Tesla delivers a record number of vehicles during the first quarter 2017 ~25,000 | Hacker News Reader

Tesla delivers a record number of vehicles during the first quarter 2017 ~25,000

electrek.co

53 pointsdavidiach24 comments

Much of the gains are coming from a huge increase in the (more expensive) Model X deliveries.

    2016 Q1 model S: 12,420
    2017 Q1 model S: 13,450

    2016 Q1 model X:  2,400
    2017 Q1 model X: 11,550

For guidance, Tesla wrote in their 2016 Q4 letter (dated Feb 22, 2017):

> We expect to deliver 47,000 to 50,000 Model S and Model X vehicles combined in the first half of 2017

So they're on track.

I would assume ahead of track as they should have more capacity this quarter

Delivery numbers may become slightly compromised as the existing infrastructure (not just assembly but the whole pipeline of getting them to customers) is routed to include Model 3 deliveries.

This may make Q2 slightly worse than Q1, making them miss the projections, even if it makes Q3 really great! Situations like this may be why they've been including the "in transit for next Quarter" numbers so often.

Regarding the price of TSLA, perhaps someone can help: If Tesla were to somehow sell 500,000 Model 3's in 2018, and make a net profit of 15% on each $35,000 car (very high, the auto industry majors make ~5%), and somehow had all the capital necessary paid for, and no financing or other costs they would earn:

500,000 * $5,250 = $2.6 BB in profit

With ~160 MM shares outstanding that's an EPS of ~$16.

At $270/share, that's a P/E of ~17 -- cheap, but not incredibly so.

In other words, if everything goes perfectly, buying shares now would be "sort of cheap", equivalent to a ~6% return. Obviously, the shares have a lot of risk.

This is practically best-case. So how do you justify buying at these levels, with the risks involved? You can't say "growth" without modelling it. Do you expect TSLA to sell a million cars a year, or more with these types of margins? Where will the earnings come from?

The people long on TSLA are not expecting a payout by 2018, much like investors in Amazon did not expect a profit in 1998 after a 1997 IPO.

>The people long on TSLA are not expecting a payout by 2018

This doesn't represent a single year payout, it represents a hypothetical annual payout of dividends.

If the payout comes later than 2018, then you should pay less for it today. So what year? How much will the earnings be? How will those earnings be achieved (how many cars sold)?

Tesla is a long-term bet, but a virtue of the stock market is that the market's horizon for payouts is potentially much longer than any individual's. If I'm holding a bunch of TSLA stock and want a payout in 2018, it doesn't matter to me what Tesla's profits are in 2018, it only matters how optimistic the market is about Tesla's long-term future- since that dictates how much I can sell my shares for in 2018. If Elon Musk shuts down sales altogether in 2018 but somehow convinces everyone that 2019 (or later) will be a complete blockbuster year, it still works out in my favor, since the market has superhuman patience I lack.

>If I'm holding a bunch of TSLA stock and want a payout in 2018, it doesn't matter to me what Tesla's profits are in 2018

This has nothing to do with a 2018 payout.

Do you know what you are buying when you buy a share of TSLA? You are buying a claim to future profits. You expect to be paid in the future: when and how much? If you can't answer those questions, why are you buying stocks ?

I'm not expert but the value of a stock is not only tied to profit, it's also tied to how optimistic people are about a company and where it will go in the future. That drives up the price of a stock and thus how much you can sell it for. This is what Elon Musk is a master at - whether his strategy is feasible or not. I personally believe Musk will not give up.

>I'm not expert but the value of a stock is not only tied to profit, it's also tied to how optimistic people are about a company and where it will go in the future.

Those people are optimistic because they expect their share of profits to rise in the future.

If you came up with a definitive way to value stocks it would mean a) you are probably the richest man in the world b) You at the very least deserve a Nobel prize in economics.

>If you came up with a definitive way to value stocks it would mean a) you are probably the richest man in the world b) You at the very least deserve a Nobel prize in economics.

I'm not looking for a "definitive way", I'm looking for a rational way to assist in pricing a stock. When something can't be forecast perfectly, we should cease forecasting it at all?

I'm just asking a simple question about what you'd pay for the stock, and why.

