see the details cause they sound about as buried as the last supporters of whale oil refiners and buggy whip manufacturers
    :) rant done
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  • Feb 27, 2014
    DaveT
    BofA ML price target $65 report - summary and analysis

    Here�s my summary/analysis on the BofA ML report released this morning.

    Length: 5 pages (plus 4 pages of disclosures)

    Summary
    1. Overall BofA ML expresses a bearish view of TSLA.
    �We continue to believe that moving downstream into the mass market will create significant risk for Tesla, particularly considering that incumbent OEMs have the financial resources to be extremely competitive, not only on the technology front, but with vehicle pricing as well. In other words, incumbent OEMs could theoretically be willing to lose money on EVs to drive competition out of the mass market for EVs.�?

    In other words, they think ICE auto makers could release lower-cost EVs (that actually lose money) to displace competition like Tesla.

    2. BofA ML expresses a bearish view on the Gigafactory.
    �In our view, the Gigafactory investment will translate into even more capital intensity and add further pressure to margins and returns.�?

    They basically think that Tesla already has massive capex expenses ahead while trying to just scale auto production, but additional expenses for battery production just adds more capital requirements.

    They also think that a 30% reduction in battery packs won�t make their cars more appealing than ICE cars.
    �this reduction is unlikely to achieve the cost range TSLA believes is necessary to create a distinctive advantage over ICE vehicles.�?

    And they think that just having battery production at 500k doesn�t mean that the demand will be there for 500k cars.
    �Also, having the capacity in place to produce 500K battery packs/year does not equate to generating this level of annual demand, particularly considering mass market competition from incumbent OEMs.�?

    3. BofA ML isn�t convinced about Tesla�s battery storage potential.
    �There appear to be numerous, non-Li-ion battery chemistries that could challenge demand for Tesla's packs in the stationary storage market. In fact, Flow, NaS and lead-acid batteries all seem like reasonably attractive alternatives.�?
    They don�t go much into detail though.

    4. BofA ML thinks TSLA is overvalued, extremely.
    �We continue to view Tesla shares as extremely overvalued (see A $72 trillion auto industry?) and believe a significant correction is likely. We therefore maintain our Underperf rating and $65 PO, based on a 2015 EV/EBITDA mult. of roughly 15X.�?

    So here�s how they come up with their valuation. They are forecasting revenue in 2015 to be $5.7 billion. They don�t give specific units sales and asp numbers but I�ll assume 57,000 cars at $100 asp in 2015.

    Then, they�re looking at a gross profit of $1.6 billion (28%) and a EBIDTA profit of $587m. Since they�re giving a 15x multiple of this 2015 EBITDA income, their valuation given is $587 x 15 = $8.8b. Divide that by 135m shares and you get $65 per share.

    DaveT�s take:
    1. Overall, the report is flimsy and lacks detail of argument compared to other reports by Morgan Stanley (Feb 24 report was 50 pages) and Deutsche Bank (Feb 20 report was 8 pages). It reads more like a bullet point summary of some bearish arguments, yet the arguments are fully flushed out and are not very convincingly presented.
    2. The main argument from BofA appears to be that they�re not very impressed by TSLA and see more risk than reward. They see ICE incumbents as having the resources to crowd Tesla out of the EV market if needed and see Tesla�s challenges of scaling production and demand as very daunting.
    3. I respect the bearish argument and focus the inherent risks with TSLA. However, BofA ML presents a poor report that doesn�t even help the shorts much.
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  • Feb 27, 2014
    Norse
    Thanks DaveT, the bots have already picked up your take on it :)
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  • Feb 27, 2014
    3mp_kwh
    Looking at just the last couple pages, as an analyst in power, I don't think the fascinating thing is the take of the others, as much as it is the will of the TSLA investor to endorse an extremely high multiple. I wish the reports (and I haven't read many) were more forward about the balance between the multiple and the earnings underneath. I'm coming over to this forum, honestly, because I'm short, for now. Still have shares, but puts outrun them. I've been wrong every time I short TSLA ;) . That's the good news. The cool reason, however, is the prospect of another round of 100% dilution, depending upon as-of-yet unset conversion prices/timing for the 1.8bb note issue. Morgan Stanley's Jonas doubling his target, and working for one of the underwriters didn't help!

    Lastly, the gigafactory news needs to address battery storage tech as it differs from lithium ion, in economies. Weight is less important and there is some distance to parity pricing, if litium is intended to fill that role.
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  • Feb 27, 2014
    Lump
    I read the Morgan Stanley report & was impressed with their detailed analysis, while the Autonomous aspect is in the future & difficult to predict the report was insightful.

    Sharing these Investment bank reports & having guys like Dave summarize them is priceless, plea keep it coming.
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  • Feb 27, 2014
    dalalsid
    Does BoFA do this same kind of thing for other high growth stocks? How do they value Twitter, Pandora and Netflix?
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  • Feb 27, 2014
    rcc
    Yep, saw the same. It became really clear that this is a guy who doesn't understand technology and is looking at the company purely through the eyes of an auto industry analyst. If I thought of Tesla purely as an old-style auto company, I'd probably come to similar conclusions. Old-style meaning similar business model and margins, no significant underlying lead in technology and no synergies with other industries.

    I've concluded that to be able to properly analyze a hot growth stock for longer term buy/hold/sell purposes, you've got be confident you can predict why a company is going to grow over the next 2-5 years (depending on how overvalued the stock is by traditional metrics) and that any obstacles are reasonable and can be overcome by decent execution. (This is straight out of the Peter Lynch playbook, btw.) This guy doesn't understand Tesla well enough to do that.

