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Short-Term TSLA Price Movements - 2016

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#21,341
This presentation from Solarcity (dated June 2016, see link below) gives a good overview of their business from Solarcity's perspective. I think it's a must-read primer. I personally have mixed feelings about Solarcity (as a stockholder since IPO). IMHO I think Solarcity does have a workable business model (see presentation) with the existence of Solar ITC (investment tax credit). Without ITC, it becomes less clear. Also, Solarcity has some major, deep-rooted problems. First and foremost, their product is not very compelling and that's why their sales costs are so high (and they're not able to reduce them). Second, their management has been overly optimistic and hasn't shown they can innovate in a way to fix the #1 issue (lack of compelling product). Third, management appears to have been overly-rosy with their financial projections and growth plans, and has had to scale back. Overall, I understand some people who think that Solarcity is a "loser" of a company but I don't necessarily agree. I look at Solarcity as a mediocre company, not terrible and not great. Without Elon on the board, I would not have an interest in Solarcity. But with Elon, Solarcity has the backing of one of the savviest investors and innovators of our time, which means something to me. I think in this case, Solarcity would really benefit by coming under Tesla. Elon could spearhead a product overhaul for Solarcity and turn things around for them. But also Tesla would benefit by gaining the personnel and infrastructure to be able to scale Tesla Energy much, much faster than if they had to do it on their own. Also, without Solarcity, Tesla has their hands-tied in a sense because they're not able to go into energy production (due to Elon's ties with Solarcity) and this hampers their Tesla Energy growth potential as there needs to be an integration between energy production and energy storage. Solarcity brings obvious negatives to Tesla as well... financial complexity and risk, unclear business model post-ITC, non-compelling product that requires high sales cost, etc. But one needs to weigh that against the positives - best-in-class installation and infrastructure to support installs, mounting tech, solar panel tech (ie., Silevo), new solar plant being built, management in place that can take Elon's orders, etc. So, the question is can Tesla take what Solarcity gives them, both positives and negatives, and turn it into value that is multiple times the amount that they're paying for Solarcity. In Elon's mind, it's a "no-brainer" because with Solarcity under Tesla, Elon thinks he can fix the product through engineering, innovation and combining with storage and Elon thinks Tesla will be able to unlock a lot of potential of Tesla Energy since they'll be able to go after the energy production side as well as storage. Just that potential unlocks hundreds of billions of dollars, in Elon's mind. As for the negatives, Elon probably doesn't see many and for those that he does see (ie., high sales cost, product, etc) he thinks he can fix relatively easily/quickly. Personally, I think Solarcity's problems are very deep-rooted, and I think it's going to take a lot for Tesla to turn things around. It'll probably suck more time, energy and resources that Tesla is initially expecting. However, I do agree that by acquiring SCTY, it will free Tesla to go after energy production and just that is probably worth the price tag. I think the potential is immense for Tesla to lead the way in energy and they need to freedom to control the whole gamut of energy so they can apply the SpaceX-approach of bringing down costs (ie., via efficiency) and creating improvements through continual and ruthless iteration. This is a big play (in investment talk) for Elon... paying a few billion to go after hundreds of billions, and it's a mission he believes in more than anything. He doesn't see much downside and if he gets his way, then the deal will happen. I do wish that Elon and his team did a better job in communicating the need to acquire Solarcity. They presented no financials on what the impact will be over the next 1-2 years, and they haven't even presented what the impact will be in regards to Tesla Energy's revenue projections. In some ways, I think Elon intuitively knows that this is the right move, but he and his team haven't worked out all the numbers and hasn't presented anything that is remotely convincing for the number-crunching analyst/investor. And Wall Street is a numbers-driven phenomena, that tends to look only 12-18 months out. Through those eyes, this deal looks horrible. And I don't blame the analysts for being critical or negative. To all this, Elon says "trust me" and "I know what I'm doing". So the investors who invest w/faith, choose to believe and follow. Others are left disgruntled and confused. Cheers, friends.

http://files.shareholder.com/downlo...7DD00B/2016.06_SCTY_Investor_Presentation.pdf
 
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#21,342
Did some thinking.

