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"Short Burn" Delivered?

"Short Burn" Delivered?

Is it short-lived or sustainable?
Let's have some fun.

dmm1240 | 6 juni 2018

Call it the precursor. The real burn comes after July sales numbers come in, which should be really high. The next impetus will be when Tesla announces it's crossed 7,500 per week in M3 production. A third boost will come after Tesla pays off a note that comes due in February 2019. The next note won't be due for several years, 2023 I believe.

Any or all of these could give the stock the kind of boost that will send it shooting skyward.

In the meantime, I would not be surprised to see some volatility the rest of this month with a general upward trend, perhaps a slightly larger hit after the Q2 report comes out. Tesla's June numbers won't be as good as they really are because so many deliveries are being deferred in order to extend the full $7,500 tax credit another quarter. The important number will be units in transit to customers, which should be substantially higher than the 2-4,000 norm. The shorts will sell actual delivery while just as dutifully trying to dismiss the in-transit number. It won't work but could cause another temporary dip. Once July's sales numbers are reported... well, being tall will be a whole lot healthier than being short.

johnyi | 7 juni 2018

The other big event is whether Tesla shows a profit / positive cash flow in Q3. Do that and there’s no place left for the FUDsters to hide. Of course, every AP accident or battery fire will draw negative attention in the meantime.

Rocky_H | 7 juni 2018

This is not yet the big thing. @dmm1240 was speaking my thoughts too. Things probably will still look kinda meh through the Q2 results.

I think it is key that the Q2 numbers will probably show that very odd split of actual sold versus in transit, and for most of the general public who doesn't follow Tesla very closely to know what's going on there and why, they won't understand the significance of it. The sales numbers will just continue to look low, which will make it appear as if the production is not ramping up as fast as it actually is, so stock will probably continue to bounce around and maybe dip if there is an overall market correction for various reasons. Q2 will also show a general loss, so that's going to seem like "more of the same" to the financial world. Actual profit, which so many have claimed could never happen, and/or paying off those debt due amounts without raising funds will be the things that set off the dynamite.

SamO | 7 juni 2018

just an appetizer. waiting for the main course.

mmmmmmmmm

Uncle Paul | 7 juni 2018

This is not the full short burn...more of a warning shot.

SamO | 7 juni 2018

sou vide burn takes longer

but shorts get cooked all the way through

just pick a temperature

Sleepydoc1 | 8 juni 2018

Chevy doing 20-25,000 Bolts a year is good but Tesla doing 150,000 a year is bad? Burn baby burn

Tesla2018 | 8 juni 2018

Tesla needs to report total model 3s produced worldwide for the quarter. We know US deliveries are intentionally being kept low but Fudweisers will spin it to say that Tesla is delivering less cars than last quarter if they also break it down into US cars sold or delivered.

johnyi | 9 juni 2018

I think Tesla always reports worldwide sales each quarter? Last quarter they mentioned SX sales and that was worldwide. Not sure why they would only talk about US deliveries, other than where they are in relation to the 200k total.

oragne lovre | 2 juli 2018

Is the burn simmering now as Tesla employees celebrated their milestone after 06/30 midnight?

SO | 2 juli 2018

Analysts are still clueless.

dmm1240 | 2 juli 2018

Simmering, oragne lovre. For once, I was right about something. June was choppy for Tesla stock. The fudsters were out in force. The shorts temporarily drove the stock down sharply this morning, but it's fought back to near even this afternoon. May break one way or another in the last half hour or so, but that's where we stand.

The real short squeeze will kick off after July's delivery numbers are scoped out by the press. What Tesla needs to do: 1) Maintain M3 production @ 5,000 or better for the last 2 weeks in July; and 2) have more positive news in a few days for the 2nd quarter conference call. The ideal conference call should: a) announce a vast improvement in Tesla's earnings per share, doesn't have to be positive, but a lot closer to zero than the 1st Q numbers; and b) formally announce some juicy energy storage projects, confirm that 5,000 per week is now the floor for M3 production.

If Musk can deliver less red ink and deliveries take off in July, then the rout will be on.