    Honestly, if it weren't for the Gigafactory and the possibilities for Tesla to supply batteries for residential solar installations, I'd probably pull a large chunk of my money off the table at $250. But with that in play, I think I'm going to let it all ride. The growth scenarios over a 4-7 period are just insane.

    Edit - I chickened out - it's not real money until you cash out so I peeled off a large chunk. Both the gains and the odds of the stock dropping sometime soonish just look too good. Still own some though and will buy more if the stock drops.
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  • Feb 27, 2014
    DaveT
    Goldman Sachs $170 price target report - summary and analysis 2/27/14

    Here�s my summary/analysis on the Goldman Sachs report ($170 PT) released this morning (for BofA ML�s report summary, see here)

    Length: 3 pages (plus 4 pages of disclosures)

    Summary
    1. Goldman Sachs ups their price target from $118 to $170.
    First, their price target is a 6-month price target and the main reason for the price target increase is that they�ve increased the multiple they give from 20x to 30x (2018 earnings). The reason they�ve increased the multiple is as follow:
    �(a) the increased liquidity which improves Tesla�s risk profile allowing it to make the necessary component investments to support its growth outlook, and (b) greater confidence in the company�s execution based on recent operating results which lend credibility to TSLA�s longer-term EBIT margin target of mid to low teens. We note we have not made changes to volume assumptions at this time.�?

    2. Goldman Sachs approach to TSLA valuation and their $170 PT.
    GS has three 2018 scenarios and then they take the average of those three scenarios to come up with their 6-month price target.

    ASPs for all three scenarios are $98.7k for Model S/X and $50.7k for Gen3.

    Scenario #1: 170k cars sold in 2018 (80k Model S/X, 90k Gen3)
    - $12.9b revenue, 14% operating margin, EBIT $1.8b, net income $1.3b, implied stock price $273 but discounted at 20% = $149 share price.

    Scenario #2: 185k cars sold in 2018 (87k Model S/X, 97k Gen3)
    - $13.8b revenue, 14.7% operating margin, EBIT $2.0b, net income $1.49b, implied stock price $311 but discounted at 20% = $169 share price.

    Scenario #3: 200k cars sold in 2018 (94k Model S/X, 105 Gen3)
    - $14.9b revenue, 15.5% operating margin, EBIT $2.3b, net income $1.7b, implied stock price $355 but discounted 20% = $193 share price.

    So GS takes the average of their three scenarios ($149, $169, $193) and comes up with their $170 6-month price target.

    3. Goldman Sachs on TSLA�s secondary
    They don�t seem to have much of an opinion on the secondary other than that it dilutes eps estimates in the short-term (over the next 3 years) but not so much by 2018 (by 4%), which is the year they base their estimates on. They do mention that the secondary improves liquidity and thus is one of the factors in them raising their multiple from 20x to 30x 2018 earnings.

    4. Goldman Sachs on Gigafactory.
    No mention about the Gigafactory. Strange because why would they release this report the day after Gigafactory details are announced and not mention it at all in the report. Are these guys really following TSLA actively?

    DaveT�s take:
    1. The reason for Goldman Sachs relatively low valuation (compared to MS and others) is because they have fairly low 2018 numbers (170k-200k cars sold) and they don�t seem to be looking past 2018 to the mass market disruptive potential of Tesla. In other words, while they�ve become increasingly more confident in Tesla�s ability to execute, they still aren�t convinced that TSLA is going to become much more than a niche auto maker.

    2. I�m also quite surprised GS�s report isn�t more bearish considering their past price targets. In fact, they�ve raised their multiple from 20x to 30x (2018 earnings) for their price target increase and this shows that even the analyst team at GS is coming around and having to acknowledge TSLA�s impressive execution and growth. They still seem hesitant regarding Tesla�s potential, demonstrated by them saying, �The primary risk is the sustainability of demand longer term.�

    3. While Goldman Sachs� report is very short (only 3 pages) and lacks depth of analysis, I think it�s a much better report than BofA ML since with BofA ML they make certain claims (ie., casting doubt on demand for product) yet they don�t substantiate those claims with well-fought-out arguments. However, at least with Goldman Sachs they�re not making really many claims. They�re simply presenting some numbers and saying while they�ve become more bullish, they�re still cautious. I would have liked for them to be more detailed and comprehensive, but oh well. In the end, this report doesn�t help shorts much at all as it falls short compared to the bullish reports/arguments published recently by other analysts.

    4. On a last note, with GS becoming a bit more bullish on TSLA (I wouldn�t consider them a bull, since their PT is $85 lower than current price) I think that the overall general sentiment on the Street toward TSLA is becoming rather positive. The main argument seems to be valuation and attempting to quantify the true potential for Tesla�s products.
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  • Feb 27, 2014
    FluxCap
    Ahh -- thanks 772. Guess we'll have to wait until after the bell then, that's 4:30 EST / Wall St Time. :)

    - - - Updated - - -

    Thanks so much for doing this, Dave. Please repost these in your Megathread for archival purposes if you don't mind.

    What this means is they flat out believe Tesla is lying or incapable of generating 500k cars sold in 2020. Which doesn't make sense given:

    Demand? Really? What makes someone think that a Tesla product with 80% of the product benefits at half the price of its current completely supply-constrained, world-beating product would not RAISE the demand curve rather than lower it?