Sure, but the value of a stock isn't tied to what I will be paid from it through dividends or whatever- its the value of what I and all future holders of the stock can expect to be paid. How long I hold the stock, and how much of those dividends I personally receive, is not an important factor.

I don't follow TSLA closely, and have no opinion about the stock, but I suppose the bull case would be that much of the revenue will come from selling things besides cars - batteries and home power systems I would guess. The car is just a battery with wheels that you can use to store all the extra solar power you generate from your Tesla roof. The bet is that this isn't (just) yet another car company, it's the energy company of the future.

>The car is just a battery with wheels

I think this sentence is what could make Tesla fail, as a car-company at least...

Every company is unique. Especially considering Elon's tracking record of redefining incumbent industries.

If analyzing Tesla as a "car company", nothing makes sense. Apparently, very few treats Tesla as a "car company".

I've been holding Tesla for a long time. Currently I'm more optimistic about the company than when I bought it, which seemed fairly risky when I bought it.

I think the room for growth and market expansion (Important Electric Things and energy future) is very large. I think trying to compute how the math will get there is a mistake, short of making sure that they are not going to run out of money.

Being long technology stocks is a strange game. If you're long IBM or AAPL right now, you're more or less betting that the future is going to look pretty much the same. It's almost a misnomer to call them technology stocks.

There are only a handful of public companies you can bet on (Tesla and Amazon are probably the most obvious) that are really betting big on the future. The dividends of these will be unknown.

Think about it this way: If you did your same math, could you have expected or predicted Amazon's AWS success? If you want to bet on the future, you have to make sure the company isn't going bankrupt, then you have to look more to the processes that the company produces, moreso than the [current] products.

>I think trying to compute how the math will get there is a mistake

I think the exact opposite; buying stocks without knowing how much you are paying for profit is a mistake.

>It's almost a misnomer to call them technology stocks.

10 years ago Apple revolutionized the tech industry with a cell phone. Now they aren't a tech company?

>If you did your same math, could you have expected or predicted Amazon's AWS success?

Do you think the people behind AWS didn't model the potential cloud services market, and were taken by surprise by the success?

I'm not saying it's easy, but being tricky is no reason to ignore using what data we have.

> Do you think the people behind AWS didn't model the potential cloud services market, and were taken by surprise by the success?

Yes.

The project was born out of Bezo's edict early on in the creation of Amazon that everything the company does internally must be able to be turned into a service. Almost every analyst in 2006 was against the idea and Bezos admitted it would not be a forseeable revenue stream:

> Stifel Nicolaus & Co. (SF ) analyst Scott W. Devitt notes: "There's not going to be any economic return from any of these projects for the foreseeable future." Bezos himself admits as much. ... "We think it's going to be a very meaningful business for us one day," he says. "What we've historically seen is that the seeds we plant can take anywhere from three, five, seven years."

From this 2006 story: https://www.bloomberg.com/news/articles/2006-11-12/jeff-bezo...

In 2011(or 2010?) AWS revenue was still listed in the "Other" column on their 10K, even though it was by then their #1 area of growth.

So yes, I think the scale of the success surprised them. It certainly surprised analysts who think like you do, nearly all of which expected AWS to be something between a hobby and a folly (read the Bloomberg article).

Why someone can not say growth without modeling it? If someone tried to model amazon in a very early years by the number of books they will sell in a few years, or model Apple before iphone. It would be fairly pointless. People very well might be valuing potential for innovation (TSLA is not just a car company).

A couple things here:

1. Profit margin is more like 24% than 15%. 2. Tesla energy generation is currently negative 1% margin, but there was a small note in the most recent investor letter that said they expect long-term margin to be similar to automotive with much faster growth rate - the automotive business has basically doubled year on year for the last 5 years. I think this isn't properly priced in. 3. Demand for MS and MX were way underestimated by most analysts and my guess is the same for M3. Especially with a rumored Model Y. 4. A lot of the execution risk has been worked out with the M3 on track 5. You get a free call option on Tesla roof + Solar City securities start paying out

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Are VW sales increasing 69% YOY too? Do their cars have an ASP of about $100,000?

Apples and bananas.

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