After a 44% rise in 4 weeks on no specific positive catalyst, Q2 earnings on July 23rd present a possible "rug pull" if Tesla misses by 20% to 30%, which seems likely
Is there any info on their Opt*mus robot? I think it was Techbrew (who are big Elon simps) we’re talking up the size of the humanoid robot industry and how you know who was best placed to take advantage. Have I missed something as the last time it was a person in a spandex suit….
Yes, a little. They have the first ones working in the factory and have announced that they are working on getting 1000 to work in teh Austin factory in 2025
There is a lot of nothing in this. Projections and puffery from a brand that had consistently missed projections and objectives. If this report is indeed from 2023 then Opt*mus was still at the Dancing Man In Spandex Suit stage of prototyping so it’s hard to see how that fits into this report unless the spandex was carbon neutral.
We can wait together. I am interested, you might be too. I would like a future where I can have help as I get older for an affordable price as I am sure it will not come from the government healthcare system. Others might say: These Spandex-guy inspired robots will never work safely for regular human interaction.
Would it be a stretch to consider that he is mocking his shareholders as usual? If he was even remotely as close to productive humanoid robots as is claimed in the link, he should be ditching low margin automobile manufacturing and putting it all into the humanoid robots.
I appriciate your analysis. Tesla does not trade on fundamentals much in general, not at all lately. Is there enough (institutional) holders left that would consistently sell to offset the momo trade from retail going into the robotaxi day or maybe even beyond?
Over 40% of Tesla is held by institutional investors, 14% of which are mutual funds and the rest being passive funds. If Tesla's market cap drops relative to various indices, passives would be forced to adjust by selling Tesla.
This is like a self-fulfilling prophecy. Mutual funds and institutional have to balance their investments in accordance to rules they gave themselves that look at the weighing of the indices and when one stock jumps they all have to readjust, putting more energy in teh jump for longer
Tesla wont trade on fundamentals...until it suddenly does. It was *really close* to happening in 2022, but in hindsight the company was still growing at the time, the '22/'23 recession never fully manifested, and the competition was still pretty new.
2024 is a different story I think. Seems they've drifted into no-mans land. Heavy reliance on old models 5+ years old and no new models that are <5 years away from being released. Tangible YoY declines in deliveries even with price cuts. And tons of other options in both the EV and hybrid market.
You can argue the fast ramp of their energy storage operations is like, a dying grasp for profitability lol. Building a new model or overhauling an existing one is too costly and would take too long. They need profit now. There's a non-zero chance that the auto biz is loss-making by year end.
At this point I have stopped trying to figure out what makes this stock move. It stopped being based on any type of fundamentals almost a decade ago. I love how bulls claims something already announced months ago is a catalyst. Robotaxis, seriously? They were promised in 2021 but have failed to materialize and should already be baked into the cake. "THIS TIME HE MEANS IT!" Stock up 10% on Musk promising something for the 420th time.
This is the amazon story over again, same as the Apple story.
People always say: This thing they say they want to do will never happen - crazy.
Then it takes 5 years and it starts to happen but 3-5 new crazy things have been announced and only the investors who buy the stock for 10 year time horizons are actually reaping full benefits. All trader just tell that story like this: hey, I had some Amazon stock when they were at $9. I kept it for a while but it did not more so I sold it. I wish I had help it. Today is split adjusted $569/share or $1111 liek Nvidia
From what I’m observing on Friday and today in my securities tool, the big institutions are selling (and today even the medium sized ones). The rally is only driven by small investors and that’s mostly by Calls again as we could see today when it went to $259.44 and then down to $248.80 when the Pros closed their Calls quickly and pulled the rug from everyone who bought due to Fomo.
Damn! What a ride today! And Musk have been quiet about Reuters all day, which is probably a confirmation of the story. I just hope, this was just a minor preview of what is going to happen next week.
1. About the stock rally, it seems a lot of Hfs/large traders who are trading this as a momentum stock. The moves made by stock on fake China FSD pump was only 15% and then it kind of faded away. However the moves made after july delivery numbers seem to be larger (almost 40% from 180 to 250). This makes me believe that even the market participants buying this seem to believe that tesla is a car company and the Q2 ER reaction will be more significant than the 08/08 Robo taxi event
Few questions:
2. Where do the 0.99 % financing promotions show up in your model? Does it go against the ASP or somewhere else? My understanding is Tesla is not going to recognize all of these costs at once but over the period of the financing?