    I can understand speaking to macroeconomic risk, but product for product, there is no auto product that can or will compete with Tesla in the near future unless it's running on Tesla batteries, Tesla software and a Tesla powertrain...which basically makes it a Tesla. And 2020 is the near future in my horizon.

    This, friends, is where the opportunity for arbitrage exists between slow analyst comprehension of shifts in company fundamentals, and fast comprehension on this forum. This is where vision can give us an edge. This is why I keep making money on TSLA, and am happy to do so for the next few years until the story is written in history for good.
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  • Feb 27, 2014
    kenliles
    They already do...

    thanks for the synopsis on that one Dave
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  • Feb 27, 2014
    DaveT
    Actually, my typo. It should be 2018, not 2020. Just made the correction.
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  • Feb 27, 2014
    Johan
    Short-Term TSLA Price Movements - 2014

    Thanks for your great synopsis DaveT. I'm just beyond words how GS could release a research note the day after GF announcement and not mention the concept and how it affects TSLA's future value?!?

    If I paid money for access to that report I'd demand a refund. If I were a GS client I'd give them some real sour feedback. Thankfully I'm neither!
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  • Feb 27, 2014
    772
    This might sound really cynical, but I think some clients pay for research they "want" to read rather than anything that necessarily makes sense. Not that I'm accusing anyone of anything here :rolleyes:
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  • Feb 27, 2014
    sleepyhead
    Thanks DaveT for your analysis.
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  • Feb 27, 2014
    Curt Renz
    "People willingly believe what they want to believe." - Julius Caesar
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  • Feb 27, 2014
    3mp_kwh


    This is where things go a little crazy. There is no convention to bring ordinary stock investors into pricing an earnings ramp that goes out to, in this case,     2018. If autos rarely trade over 15X forward year earnings, and don't deserve Tesla's valuation (for a host of reasons I am all-in with), that does not mean we should price F, GM, etc, at 10X 2018 earnings in six months. These analysts are dialing the bull/bear of their pitch. The trend is up with them, but even with this sauce, they�re landing on $170. FWIW, I agree 170k-200k units, in �18, sounds low.

    Tesla deserves a whole lot, but Musk said a while ago the price is unjustified/lofty. I�d expect him to drop the conversion price from the Barron�s rumored $348-360, down to $300 or lower if he thought his shareholders would stick around for it. He has capital to raise, and it�s either that, or pay a high enough interest rate on the notes so that a 1.8bb borrowing can find enough investors.

    Beyond the 35,000 unit target, I think growth away from autos is definitely explaining much of the recent leg up. But that raises the bar in that sector. I can see �second life� use for auto batteries, as home backup. Not major. More importantly, with CA�s 1.3GW storage mandate being the first of what may be many, the question of what chemistry is most competitive should�ve been evaluated by Jonas. Did he? (I�d love to get his report, if a kind sole would PM). If you say these auto analysts don�t get it, does that mean that CA�s 00.7% of statewide electric generation (EIA 2012) coming from solar needs to find a battery, in 6 years? One thing CPUC will probably stand by is enough net metering economics to keep folks from wanting to go behind the meter (needing batteries). It isn�t just PG&E and SCE who depend on those revenues. All kinds of publics push 5-10% of them to local government. You�re right, this valuation needs to price in something past the auto-analysts.
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  • Feb 27, 2014
    Ocelot
    In response to the GS report...
    After watching Inside Job about the 2008 financial crisis (worth a watch for anybody who has not seen in) I was left with disbelief at just how much these big investment firms push their own agenda (making $$$$) even at the expense of their clients. I do not feel things have changed in the last 6 years at all. I do not trust anyone's report, even Morgan Stanley. A few folks on here pointed out that MS's price target was autonomous of their underwriting part of the share/notes offering, as there are laws saying how analysts cannot correspond/share info with 'traders' and vice versa. Personally I very, very, very highly doubt there was no collusion. It is plainly obvious from the huge revelations that that keep unfolding (housing market crash, libor rate scandal, etc. ) that greed is the prime motivating factor on wall street. There is a notable lack of ethics, and accountability, making these reports in my opinion, worthless.
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  • Feb 27, 2014
    FANGO
    Can you please deliver this quote, in context?

    I think you will find that he did not say that. He said the company would have to grow into it. What do you think the gigafactory is about? That's exactly what "growing into it" is. People are trading this stock on a few years from now, not now. Now is relevant only in that it increases or decreases the likelihood of the future being positive.
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  • Feb 27, 2014
    justthateasy
    I haven't had time to do any of my own in-depth analysis lately because of my new schedule but I just have to thank those who are able to do so.

    I was wondering what was putting a lot of downward pressure on the stock today after the favorable gigafactory announcement yesterday and saw the mentions of BofA and Goldman. If it weren't for these two, I think TSLA would be in the 270s now.

    As far as technicals and charts goes, TSLA is on the path of going back into the channel it was in between May and October of 2013. That threshold for that channel, as of today, is around 274 with roughly a 1 point rise every day it's not in the channel. In other words, 275 tomorrow, 276 Monday, and so on.