If you bring 500K electric cars into service, they use so much energy, that you need about 1.4GWh solar panelled installed (assumption 1KW produces ~3.2KWh daily, I think I used 250mwh/mile and 12K miles a year)

Now, if you bring 1M, and force=convince other manufacturers to produce another 2M e.cars, we're into need for 8.4GW installed just to offset it. 10M electric cars in 7 years? That's 28GW you need to install. Every year.

Perhaps Elon is concerned that incumbents will increase price of electrical energy and limit his ability to sell electric cars? Fear that market will not react fast enough to increasing electrical energy needs?

By owning SCTY, he controls his destiny end-to-end, and the higher price of electrical energy that utilities try to push, easier to sell panels and batteries to the car owners.

Perhaps this IS about cars?

Anyhow, Elon, I'm still upset about SP. Do SCTY deal once Model 3 is rolling off of the production lines!
 
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#21,347
Johan said:
Tesla was always destined to be much more than Tesla Motors. The introduction of Tesla Energy with the PowerWall and PowerPack should have been a very obvious clue to this
Click to expand...
Plus, if you have been keeping track of what JB has said in his presentations and interviews over the past couple of years, you would have noticed he's not just there working on battery chemistry for cars. His knowledge and roll are much bigger than that and his enthusiasm when talking on the future of batteries is quite abundant. You could see in some of his videos he couldn't wait until the day Tesla started its energy side.
 
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#21,348
dakh said:
Did we listen to the same call? He said he thinks they won't be needed but if the need arises scty won't be able to get them due to acquisition so Tesla would have to bridge the gap. He also said financial reporting will be kept separate as much as possible.
Click to expand...

I think we are saying the same thing... I was responding to the question of whether Tesla will need to do a cap raise to get the cash to acquire SolarCity.
 
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#21,349
Seesaw said:
Focusing on solar panels is silly, there is no competitive advantage there, the Chinese and Germans do it better and cheaper.
Click to expand...
That's incorrect, China currently does it cheaper but very far from better (lower efficiency) and due to import costs, cheaper it's not guaranteed.

Silevo panels are the highest efficiency currently and SCTY owns them.

Seesaw said:
The only way SolarCity survives is through hugely expensive sales strategies, multi level marketing schemes and stupid PPAs. And considering their massive cash burn and 20% bond payments, I would barely call it surviving.
Click to expand...
Totally wrong. You and everyone else saying that solar city is in trouble, or is barely surviving or other such nonsense are fundamentally incorrect and appear to not know much about the company, so please do refrain from talking out of your ass without learning more or at least considering the idea that your uninformed, gut reaction could be wrong. Only SBenson seems to have done research on this and his concern is risk, not imminent collapse.

SCTY will be cash flow positive before Tesla. It will happen between 3 and 5 months from now. Your "massive cash burn" is exactly as wrong as sorts complaining about Tesla and it's "massive cash burn" or "losing 20k per car".

Getting really tired of the least informed speaking the loudest lately just because their portfolio took a major temporary hit. Drop the emotions and work with your brains.
 
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#21,351
Curt Renz said:
To inhibit your brokerage from lending your shares, enter a good till cancelled limit order to sell at a very high price.
Click to expand...

But be certain "good 'til cancelled" really means that. In my TIAA brokerage account it really means up until 3 months. If your account uses that approach, be sure you check just before that time and make a minor change to renew that start date. Of course, if you're only doing it to inhibit shorting, that won't be relevant.
 