3. Do you have any thoughts on insider sales by Musk? Space X has been quietly selling every now and then, not sure how much Musk is selling in that. However he does need a lot of $ for x AI Capex as evidenced recently by the capital raise of $6B. Everything he has been doing since the China trip seems to suggest to me he is looking for 1 last squeeze of the stock. No reason for him to do that unless he wants to sell. I think his pumping seemed more than the usual drama around his comp award
4. How are you thinking about the Capex increase for GPUs this qtr? Are you assuming an increase this qtr or more of the same?
5. When do you think the company is going to turn FCF -ve?
6. You mentioned if they sold BTC in Q2, this should offset some of their one time restructuring costs. However, BTC was higher on 03/31 than it was on 06/30. Shouldn't that be a negative? I am not strong at accounting so please pardon my ignorance or if this is a stupid question
7. What do you think about the Q3 and Q4 delivery numbers given the headwinds from
a) pull fwd demand from Q3 into Q2 due to low interest financing, this will not last.
b) Q2 numbers were also higher by at least 30K due to a large number of these cars which should have been delivered in Q1 but got stuck due to red sea issues/ Musk deliberately slowing things down in end of Q1 by having employees do more of an FSD demo etc. This was a one time uplift for Q2
c) new EU tariffs which will hit china exports and therefore impede demand
Musk said in Q1 earnings that they will exceed 2023 delivery numbers. However he also pivoted his narrative that Tesla is no longer about auto business. I am skeptical how far he will continue to support the annual delivery guidance because if they have to exceed 1.8M , that means 969,234 more vehicles in Q3 and Q4 which would average to 485K each of the remaining qtrs. This seems completely unrealistic
Thanks for reading my report and the kind words. I don't have the time to answer all of your questions, but keep reading and I'm sure you'll find your answers.
In short, BTC holdings at June end were still big enough to cover any restructuring, 0.99% loans are at least $3K-$4K hit to prices up front (if not more), EU tariffs (and next Canadian as well?) for China-made cars is a negative, as it's less exports from Shanghai, Tesla's most profitable plant, but could be covered by Fremont.
For Q3, I've got 412K deliveries and for Q4 I've got 426K. Full year should be 1.669 million.
I love to read what Motorhead has to say about Tesla.
I actually agree that the Q2/2024 numbers will probably disappoint wall street analysts. Does it matter? I don't think so
Extreme price moves seem to be pretty normal recently. Even based on great earnings, the price moves for Nvidia make no rational sense either.
So what is causing the increase in prices? As always, more people buying the stock than selling.
Could that continue? - sure. People could believe TSLA is an AI company, or an FSD company, or an energy storage company, or an AGI-robots company - or they could create a totally new category that has new rules for valuation by analysts.
Describing the results of gambling in the short-term wall street casinos and speculating what numbers will fall on the next roulette wheel spin is fund and makes for great articles.
Two quick corrections:
1. Tesla Megapacks don't use Lithium ion - they use LFP since 2022
2. I don't agree that Cybertruck is not a new vehicle or that Tesla had no new vehicles the last 2 years. Even Motorhead would normally consider Model 3 Highland a new vehicle if it were from GM or Ford or Toyota, but a totally newly launch vehicle should count - even for Motorhead.
The Cybertruck is a niche model only for the North American market. It will never come close to making even half the money for Tesla that the Models 3/Y did.
The Model 3 Highland is an attempted refresh of the 8-year-old Model 3. As can be seen, Tesla spent minimal time and money to do a proper refresh (one where the exterior makes it look different from the 1st generation model), which is why it saw discounts in China and the EU soon after launch. Despite these price cuts, the refreshed Model 3 saw sales drop by 5% YoY in Q2.
After 5-6 years, all carmakers do a "full model change" by releasing the next-generation version of an existing model. Successful full model changes can reinvigorate sales substantially (e.g. Porsche's 2nd generation Panamera, etc), yet Tesla can't (won't?) do full model changes, which is why the Models S/X are all but dead and plunged by 45% YoY in Q2.
Finally, I find it hard to see Tesla coming up with something new the way that Amazon or Apple did in the past. Tesla can barely make good cars. I doubt they can do good AI. But we'll see.
Well, the Cybertruck might be niche, even though the planned production of 150K units would be substantial in my view, but my point was that you wrote there had been no new model and niche or not, it is a new model available in the market.