    Personally, I can see a scenario where TSLA will see a massive push upward back into the May-October channel in the coming weeks then hit some resistance at 300. Other than the May-October channel, we're deep into uncharted territory with no real support and resistance levels being tested.
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  • Feb 27, 2014
    Chickenlittle
    i dont believe it was the analysts. we dont know the prices that are being shopped for the bonds. its interesting that the stock stuck around 250 range wouldnt be surprised if that is what the bonds are based on. to the general market they just are raising money for another factory without realizing the significance. i am concerned about the next report. q3 report had a warning of 1000 cars in transport but market didnt take that into account. q1 carries same warning but i suspect if its 1000 cars headed to china that will be different. i believe the PT of 320 is good but represents may not be realized for another year
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  • Feb 27, 2014
    FluxCap
    Check out Lovallo getting singled out unflatteringly by CNN for this sloppy and incomplete analysis. That's some pretty mainstream media attention for this "minority of one."
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  • Feb 27, 2014
    drinkerofkoolaid
    Jonas's last major upgrade included a footnote that said if Tesla can sell 500,000 vehicles, and achieve 20% operating margins, the stock is worth ~$800. Now that he's recognizing the value of Tesla in the energy storage business, and as a supplier to other companies, he's basically indirectly saying the stock could easily be worth $1000-$1500.
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  • Mar 2, 2014
    Robert.Boston
    Moderator's Note:
    I've resurrected this thread for discussions of analyst's reports.
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  • Mar 3, 2014
    FrozenCanuck
    This is a great thread. Just reading DaveT's summary of the most recent bearish report. Man, that analyst is grasping at straws. If the gigafactory reduces battery cost 30% he somehow things capital intensity will ruin the story? And to suggest that lead acid is going to compete in the energy storage market .. lead acid gets what ... 41 Wh/Kg versus something like 260 Wh/Kg for Li-Ion (on its way to 360 if Elon is right)? So you can put a Tesla battery on your wall ... or you can build a lead-filled extra room for your house to save a few bucks :)

    Whenever I see a big bear I ask myself if the argument is the same argument that has been utterly PROVEN as wrong over the last couple of years. If it is the same argument, no need to pay any attention.
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  • Mar 3, 2014
    Theshadows
    Since Lovallo gas such a low price target does anyone know his position on the stock. With that low of a price target he should gave done money on the line for his massively short position?
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  • Mar 3, 2014
    FrozenCanuck
    It would be illegal for an analyst to short a stock without disclosing it. There are a lot of amateurs (I say this as a statment of truth, not judgement or as an insult to anyone, and this is not directed at you, shadows) who see big conspiracy theories and wrongdoing everywhere in an industry (Wall Street) that they don't understand. Most analyst are honest and publish what they believe is true. This guy Lovallo has been wrong, but I doubt he's lying about his view or illegally trading around it.
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  • Mar 3, 2014
    sleepyhead
    As an analyst you are forbidden from trading stocks in the sector you cover. Even if you don't cover that specific stock, but it falls in your sector, you still can't trade it.
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  • Mar 3, 2014
    TSLAopt
    If I was this analyst Lovallo and so wrong about a stock I cover for so long, more wrong than everyone else....then I might talk myself into staying on the contrarian side of all the other analysts. It would be the only way I could redeem myself, for the stock to flip back in my favor making all the other analysts more wrong than me and making me the smart one that investors should have been following all along.
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  • Mar 3, 2014
    Theshadows
    Your comments are quite interesting since I am not a conspiracy theorist and I do not believe that I have ever had that tone in the hundreds of posts I have shared here. Since I do not have access to his report I was asking if in his disclosure he disclosed that he was short.
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  • Mar 3, 2014
    Theshadows
    I would hate to have that job then. I don't see why you would spend the time analyzing something you are forbidden to do business (trade) in?

    One of the reasons I trade solar stocks is because I feel like I am killing two birds with one stone since my work in the industry means I have to do less research to invest in companies that are publicly traded in the industry. I also feel it allows me to offer our customers the best products that are created by the best companies in the industry.
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  • Mar 3, 2014
    FluxCap
    They do it because they are paid very, very well by their investment banks while they are working as analysts (and don't have to guess at their income), and then can take their connections and experience elsewhere to trade on them (such as private equity, pension funds, hedge funds, etc).
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  • Mar 3, 2014
    bonnie
    I doubt he's shorted it personally, but when I saw his new report/price target I fired off a note to my ML advisor. I've been with them a long time, have a healthy portfolio, am charged zero fees, and if it wasn't for the advisor (as I told him in the note), I'd move 100% of my assets based on this report alone. It's sloppy work and begs the question of just how many ML clients are shorting this stock.

    So I get home from work tonight and I have a personal note from a ML vice president saying he will look further into the TSLA analysis and get back to me. "And if in the meantime, you would like to chat on the phone, please feel free to call my direct number." I would be foolish to expect anything to change, but still it warms my heart to know that at least one person knows of my dissatisfaction.
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  • Mar 4, 2014
    Andrew
    Morgan Stanley's explanation of $320 target: "Nikola's Revenge: Part 2"

    My dad just forwarded this to me from his broker... Didn't see it posted here yet, so I thought I'd share. Thirty-three pages of pure TSLA/Tesla/Gigafactory/Solar geekiness! (Mods please feel free to merge wherever appropriate.)

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  • Aug 6, 2014
    FluxCap
    Wow, this is squeezeville now. I just read the AJ note. I'll provide a quote here:

    AJ 8-6.png
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  • Aug 6, 2014
    uselesslogin
    Yeah, the market has not yet come to the realization that the Model S is the second worst car Tesla will ever make. At least when you account for price of course. (ie Model 3 will not be as good but will be better for the money)
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  • Aug 6, 2014
    FANGO
    This is a good point, the cars really will only get better from here. There's always the chance they'll come out with a dud if Franz gets a little too experimental and people aren't into it, or something, but at least Tesla shows off their models early enough to gauge public reception and change them if people don't see to be into it, so that helps prevent possible duds anyway.