One caveat: Trump's trade war. If the follows through, and I think the stubborn dummy will, the markets are going to tank. Tesla could be swept up in the outgoing tide. A trade war will kick off the recession nobody wants and isn't necessary. BTW, there are rumors the big money boys are exiting the markets and parking their assets in cash. Not good.

I don't know whether a short squeeze can still happen, at least at the level if would normally, if it's occurring in a sea of red around it (meaning stock prices in general). I've seen estimates that GDP could drop 2-3% if a trade war breaks out. For reference, the Great Recession depressed GDP around 6% in 2009. So all that has to be taken into account.

TeslaTap.com | 2 juli 2018

Official numbers for Tesla production released: 28,578 Model 3s built up 3 times from Q1. No word on deliveries, which may not be released until the Q2 earnings call. Tesla also built 24,761 Model S and X (combined) in Q2.

My expectation is Tesla employees will get the 4th off and maybe another day? I doubt this week will maintain the 5,000 output, but hopefully be back on track next week. I'm sure quite a few employees can use a day off!

johnyi | 2 juli 2018

I'm guessing that 5000 was all-hands-on-deck, and not something they can sustain yet. I'll guess 3500-4000 right now, with maybe another shut-down, or partial shut-down now they have multiple lines, to get to the next level by end of Q3. Good progress.

sosmerc | 2 juli 2018

Sure looks to me like Tesla line workers have earned a few days off! Good job !

mos6507 | 3 juli 2018

Based on the CNBC article I'd say short-lived. The workers will be ground into dust. Tesla really should have gotten the automation working because it seems to be the only way to increase throughput.

mos6507 | 3 juli 2018

Quote:

[the worker told to expect longer shifts warned that pushing assembly-line workers too hard could backfire.

"He (Musk) is gonna go through an awful lot of people because people are gonna start getting hurt left and right," by the fast-moving assembly line, the worker said.

"There's only so fast a person can move."]

SO | 3 juli 2018

No matter what happens, the naysayers will ALWAYS find something to complain about. ALWAYS!

Mike83 | 3 juli 2018

The shorts are working much harder than employees of Tesla and they don't even get Tesla options at a good price. Not very smart. I thank the shorts again for giving me such great prices.
Happy 4th to real Americans.

dmm1240 | 3 juli 2018

"No matter what happens, the naysayers will ALWAYS find something to complain about. ALWAYS!"

The Johnston Strategy. W/o going through the whole rigamarole again, if you get knocked off a defensive position (i.e. Tesla will never make the M3) retreat to the next high ground, take up a position and make 'em knock you off that. You're still getting giving ground, intellectually in this case instead of militarily, but you're there to fight on. Defeat is inevitable, but you can delay it.

"Tesla will never make 5,000 M3s a week!"
They just did it.
"They won't be able to sustain it!"
They have.
"Tesla will never reach 7,500!"
Impartial analysts say they will be up to around 8,000 a week by the end of the year.
"Who are they going to sell them to, the Tesla fairies?"
The backlog of reservations would take 19 months to fill @ 5,000 a week.
"They'll get tired of it and drop off to go buy a BMW!"

On and on. The net result will be this: The ICE car is finished. If Tesla minds its Ps and Qs reasonably well, it will be a very large company selling a lot of EVs 10 years from now. Several of the haughty, currently very large, automakers who fail to adapt will be gone or seriously on the ropes by then.

The critics will be like the knight on the bridge in "Monty Python and the Holy Grail" who is yelling "come back and fight" after his opponent has lopped off his legs, arms, and head. That is the end for the legacy crowd and it won't take until 2050. Disruptions like the one underway usually take 12-13 years. We're around year 2 into it. By 2030, public sentiment will be, "Why in the world did we put up with those loud, smelly, dirty internal combustion engines so long?"

dmm1240 | 3 juli 2018

"The shorts are working much harder than employees of Tesla and they don't even get Tesla options at a good price. Not very smart. I thank the shorts again for giving me such great prices."

The entire market is down big time, however. It's starting to dawn on the corporate titans and investors that Trump fully intends to carry through with his stupid trade war.

I'll make a prediction on that: Conspiring with the Russians will be the means, but tanking the economy with a simpleminded approach to trade will be the root cause. The business community is turning on Dummy and that will finish him with the Republican Party. Job losses will peel away his base. Layoffs are already happening. Farmers are beginning to realize the fate of the crops in their fields will not be good.