#21,354
DaveT said:
This presentation from Solarcity (dated June 2016, see link below) gives a good overview of their business from Solarcity's perspective. I think it's a must-read primer. I personally have mixed feelings about Solarcity (as a stockholder since IPO). IMHO I think Solarcity does have a workable business model (see presentation) with the existence of Solar ITC (investment tax credit). Without ITC, it becomes less clear. Also, Solarcity has some major, deep-rooted problems. First and foremost, their product is not very compelling and that's why their sales costs are so high (and they're not able to reduce them). Second, their management has been overly optimistic and hasn't shown they can innovate in a way to fix the #1 issue (lack of compelling product). Third, management appears to have been overly-rosy with their financial projections and growth plans, and has had to scale back. Overall, I understand some people who think that Solarcity is a "loser" of a company but I don't necessarily agree. I look at Solarcity as a mediocre company, not terrible and not great. Without Elon on the board, I would not have an interest in Solarcity. But with Elon, Solarcity has the backing of one of the savviest investors and innovators of our time, which means something to me. I think in this case, Solarcity would really benefit by coming under Tesla. Elon could spearhead a product overhaul for Solarcity and turn things around for them. But also Tesla would benefit by gaining the personnel and infrastructure to be able to scale Tesla Energy much, much faster than if they had to do it on their own. Also, without Solarcity, Tesla has their hands-tied in a sense because they're not able to go into energy production (due to Elon's ties with Solarcity) and this hampers their Tesla Energy growth potential as there needs to be an integration between energy production and energy storage. Solarcity brings obvious negatives to Tesla as well... financial complexity and risk, unclear business model post-ITC, non-compelling product that requires high sales cost, etc. But one needs to weigh that against the positives - best-in-class installation and infrastructure to support installs, mounting tech, solar panel tech (ie., Silevo), new solar plant being built, management in place that can take Elon's orders, etc. So, the question is can Tesla take what Solarcity gives them, both positives and negatives, and turn it into value that is multiple times the amount that they're paying for Solarcity. In Elon's mind, it's a "no-brainer" because with Solarcity under Tesla, Elon thinks he can fix the product through engineering, innovation and combining with storage and Elon thinks Tesla will be able to unlock a lot of potential of Tesla Energy since they'll be able to go after the energy production side as well as storage. Just that potential unlocks hundreds of billions of dollars, in Elon's mind. As for the negatives, Elon probably doesn't see many and for those that he does see (ie., high sales cost, product, etc) he thinks he can fix relatively easily/quickly. Personally, I think Solarcity's problems are very deep-rooted, and I think it's going to take a lot for Tesla to turn things around. It'll probably suck more time, energy and resources that Tesla is initially expecting. However, I do agree that by acquiring SCTY, it will free Tesla to go after energy production and just that is probably worth the price tag. I think the potential is immense for Tesla to lead the way in energy and they need to freedom to control the whole gamut of energy so they can apply the SpaceX-approach of bringing down costs (ie., via efficiency) and creating improvements through continual and ruthless iteration. This is a big play (in investment talk) for Elon... paying a few billion to go after hundreds of billions, and it's a mission he believes in more than anything. He doesn't see much downside and if he gets his way, then the deal will happen. I do wish that Elon and his team did a better job in communicating the need to acquire Solarcity. They presented no financials on what the impact will be over the next 1-2 years, and they haven't even presented what the impact will be in regards to Tesla Energy's revenue projections. In some ways, I think Elon intuitively knows that this is the right move, but he and his team haven't worked out all the numbers and hasn't presented anything that is remotely convincing for the number-crunching analyst/investor. And Wall Street is a numbers-driven phenomena, that tends to look only 12-18 months out. Through those eyes, this deal looks horrible. And I don't blame the analysts for being critical or negative. To all this, Elon says "trust me" and "I know what I'm doing". So the investors who invest w/faith, choose to believe and follow. Others are left disgruntled and confused. Cheers, friends.

http://files.shareholder.com/downlo...7DD00B/2016.06_SCTY_Investor_Presentation.pdf
Click to expand...

Dave, the ITC at 30% was extended thru 2023, so that uncertainty is gone now. mediocre is pretty tough since they've got 34% marketshare which is more than the next 70 competitors combined. They are also the first to offer lease/ppa for residential which has transformed the entire industry to explosive growth which Solarcity's annual compounded growth rate over the past 4 years has been over 80% while at the same time precipitously dropping all in costs by well over half. They are the first to offer mass market solar+storage for residential, the first to offer mass market commercial solar+ storage and the first to install and operate solar+storage "firm demand" utility scale system in the United States. They have the best possible rating from the better business bureau and are among the top 10 companies to work for from Glass Door. They have multiple patents, the best, industry leading zep mounting hardware, and have the most efficient mass market silveo technology in the world beginning mass production in at the largest module manufacturing site in the Western Hemisphere starting 2017. And, they are at the cutting edge of research and development of policy, standards, and procedures having done many studies with NREL, multiple globally respected university and think thanks to create the future grid environment of the 21st electrical grid system and utiltiy business model.

If that is mediocre, then I have utterly no idea what innovate, cutting edge, best in class, and market leading is...
 
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#21,356
esk8mw said:
Do we have any data on how quarterly car production compares to deliveries? Tried some searches but I'm coming up empty.