    Also, I'm not even sure about that parenthetical. I bet a well-specced Model 3 will be better than a low-specced early-model S in a lot of ways, since Tesla will have worked out a lot of fit and finish and interior bugs by then and will just generally be a better automaker (though I suppose there may be kinks on the way to six-digit volume production, which is a whole different game than five-digit volumes). Either way, any Model 3 will be more desirable to me than any S based on size factors alone.
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  • Aug 6, 2014
    30seconds
    by the way the morgan stanley "Bull" case has a $500 price target by Aug 2015. this is built on the gigafactory creating "material disruption in premium car market with larger inroads into grid storage" by producing a $100/kWH pack
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  • Sep 5, 2014
    vgrinshpun
    Trip Chowdhry of Global Equities Research issued a commentary following the GF event, clarified his earlier musings regarding GF2, GF3, put a $60B value on the GF when in operation in 2017. The digest accoridng to streetinsider.com:

    Global Equities Research is issuing commentary on Tesla Motors (Nasdaq: TSLA) following news Thursday night that the company and the State of Nevada inked a $1.25 billion deal for construction of a Gigafactory. The firm has Tesla at Overweight with a target price of $385.
    Analyst Trip Chowdhry offered the following insight:

    • Elon Musk said that "This is it" for the GigaFactory
      • Hence, there will not be any other locations - so no GigaFactory 2 or GigaFactory 3. Thus Arizona, California, Texas and New Mexico have missed out on GigaFactory
      • Nevada offered incentives of $1.25 billion, a lot more than what we were expecting. We were expecting the incentives to be about $300 million to $400 million
      • With incentives at $1.25 billion, Tesla motors does not need to build GigaFactories at other locations, hence Elon said "This is it"
      How should Investors value the GigaFactory?
      • One of the ways to think is the following - "What GigaFactory is to EV's (Electric Vehicles) :: Petroleum companies is to ICE (Internal Combustion Engine)"
      • The market cap of Chevron is $240 Billion; The market cap of Exxon Mobile is $420 Billion
      • Investors may want to give GigaFactory a %age value of either Chevron or Exxon Mobile
      • We think, when GigaFactory is fully operational in 2017, GigaFactory by itself could be valued at 25% valuation of Chevron, which would be about $60 Billion
    �
  • Sep 5, 2014
    vgrinshpun
    The $60B value assigned to GF sounded a little optimistic to me, so I decided to do my own calculation to see what number do I get. My calc is based on quantity of cars that can be served by Chevron production vs. quantity of cars that can be served by the output of the GF. I will post the calc tonight in the Long Term thread, but the number I get is $4.4B based on 10 year lifetime of the car battery.

    Would be interesting to see which method T.C. Used to arrive at $60B.
    �
  • Sep 5, 2014
    Lump
    I am struggling with the $60B valuation, I think some of these analyst are getting ahead of themselves & want to make outrages "Henry Blodget" claims purely to gain notoriety.
    �
  • Sep 5, 2014
    vgrinshpun
    It does seem that his calculation (assuming that he did it) lacks rigor...
    �
  • Sep 5, 2014
    Robert.Boston
    This is silly thinking. First, Chowdhry should learn how to spell "ExxonMobil" (no space, no final 'e'). More substantively, petroleum companies have non-reproducible assets: oil reserves, government franchises, and industrial facilities that could not be built under current environmental standards. (The newest complex refinery with significant downstream unit capacity began operating in 1977 in Garyville, Louisiana.) There's nothing particularly unique about the Gigafactory, other than the exclusive relationship with Tesla Motors to supply battery packs. So, the plant is worst almost precisely what it costs to build.
    �
  • Sep 5, 2014
    30seconds
    right now the plant is worth about as much as it will cost to build. However in a year or two it may be worth more as it may be the only large scale, low-cost battery production facility in the world. In that case it would give Tesla a massive advantage in terms of being able to build and sell high margin vehicles.
    �
  • Sep 5, 2014
    AudubonB
    Ouch.
    That update from Chowdhry was truly painful to read. Robert.B presented the salient sillypointes (sorry, GER: sillypoints); the reason I found it painful, however, was because it gives naysayers the FUD-powder so often used inappropriately against Tesla.

    Take your time to come up with appropriate analogies and appropriate research. I think those points Chowdhry enumerated are, unfortunately, a perfect example of why Mr. Musk yesterday used words like �I think our stock price is kind of high right now". Yet Chowdhry wrote that afterwards!.

    Ouch, ouch, ouch. Wall Street Journal is going to be jumping on that like a duck on a june bug.
    �
  • Sep 5, 2014
    chickensevil

    Note: it goes both ways... duck... chicken... either way, they sure do love them june bugs! :D
    �
  • Sep 5, 2014
    adiggs
    OMG chickenevil - love it. I'm still laughing :)

    (in my case, I grew up with chickens, so I know how they like bugs; seeing them in action does bring back good memories!)
    �
  • Nov 17, 2014
    Derek Vinyard
    Stifel reaffirms its PT $400, followed by FBN and Baird

    Good morning everyone

    Today James Albertine has confirmed his sexy $400 PT.
    Shebly Seyrafi from FBN Sec. confirmed her "outperform" rating and a PT of $325.
    Ben Kallo stays with his $275 PT.
    �
  • Nov 17, 2014
    mulder1231
    Adam Jonas doing it again, just wait for the headlines. In a new research note he is addressing the potential of Tesla ditching the Model X falcon wing doors. But again, it seems he is starting a rumor, no evidence is presented. Here are a couple of quotes:

    And then later in the article:

    And then he goes on to present two options: choice A: proceed with falcon doors and choice B: ditch the falcon doors and redesign model X for more traditional doors. Duh..