As for the Model 3 we might agree or disagree. The sales numbers might be due to minor design changes not qualifying as a real refresh, or they could be due to economic conditions that make it harder to sell cars in that price range.
We will know if they can do AI pretty soon. If you watch the FSD videos online, not with a bias to find flaws but to compare to other offerings, Tesla seems to be on a pretty good track. We will both have to wait and see if their safety statistics will prove a multiple-time safer result than humans. If that develops, I think it could become a great revenue source and both FSD and Optimus use the same massive dataset.
I suspect your skeptical position and my optimistic position will ultimately find common ground in the middle - as we both keep watching for the next decade 😉
Judging FSD by YouTube videos is not a good measure for how good or bad FSD is. "Miles driven before critical disengagements" is the best measure and FSD is dead last at 119 miles vs Waymo at 12K and Zoox at 25K.
Furthermore, Tesla itself has yet to even apply for Level 4-5 validation at the two respective US government agencies. This is another sign that they may be far away from being 99.999% safe.
I referred to the videos more so people who have no idea what it does can get an impression.
You are right that the true measure is “critical disengagements”.
I like to point back to where we started: Share price - as far as I learned - is a reflection of the current value and the expected future value.
I believe part of the reason for the significant jump recently is the expectation that Tesla will solve FSD to a point where a NTSA-accepted definition of “critical disengagement” is consistently 5k or 10k or whatever distance is deemed “significantly better than human drivers”. That’s the true measure.
As long as enough people think that will soon be reached, they will buy the stock as that will generate more profits for the company.
If that expectation, or the one for massive growth in energy storage, or the one for the $25K car, or the one for robotaxi, or any of the AI-services option, or the one for Optimus, or all of them together don’t seem to materialize, the share price will go down.
Right now there appears to be optimism that at least some of these opportunities will turn into massive revenue and profit growth.
All you and I can do is observe and track and see what they actually get done - probably late, as always 😘😉😊
Q2 earnings could be a rug pull if fElon forgot a pump but could also be blowout if fElon sold enough bitcoin and recognized enough deferred FSD revenue. With passive as forced buyers on the pump and a cult over the moon about 8/8 and “Optimus” I will be waiting until at least 8/8 to even psychologically short. We could turn around at the $300 resistance level on 8/8 or 8/9.
There’s still some money to be made if you observe the lines and see in your securities tool when the sentiment is turning and capital moves out of Tesla all of a sudden (like it did at the $259 peak). But it’s indeed risky and it’s a few brave people. Basically the Spartans against 1 million Simps.
Don’t think so. Stock market is a close circuit, meaning if those people sell their Calls then someone is stupid enough to think otherwise and will lose money. That’s one group of the simps albeit lesser. I think most of them are seeing the stock run, were pitched the “Tesla to the moon, you have to get in, $2600 bull case” story by the various stock pumpers, both WS analyst (Hello Dan), Cathie Woods and the classic Tesla ones (Farzad and his gang etc.).
As was pointed out in this article by Brad, there’s just not enough shorts per definition and per stats to suffer those losses that will feed those wins. I mean $15 up today from low to high? It’s just when so many people are blindly running towards an impossible target, some will indeed succeed. But fundamentals will always win long-term, so let’s wait and see. In the meantime, the extreme volatility gives ample chances to make money on both directions.
Is there any info on their Opt*mus robot? I think it was Techbrew (who are big Elon simps) we’re talking up the size of the humanoid robot industry and how you know who was best placed to take advantage. Have I missed something as the last time it was a person in a spandex suit….
Yes, a little. They have the first ones working in the factory and have announced that they are working on getting 1000 to work in teh Austin factory in 2025
Have they said just what it is they are doing?
Yes, they have, in a lot of detail:
https://www.tesla.com/ns_videos/Tesla-Master-Plan-Part-3.pdf
This has nothing about Optimus in it. Do you have anything from Tesla about Optimus specifically?
Tesla has a dedicated account on X for Optimus if you like to follow along: https://twitter.com/tesla_optimus
There is a lot of nothing in this. Projections and puffery from a brand that had consistently missed projections and objectives. If this report is indeed from 2023 then Opt*mus was still at the Dancing Man In Spandex Suit stage of prototyping so it’s hard to see how that fits into this report unless the spandex was carbon neutral.
That's true. I misunderstood your question to mean if Tesla had said anything about this other than cars. Here is an article about Optimus: https://www.notateslaapp.com/news/2087/optimus-what-we-learned-about-teslas-robotic-future#:~:text=There%20are%20some%20ambitious%20plans,million%20per%20year%20or%20more.