I'm trying to model Q2 performance, so it would be helpful to have past data on this disparity.
Click to expand...

Below is an assessment by forum member Vgrinshpun that was written in March regarding matching of production and deliveries over a given quarter. I have highlighted the final paragraph as it might have some relevant numbers from q42015 ?


In order to meet quarterly goal while ramping production of MX, Tesla production allocation is currently designed to ensure that all cars produced during the Q1 are delivered in Q1. Given that delivery in US takes 1 to 2 weeks, delivery to Europe - 5 to 6 weeks, and even longer to Asia, production is scheduled to cover each region during specific time within the quarter to make sure that all cars reash customers in Q1.

In Q4 split of US/European/Asia-Pacific deliveries was 52% / 31% / 17%. Historically, out of 13 calendar weeks in each quarter the factory is running 12 weeks, with one week of down time per quarter for tooling. Roughly splitting 12 production weeks in above proportion results in 2 weeks of production (100% of it) allocated to Asia/Pacific, 4 weeks of production allocated to Europe and 6 weeks of production allocated to US.

In order to assure that all cars produced in Q1 are delivered in Q1, the last week of Q4 and first (working, or second calendar) week of Q1 - total of two weeks per the above - were allocated to producing cars exclusively for Asia/Pacific. Given 6-8 weeks for delivery this assures that all these cars will be delivered in Q1: second week of Q4 +6/8 = 8/10. This means that all cars slated for Asia/Pacific will be delivered between the 8th and 10th week of Q1, i.e. during first and second week of March.

The next four weeks are allocated to the production of European orders. This means that last European order will be produced during the 6th week of the Q1, which leaves up to 7 weeks for delivery of the cars produced at the end of 6th week of Q1. Once again this means that virtually all European cars will be delivered in March.

Finally, from the 7th through 12th (calendar) week of Q1 the production will be fully allocated to NA, with cars designated to CA being produced last. This again will result in majority of cars (roughly 2/3) delivered in March.

The net result of the above is that almost all cars destined to Asia/Pacific and Europe will be delivered in March, while about 2/3 of cars designated for NA will also be delivered in March.

The European cars that were delivered during Jan/Feb are essentially cars that were not delivered in Dec of 2015 for one or another reason.

Finally, during Q4 Tesla delivered about 17,400 cars, 208 of them MX. So total delivered MS were 17,192. At the same time, according to the shareholder letter Tesla produced 14,037 vehicles (with up to to 13,829 of them MS). Given that Tesla producing around 14,000 Model S per quarter, the Q4 goal of 16,000 vehicles likely includes 14,000 MS and 2,000 MX.
 
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#21,357
Curt Renz said:
To inhibit your brokerage from lending your shares, enter a good till cancelled limit order to sell at a very high price.
Click to expand...

Curt, with all due respect, are you sure this is correct? I have lent out shares at two different brokerages and both of them supply cash collateral from an independent bank in exchange for the shares. This is for the unlikely case that if the brokerage goes bankrupt, you won't lose the value of your shares. You actually would lose your shares, but you keep the cash collateral.

If the brokerage is borrowing your shares without your knowledge and not supplying collateral, your shares could be lost in the event of the brokerage declaring bankruptcy. It would be highly abusive for them to take that risk with your assets without your explicit permission.

This would be for shares you own outright, shares you buy on margin would obviously be a different case.
 
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#21,358
DaveT said:
I do wish that Elon and his team did a better job in communicating the need to acquire Solarcity. They presented no financials on what the impact will be over the next 1-2 years, and they haven't even presented what the impact will be in regards to Tesla Energy's revenue projections. In some ways, I think Elon intuitively knows that this is the right move, but he and his team haven't worked out all the numbers and hasn't presented anything that is remotely convincing for the number-crunching analyst/investor.
Click to expand...

The answer to this is the only reason we even know about the acquisition is the specific company setup with lots of shared ownership. They had to announce the intent. Numbers are incoming once the offer is accepted and due diligence work complete.
 
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#21,359
TSLAROX said:
Speculation: Perhaps bringing Solar City under the umbrella of Tesla was the plan from the beginning. We know that Solar City was conceived by Elon and his cousins on the road to Burning Man in 2004. Elon joined the board of Tesla earlier that year.
Click to expand...

This is not speculation, it's a fact. Maybe not from the very beginning but surely for quite some time.
 
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