    I guess all this speculation makes for an interesting article, but coming from Morgan Stanley, just count on a few headlines showing up, out of context, with a negative spin...
    �
  • Nov 17, 2014
    Curt Renz
    I doubt that the final purchase decision by a potential buyer of a Model X will hinge on whether it has falcon wing doors. I'll trust Elon and his engineers to correctly determine whether those doors are worth the bother. Either way, I would not it expect it to affect Model X sales volume. It should not affect decisions to buy or sell TSLA shares, even though that may have been the case today, especially with bots reading the news. Cooler heads may soon prevail.
    �
  • Nov 17, 2014
    Johan
    Jonas has seriously lost his game. What's his nick here on TMC? I'm sure he or his assistants follow our threads for info and "rumors".
    �
  • Nov 17, 2014
    Robert.Boston
    Remember the issues around the Model S retracting handles? These were a complete engineering nightmare, increased costs, and were flaky, at least originally. But they were Elon's signature touch on the Model S; there was no doubt they were going to be part of the final design.

    I see the falcon-wing doors on the Model X as equivalent. It's what Elon has been touting about the Model X; it is central to his vision of making a great cross-over. I refuse to believe that the Model X will be released without falcon wings.
    �
  • Nov 17, 2014
    ecarfan
    Anyone who believes that the X will go into production without the Falcon Wing doors is delusional.
    �
  • Nov 17, 2014
    austinEV
    I find it plausible that getting the doors right is hard and might be contributing to the X being late. Is that so crazy?
    �
  • Nov 17, 2014
    ecarfan
    Not crazy at all and the likely explanation for the delay, at least in part. But certainly it is a solvable engineering challenge.
    �
  • Nov 17, 2014
    Blurry_Eyed
    I have no particular inside knowledge of the situation with the X or it's doors, but from my outside perspective, I tend to think the 'delay' is more of a business decision than an engineering decision. In other words, it seems like Tesla doesn't really need the revenue from the Model X to get to Gen III. There is much more cash flow available to them sooner if they focus on continuing to ramp up the Model S production and increase the efficiency of production on the S. This gives Tesla more money so they can fulfill Elon's directive to spend as much money as possibly as quickly as possible without wasting it. Also it's easier for them to iterate and improve the S as it's an existing product with many of the larger engineering hurdles and challenges overcome. Now they are in a refinement phase with the Model S and continuing to use it to get real world data from tens of thousands of real world drivers. It's a smart business decision to slow down the release of the X in my opinion. But Tesla has to have a fine balance between disappointing it's customers by slowing down the X release and improving it's financial strength and it's business operations. Delay the X too much and it's reputation and brand equity could take a significant hit.
    �
  • Nov 17, 2014
    pGo
    Tesla CEO Elon Musk (2014) - YouTube

    In this video, Elon says that Model X is inspired by Mercedes Gull-wing door car at the mark 33:00. The video was released on Nov 5. X may be delayed, but the falcon wing doors are here to stay.
    �
  • Nov 17, 2014
    Papafox
    I remember in the 3Q ER when Elon was asked if the delay with Model X was due to any particular issues. Elon replied that the delay is just ironing out the details in many different areas, in getting the vehicle just right. I will take him at his word on this matter.

    Nonetheless, when Jonas said Model X would be delayed, and it was again, he attributed this statement to a lack of Model X vehicles being tested on the open roads. I'm rather inclined to believe he has someone at Tesla sharing information. For this reason, I cannot entirely rule out a gull-wing door issue.
    �
  • Nov 17, 2014
    AlMc

    ^^This^^, ....and, TM did set the bar very high with the S. Yes, some glitches with the door handles, 12v bats but all those were overlooked because the car was unique and compelling. Production ramp of the S was slow and early adopters would be more forgiving. Any problems could be identified and fixed on a small number of cars. The X will not be granted the 'glitches'. They will ramp quickly and can't afford a large number of them on the road with them needing to be called in to fix the glitches.
    �
  • Nov 17, 2014
    jhm
    Getting back to the topic of analysts, I think when Jonas speculates about a potential engineering fail, he is coming close to peddling uncertainty and doubt, just an F away from FUD.

    Meanwhile, Tesla's pride now hangs on whether if it can pull off an F wing door. So if they back down now they lose face.

    Honestly, I don't think it mattered much to customers or shareholder. There are so many other innovations and refinements that will make a much bigger impact on the world. Why should the reputation of Tesla hang on this? Vanity.
    �
  • Nov 17, 2014
    tftf
    But (same for the rearview cameras in the Model X that need updated laws etc.) at some point a decision has to be made because of lost revenue and slipping timelines.

    It's not like Tesla has dozens of other car models on sale, the X slipping into late 2015 will likely delay the even more important Model 3 as well (I doubt the design and engineering is 100% separate on these two cars and all of the work can be done in parallel, that's not even the case for huge car companies).

    It remains to be seen if analysts have done scenarios where the Model X slips intoearly 2016 for (meaningful) volume deliveries and the Model 3 back to 2018-2019.

    - - - Updated - - -

    I don't think there's a bigger TSLA bull out there than Jonas among the well-known street analysts (besides maybe Andrea James).
    �
  • Nov 17, 2014
    blakegallagher
    No doubt. He has lost his edge.

    And to TFTF I would love to see analyst model what 100k Model S and 100k Model X Before Gen 3 hits looks like on the balance sheet.

