Monday, July 3, 2017

Tesla Q2 Sales Miss Expectations, "Severe" Battery Production Shortfall Blamed (TSLA)

Except for the execution risk, and the financial risk, and the macro risk, and the supply chain risk, I see no risk at all.
The stock closed down $8.99 (2.49%) at $352.62.
From ZeroHedge:
Heading into today's car delivery estimate, Tesla had previewed that for the first half of 2017 it expects a substantial jump in vehicle deliveries. Recall that management guided for a 61% to 71% increase in Model S and Model X deliveries during H1 of 2017 compared with the first half of 2016. To achieve this goal, Tesla would need to deliver 47,000 to 50,000 vehicles in Q1 and Q2 combined. Moments ago Tesla announced its first half vehicle deliveries, and it made the low end of this guidance: just barely, with 47,100 autos delivered.
Tesla delivered just over 22,000 vehicles in Q2, of which just over 12,000 were Model S and just over 10,000 were Model X. This represents a 53% increase over Q2 2016. Total vehicle deliveries in the first half of 2017 were approximately 47,100.
However, where Tesla clearly failed to deliver was relative to sellside consensus which expected the electric car maker to sell 22,912 cars in Q2. Instead, the official number was 22,000. Which explains the very next sentence, in which Elon Musk delivered the latest the mea culpa why the company once again failed to hit expected deliveries.
The major factor affecting Tesla's Q2 deliveries was a severe production shortfall of 100 kWh battery packs, which are made using new technologies on new production lines. The technology challenge grows exponentially with energy density. Until early June, production averaged about 40% below demand. Once this was resolved, June orders and deliveries were strong, ranking as one of the best in Tesla history.
Odd how this production bottleneck was never made clear to any of the analysts covering the company so they could adjust their forecasts accordingly.
Tesla also issued a conditional guidance for second half, in which Tesla said that "provided global economic conditions do not worsen considerably, we are confident that combined deliveries of Model S and Model X in the second half of 2017 will likely exceed deliveries in the first half of 2017."

And since Tesla will likely miss, or once again just barely make its guidance, we look forward to seeing just what economic conditions will "worsen considerably" preventing Musk from hitting yet another projection....MORE
We have a few hundred posts on Tesla going back to before the IPO. Here are some of the more recent, they weren't real positive:

June 14
More on Ron Baron's "Tesla to $1000" Call (TSLA)
TSLA Tesla, Inc. daily Stock Chart

...Our last comment on Mr. Chanos' position was in May 31's "Hedge Funds: SALT Conference Losing Luster":
I don't think we even covered it this year although I did look at Chanos on Tesla.
He was early....
Looking at the last couple weeks on the chart above, yup, he was early.
But, and that's a big but, the execution skill that will be required to hit the 500,000 and above production targets is almost otherworldly and I have a suspicion we will be violating our "Don't short Tesla" admonition in a big way.
If stock is available.
And doesn't cost 100% per year to get hold of.

June 13
Tesla to $1000; "Bitcoin May Hit $1,000,000"; Act Now Before It's Too Late! (and potcoin) 

June 8
Signposts: "Goldman Sachs Mulls the Death of Value Investing"
I was thinking of putting a post together on how the momentum stocks that have been up are the ones that are up today, Tesla up 10 bucks, NVIDIA up 10.75, etc. when this story was brought to my attention....

June 7 
Would you let DJ Elon (E-to-the-Musk) set the playlist for your roadtrip? (TSLA)
And not just* because this doesn't seem like the highest use of AI, more like a magician's "Hey, Look at this!"... 

June 6
"Tesla: First $439, Then..." (TSLA) 

June 2
"Einhorn Compares GM to Apple and Explains Why He’s Short Tesla" (TSLA; GM)
...It is just so dangerous to put valuation (as compared to fraud) shorts on in a bull market.
We have had a general rule, "Don't short Tesla" virtually since the IPO, that we've violated on three occasions, fortunately profitable but it is tough to tell if it was worth the risk....

May 18 
Elon Musk Says Tesla Does Not Deserve Its Market Capitalization, Stock up $7.00 On the Mention (TSLA)

Here's another one we cheered on, May 2015- Feb 2017:

NVDA NVIDIA Corporation daily Stock Chart