$TSLA Stock Update for 5/9/18



  • Some fireworks at recent earnings conference
  • Production of Model 3 still lagging
  • Hold


  • Analyst recommendation 2.9
  • PEG n/a
  • EPS next 5Y 35%
  • Performance
    • month: 4%, quarter -10%, 6 month -1%, year -2%
    • EP Club 642%


  • Musk, who hosted Tesla’s earnings conference call last week to detail the company’s quarterly progress, grew frustrated by what he characterized as “boring, bonehead” questions from industry analysts.
  • Musk: “We’re going to go to YouTube,” Musk declared. “These questions are so dry. They’re killing me.”
  • Musk: The reason the Bernstein question about CapEx was boneheaded was that it had already been answered in the headline of the Q1 newsletter he received beforehand, along with details in the body of the letter
  • Musk: Reason RBC question about Model 3 demand is absurd is that Tesla has roughly half a million reservations, despite no advertising & no cars in showrooms. Even after reaching 5k/week production, it would take 2 years just to satisfy existing demand even if new sales dropped to 0.
  • One of the analysts cut off by Tesla chief executive Elon Musk during the company’s latest earnings call has responded, telling clients he plans to “hold Tesla accountable” for its performance.
  • In an open letter and invitation to Musk entitled “Dear Elon,” RBC Capital Markets analyst Joseph Spak defended his questioning.
  • “Some of these questions can seem dry, boring or short-term focused, but hopefully you can appreciate that anyone looking to invest in Tesla’s future must first be comfortable with its present,” Spak wrote Wednesday.
  • Musk said last summer that Tesla would likely be making 20,000 Model 3s per month by the end of the year, but the company then downgraded those expectations to 2,500 per week. Just last month, Jalopnik reported that the company was making 2,000 Model 3s per week as of the end of the first quarter.
  • Aside from the production issues, Wall Street’s short sellers – who have made Tesla the single biggest short on the Street – likely celebrated a voluntary recall of 123,000 Model S vehicles last month because of an issue with a power-steering component.
  • Still, Musk continues to push back against who’ve raised concerns about the company’s long-term financial outlook. Though some have wondered whether the setbacks will require the company to raise more capital later this year, Musk firmly rebuked that claim last week.
  • Asked last Wednesday if he might consider now a good time to raise more money, the CEO simply said “no.”
  • The story with Tesla continues to be scaling production of the Model 3. They produced a little under 10,000 Model 3 vehicles this quarter. They produced about 25,000 Model S and Model X vehicles, but they’re still well behind the pace where they wanted to be with Model 3 production. I think by the end of last year, they wanted to be producing somewhere in the neighborhood of 5,000 vehicles a week. Right now, they just peaked out at about 2,300 vehicles per week. They’re trying to revamp automation within the factories, revamp the whole manufacturing process to get that number up to 5,000 vehicles a week. I think by July is when they’re targeting. And then, they’re even talking about different ideas to get it up to 10,000 vehicles a week down the road. But, the theme here with Elon Musk continues to be over-promising, under-delivering, and hopefully there’s intersection of those two things. But for now, I think all eyes continue to be on the Model 3.
  • They’re saying that they’ll be profitable in the third and fourth quarter this year. So, next quarter will continue to be unprofitable, but they’re saying they will bounce back to profitability. And not just non-GAAP profitability or adjusted profitability, but GAAP profitability.

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