"Americans love soy sauce. It tastes great on everything! Buy more!"

Tesla-David | 3 juli 2018

@dmm1240, great analysis, loved your Monty Python analogy from the "Holy Grail", great movie! and excellent choice as well as your "Johnston" analogy to make your point. Totally agree!

johnyi | 3 juli 2018

I was reading somewhere a prediction that Ford will likely be the first of the old guard to fail, as they don't have an EV plan. I think Honda too. They predicted VW was the most likely to survive of the Euro brands, and GM would be OK.

dmm1240 | 3 juli 2018

I think that might have been me. Look for obstinance. Ford has no EV plan. They've essentially ceded cars to other manufacturers. Their efforts, so far, in adapting to the rise of EVs is putrid. When the shift in sentiment occurs, which should come around 2022, Ford will be so far behind there will be no catching up. Volkswagen is starting to realize there's a storm ahead and is making moves. Daimler and BMW are dragging their feet. Of the Japanese companies, Toyota is still yelling about hydrogen. Nissan has got it, they do have the Leaf, but it's a somewhat flawed vehicle. The Japanese mastered the art of production (see Toyota) but have never been all that innovative. The Chinese get it but are behind in technology. They will probably do what they've done for 20 years which is to steal the knowledge they need. That's what my thesis is based on.

dmm1240 | 3 juli 2018
Madatgascar | 3 juli 2018

Tesla should just focus on making good cars. They seem to be letting the market pressure for optimal quarterly results get to them, to the extent they spend stupid money trying to beat an arbitrary metric. Staff will get burned out, and could be demoralized after the big surge doesn't achieve the intended results.

johnyi | 4 juli 2018

Unfortunately I don't see the short burn really happening for another 4 months - until the Q3 earnings call. Before then, there's just not enough ammunition to fend off all the negative twists to anything Tesla announces. Yes TSLA made 5k M3's last week, but it isn't sustainable yet so it's easy to dismiss. And the 11K delta between M3 production and deliveries can be too easily spun as a problem. TSLA won't show a profit in Q2, though I'm guessing cash burn will be significantly decreased from Q1, but again easily dismissed as it's still in the red.

But once they show a profit (assuming they do!), there's no place for anyone to hide, no amount fo spin that can be applied, and Moody's will have no choice but to give TSLA back a good credit rating. Probably they also need to show sustained 5k/wk M3 production, but I would think that's required anyway to turn a profit. Plus Q3 will no longer have the 200k tax rebate threshold impacting executive decisions.

Fans and longs just need to all hold our breath for 4 more months, and hope the Tesla team can fend off all this crap thrown at them while they continue ramping.

Gene3075 | 4 juli 2018

@ JohnYi

Oh I can dismiss any 3rd quarter profit right now. Mind you I doubt Tesla will ever achieve it.
But 1 quarter profit is relatively easy to do with financial engineering. its sustained profit thats hard just like sustained production.

they can, shift costs into q2 and q4 to make q3 beter
they can, sell all accumulated credits in q3 to make it look better
they can reduce R+D and cap ex in q3 to make it look better
they can sell a many held back cars and inventory cars in q3 as possible to make it look better
they can sell have employees and management exercise their options to make q3 look better. (if you don't understand how that works, in brief, options allow person to buy shares at discount directly from tesla but its still cash in TESLA's pocket and a stealth dilution...its why TESLA share counts keep creeping up even without an official stock offering)

and that's just for starters...
1 quarter of profit means absolutely nothing. Tesla did that once in 2016, and q4 was a disaster to pay for all the engineered financials. Elon is simply trying to repeat it.

so yeah John, people can easily dismiss any results from q3...and q2 will be worse than q1 to pay for it (tent, restructuring, layoffs, overtime, new equipment ect)

SO | 4 juli 2018

Show a year of profit and still the naysayers will say it needs to be 2 years, etc.

Oh well. I’m looking out 10 years+.