    Add storage solutions that are hitting the market next year and we are in for exciting times.

    Edit:
    He is a Tesla bull but not really as much of a TSLA bull anymore since he thinks that all cars will shortly be autodriving and at that point no one will want to drive Tesla's anymore.
    �
  • Nov 18, 2014
    chickensevil
    Just wanted to point out that according to the company they don't need to make the Model X in order to be successful or to get the Model 3 on the road. Keeping in mind that originally the company was projecting only about 20k a year demand for the Model S and that has been steadily increasing to about 50k a year now, they have already gotten all the added demand they felt they needed from the X in the S. So I think they are inclined to focus on getting this right since I really don't think the industry is going to be as forgiving of the minor issues with their second model as they were with the Model S.

    It should also be noted that with the Roadster (although they didn't make the whole car in house) they had so many issues with even just the first few hundred that it was almost to the point where they didn't actually have a marketable product. The Model S was 100x better executed and it still had its share of issues and glitches. While I expect there to be some issues with the X for the first few thousand, I am not going to complain about them pushing the product back just because I want the X release to be essentially 100x better than the S release, because they are going to need that more than anything to continue to be successful.
    �
  • Nov 18, 2014
    hershey101
    If the falcon wing doors are indeed problematic, and they end up not being in the production version of the car I, for one, will be very disappointed as both a shareholder and potential buyer. I surely won't be purchasing a Model X if it doesn't have falcon wing doors (I already have a Model S though)...
    �
  • Nov 18, 2014
    Zaxxon
    An X update email to reservation holders went out shortly after market close today. Excerpting from it:

    The falcon-wing doors are coming.
    �
  • Nov 19, 2014
    Curt Renz
    Morgan Stanley reports that Tesla Motors has reputed the conjecture about falcon wing doors being abandoned and confirmed that the Model X will have those doors: Tesla clarifies Morgan Stanley's concerns on Model X doors | Tumblr Photoset - Yahoo Finance
    �
  • Nov 19, 2014
    Johan
    Inspired by the Haiku thread and our fine tradition of poetry here on the Investor's subforum:

    Once Adam Jonas on Wall Street
    was erranously tweaking his spreadsheat
    his ill-researched note
    was recieved as moat
    and his opinions became obsolete

    Good night to you sirs and madams.
    �
  • Nov 19, 2014
    AlMc
    Johan, The last time we all posted poetry/haikus the stock tanked.......I am buying puts tomorrow.:wink:
    �
  • Nov 19, 2014
    Curt Renz
  • Nov 19, 2014
    jhm
    Yes, it come with an optional trailer hitch. Customers who want a tow vehicle will want a larger capacity battery. The will also want P and D. So I anticipate a P110D version will be popular for towing. Power outlets would be a nice touch. RVers, for example, will want to plug in their trailers.
    �
  • Nov 19, 2014
    AlMc
    I posted a comment over in the 'short term thread' as well. The towing capacity of the X will not be as good as a Tundra, F series or many GMC products. Not because it won't have lots of torque and not because it won't be fast....but because the frame and suspension would have to be very heavy duty (read very heavy) to be able to pull say a two horse trailer which could conceivably weigh up to 5500-7000lbs.
    �
  • Nov 20, 2014
    jhm
    I would expect that Tesla has already thought through this. Once they put a hitch on this thing, they open up a whole new set of performance criteria. If the frame cannot deliver to the hitch the power in the motors, then they set themselves up for disappointing consumers. Worse yet, that configuration could cause structural damage. So I'm willing to give Musk the benefit of the doubt for thinking through this kind of disappointing downside and finding an innovative way to exceed expectations.

    We can also see this as a critical step down a developmental path toward a high performance truck. Towing with the X could pique interest while providing Tesla engineers with valuable experience and a test bed. So even if initially the Model X is not the truck pull champ, give them a couple of years. The S P85+ was only able to go 0-60 in 4.2 sec, but two years later, the P85D does 3.2. Moreover, this technology advance is also leading to the Model X. So I think the Model X could pave the way to a high performance truck.

    Current truck esthetics exaggerate bulk, as if mass conveys power. But I think that Tesla will offer a lean esthetic. Power comes from efficiency and superior design, not from bulk. I believe that Tesla can subvert the bulk = power paradigm.
    �
  • Nov 20, 2014
    AlMc
    I agree that a Tesla truck will be built for great 'bed' carrying and towing capacity. This is several years down the line and will certainly have a battery pack that will be able to supply the power needed to pull 7-11K pounds that many of the 1 and 2 ton trucks are capable of towing at this time. However, since the X is really built to compete with the Audi/BMW/MB SUVs that are not really made to tow but more to transport people I would be shocked (hope I am wrong) that the X will be rated to pull more than a 4-5K trailer. This is still not bad and will accommodate much of the towing that the average family would ever need but I just did not want to give people the impression that it would be capable of towing what even a Tundra or its SUV counterpart, the Sequoia, could.
    �
  • Nov 20, 2014
    austinEV
    They will need to do some subversion for sure. I have always been confused about the proposition for a truck. It has market issues, due to the good-old-boy factor. It took decades before it was really acceptable to buy a Tundra/Tacoma (if it really can be said to be ok yet, in some quarters). Then it has physics issues, since as everyone is saying, with a largish (like model X) bulk, plus load in the bed, plus load on a trailer, this truck driver better be quick with a calculator to figure out what his/her range is going to be. If this truck was hypothetically built on a Model X skateboard, with 85kWh, it's range would drop in a big hurry. That is getting into range anxiety territory pretty quickly, and its worse since the variability would go up to. You can do your calculations right, then hit a headwind and it's all over.