Let the shorts keep piling on for some measly gains once in a while.

vpoz | 4 juli 2018

dmm1240 ... I think you underestimate the new Leaf, with ProPilot it’s very like a cheap Tesla ( it’s a third of the price), charges nicely with Chademo and has enough range to comfortably cover daily and medium range driving.

finman100 | 5 juli 2018

It's still a box o' batteries on wheels! NO cooling whatsoever. None! no fan, just sealed up good and tight.Not going to make it long term or replace ICE.

And if you can find more than one Chademo per location, and is actually functional ALL the time, not blocked by an ICE or in use already, more power to you. wait, that is going to be 50kW or less power. NOT fast.

And i LOVE my current Leaf. But better is out there. WAY better.

Just wait for the new Leaf owners to ask Model 3 owners how they like their car. Once people find out you can actually take an EV out of town worry free (Model 3) because of the Supercharger network, there will be grumblings in Leaf world...Hey, why can't I do that?

Tesla-David | 5 juli 2018

@finman100 +1, agree, Also, M3 has the much better battery, as per Jack Rickard teardown of M3.

https://evannex.com/blogs/news/tesla-s-battery-pack-is-both-mysterious-a...

SO | 17 juli 2018

Just listened to the whole thing. Both sides have great points!

Will be interesting to see how it plays out.

SO | 19 juli 2018

Disgustingly misleading articles.

https://money.cnn.com/2018/07/19/technology/business/tesla-downgrade/ind...

“Tesla is finally making enough cars -- it just can't sell enough of them.”

Xerogas | 19 juli 2018

A new low: “Tesla Could Be Doomed by Earning Money”...WTF?

https://www.barrons.com/articles/morning-movers-arconic-soars-bank-of-am...

Rocky_H | 19 juli 2018

@Xerogas, Did you post the wrong link? I looked all through that and saw no mention of Tesla or that line. I did a text search, and the word "doomed" isn't even on that page at all, so where did you get that from?

SamO | 19 juli 2018

This is the best "real" argument I've ever heard. Tesla is built on 50% growth per year.

If they start paying a dividend, they can't figure out how to spend all those profits for innovative new products. maybe they'll just offshore the money and wait for the tax law to change or do share buybacks

;-)

Everyone I meet on the streets knows that Tesla is in trouble. Except for us, the happy owners.

carlk | 20 juli 2018

Like many of Elon's promises it will be delivered, just not at the time he said it would.

carlk | 20 juli 2018

"Everyone I meet on the streets knows that Tesla is in trouble. Except for us, the happy owners."

What works for Tesla is number of happy owners will only grow.

Madatgascar | 20 juli 2018
oragne lovre | 1 august 2018

Does the burn truly start after 08/01/18?

Uncle Paul | 1 august 2018

Tesal up almost 10% in after hours trading.

Looks like tomorrow is going to be a sad day for the shorts.

Tesla is on a roll. The shorts keep making up stories about how the good things are actually bad things.

Tesla is producing more cars than ever. They have borrowed money to finance the capital expenditures to expand the Fremont plant, Build the Giga Factory and bring on additional production capacity and personnel

They have finally reached critical mass. From now on it is money in the bank...

Uncle Paul | 1 august 2018

Tesal up almost 10% in after hours trading.

Looks like tomorrow is going to be a sad day for the shorts.

Tesla is on a roll. The shorts keep making up stories about how the good things are actually bad things.

Tesla is producing more cars than ever. They have borrowed money to finance the capital expenditures to expand the Fremont plant, Build the Giga Factory and bring on additional production capacity and personnel

They have finally reached critical mass. From now on it is money in the bank...

carlk | 1 august 2018

For David Einhorn it has already started. In his investor letter he said he covered his NFLX short but he did not mention TSLA. He just got burned more today.

rxlawdude | 2 august 2018

Couldn't happen to a nicer (/sarcasm) guy.

carlk | 2 august 2018

Just like what I said "Like many of Elon's promises it will be delivered, just not at the time he said it would.". He said it will come in three week but took and extra four weeks. Delivered right on Elon's time.

quinney | 2 august 2018

Hope those short shorts Elon is sending Einhorn have asbestos in the lining.

KevinR.co.us | 2 august 2018

I think the fuse is lit. The real burn has not yet begun.

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