    The whole engineering breakthrough that allows a model S/X to go 265 rated miles is 1) they are slippery as seals in the air and 2) they put tens of thousands of dollars of batteries inside to get the capacity to a good functional point. When you talk a truck use case, the aerodynamic advantage goes out the window and the weight goes up dramatically.

    I hope the Tesla Truck is built on a 150kWh platform to negate this, or the whole product is a different paradigm. Instead of competing with rangers or tacomas, it would be (sacrilege, I know) a special-built utilitarian city-range product with a modest 2-3 person bench seat and a full size bed and limited towing specs. It would be aimed at fleet buyers; businesses. They can charge overnight and have predictable routes during the day. I see power utility trucks and Time Warner Cable small trucks running all over town that don't do anything heavy duty. There is a huge addressable market there. Just don't try to be the cool aspirational truck that 20yr old cowboys want to buy.
    �
  • Nov 20, 2014
    jhm
    Yeah, I don't want to work up expectation on this either, but I do suspect that Tesla has a few surprises for us in this area. Does anyone recall Musk talking about the Model X having any towing capacity? It's a surprise to me at least. So we'll have to wait and see what they have in store.
    �
  • Nov 20, 2014
    Phil Seastrand
    Somewhere he was quoted to say that the Model X will have class-leading towing capabilities. Not truck level, but should be comparable to a SUV/CUV type vehicle. I fully expect class III towing (5000 Lbs towing, 500 Lbs tongue weight).
    �
  • Nov 20, 2014
    roblab
    Towing with the X has been on the menu for months if not years.

    No one who tows (who might even know what Class I, II, III etc. actually are) would ever try to tow a horse trailer with a cross over SUV. I have seen horse trailers being towed behind honda civics in Europe, though.

    As to towing, a hitch has been available for years for the Model S:

    Trailer 002 sm.jpg
    �
  • Nov 20, 2014
    AlMc
    I know I have been partially responsible for getting us off topic on the thread.....But this is my point. The X is closer to a crossover/medium SUV. It will have a light weight chassis and suspension system that will be great for passengers and light towing. It will compare favorably to most of the German SUVs but it is not designed, nor will it be capable of pulling even a fully loaded two horse trailer. The reason I use this as an example is that is what I would like it to do so that I can get rid of my Tundra.
    �
  • Nov 20, 2014
    v12 to 12v
    This article has clarification from Elon and mentions that the hitch can be used for bike racks and accessories. Also, puts to bed any speculation about a Model X sans falcon doors.

    Elon Musk: Rumors about canceling Falcon wing doors are false | SiliconBeat

    As the former owner of a Tundra that was flipped over by a trailer, please be mindful of what you tow! I don't think the Model X will come close to Tundra's towing capacity from what I am reading.
    �
  • Nov 21, 2014
    FluxCap
    Thanks for sharing, Curt.

    "Don't bet against the Iron Man"
    �
  • Nov 21, 2014
    chickensevil
    I guess I will post the whole thing here instead of the short term thread.. The Street (aka... Cramer) has downgraded TSLA from hold to sell:

    Tesla Motors (TSLA) Downgraded From Hold to Sell - TheStreet

    �
  • Nov 21, 2014
    FluxCap
    FYI, Cramer didn't write this report -- in fact no one did. It's an automatically generated report with text filled in by software that looks at ratios and writes sentences based on preset text.

    The only human involved in this was the one who decided to hit "publish" on their content management system.
    �
  • Nov 21, 2014
    chickensevil
    I just meant Cramer as the association with the Street since this is basically his website. So I'm sure somewhere along the way he had his hand in this.
    �
  • Nov 21, 2014
    FluxCap
    Certainly possible. One of his buddies certainly could have called him and asked him to fire off this report.
    �
  • Nov 21, 2014
    Johan
    It's a given. A while back when I suggested something similar about Cramer I remember some here saying I was out of line "accusing" him of such unethical behavior... Well I'll let everyone make up their own mind. Just pointing out that the data underlying the report, which is basically written by a computer program based on publicly available numbers, could have been spit out any day since the Q3 report. But for some reason it hit the presses today. Coincidence?
    �
  • Nov 21, 2014
    CHGolferJim
    It also follows his recent statement that people should read the Morgan Stanley report carefully.
    �
  • Nov 21, 2014
    pz1975
    Just want to point out how the use of %'s for financial data are so meaningless and make things look worse (or better) than they actually are:

    "The net income has significantly decreased by 94.1% when compared to the same quarter one year ago, falling from -$38.50 million to -$74.71 million."
    --> 94% WOW!!! But really it is only a drop of $34 million so the 94% number is meaningless in this context. For example, if last year had been -$2 million and this year -$10 million, the report would have said "...decreased by 400%...." So when the actual amount difference is minimal ($8 million), the % difference would look very dramatic. But if it was -$100 million last year and -$108 million this year (same $8 million drop), the % difference would be 8%. Anyways, you see my point. They do the same thing with the 127% drop in the next point, again making it look much worse than it really is (actual drop from -$8.5ish million to -$28 million). I'm sure bots are programmed to see % changes like that and react accordingly.
    �
  • Nov 19, 2015
    AQQU
    Julius B�r : B�r Insight Equity Research: TESLA MOTORS : Nov 18th 2015 : Hold

    Julius B�r : B�r Insight Equity Research: TESLA MOTORS : Nov 18th 2015
    Stock Rating: Hold
    �
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