We can wait together. I am interested, you might be too. I would like a future where I can have help as I get older for an affordable price as I am sure it will not come from the government healthcare system. Others might say: These Spandex-guy inspired robots will never work safely for regular human interaction.
Would it be a stretch to consider that he is mocking his shareholders as usual? If he was even remotely as close to productive humanoid robots as is claimed in the link, he should be ditching low margin automobile manufacturing and putting it all into the humanoid robots.
I appriciate your analysis. Tesla does not trade on fundamentals much in general, not at all lately. Is there enough (institutional) holders left that would consistently sell to offset the momo trade from retail going into the robotaxi day or maybe even beyond?
Over 40% of Tesla is held by institutional investors, 14% of which are mutual funds and the rest being passive funds. If Tesla's market cap drops relative to various indices, passives would be forced to adjust by selling Tesla.
This is like a self-fulfilling prophecy. Mutual funds and institutional have to balance their investments in accordance to rules they gave themselves that look at the weighing of the indices and when one stock jumps they all have to readjust, putting more energy in teh jump for longer
Agreed this is good fundamental analysis but fundamentals are out the window. Most institutions are passive.
Tesla wont trade on fundamentals...until it suddenly does. It was *really close* to happening in 2022, but in hindsight the company was still growing at the time, the '22/'23 recession never fully manifested, and the competition was still pretty new.
2024 is a different story I think. Seems they've drifted into no-mans land. Heavy reliance on old models 5+ years old and no new models that are <5 years away from being released. Tangible YoY declines in deliveries even with price cuts. And tons of other options in both the EV and hybrid market.
You can argue the fast ramp of their energy storage operations is like, a dying grasp for profitability lol. Building a new model or overhauling an existing one is too costly and would take too long. They need profit now. There's a non-zero chance that the auto biz is loss-making by year end.
At this point I have stopped trying to figure out what makes this stock move. It stopped being based on any type of fundamentals almost a decade ago. I love how bulls claims something already announced months ago is a catalyst. Robotaxis, seriously? They were promised in 2021 but have failed to materialize and should already be baked into the cake. "THIS TIME HE MEANS IT!" Stock up 10% on Musk promising something for the 420th time.
This is the amazon story over again, same as the Apple story.
People always say: This thing they say they want to do will never happen - crazy.
Then it takes 5 years and it starts to happen but 3-5 new crazy things have been announced and only the investors who buy the stock for 10 year time horizons are actually reaping full benefits. All trader just tell that story like this: hey, I had some Amazon stock when they were at $9. I kept it for a while but it did not more so I sold it. I wish I had help it. Today is split adjusted $569/share or $1111 liek Nvidia
From what I’m observing on Friday and today in my securities tool, the big institutions are selling (and today even the medium sized ones). The rally is only driven by small investors and that’s mostly by Calls again as we could see today when it went to $259.44 and then down to $248.80 when the Pros closed their Calls quickly and pulled the rug from everyone who bought due to Fomo.
Damn! What a ride today! And Musk have been quiet about Reuters all day, which is probably a confirmation of the story. I just hope, this was just a minor preview of what is going to happen next week.
Markets are gifting a short entry to bears.
https://www.zerohedge.com/the-market-ear/bullish-longs-and-some-overbought-extremes
great analysis , as always Brad!
1. About the stock rally, it seems a lot of Hfs/large traders who are trading this as a momentum stock. The moves made by stock on fake China FSD pump was only 15% and then it kind of faded away. However the moves made after july delivery numbers seem to be larger (almost 40% from 180 to 250). This makes me believe that even the market participants buying this seem to believe that tesla is a car company and the Q2 ER reaction will be more significant than the 08/08 Robo taxi event
Few questions:
2. Where do the 0.99 % financing promotions show up in your model? Does it go against the ASP or somewhere else? My understanding is Tesla is not going to recognize all of these costs at once but over the period of the financing?
3. Do you have any thoughts on insider sales by Musk? Space X has been quietly selling every now and then, not sure how much Musk is selling in that. However he does need a lot of $ for x AI Capex as evidenced recently by the capital raise of $6B. Everything he has been doing since the China trip seems to suggest to me he is looking for 1 last squeeze of the stock. No reason for him to do that unless he wants to sell. I think his pumping seemed more than the usual drama around his comp award
4. How are you thinking about the Capex increase for GPUs this qtr? Are you assuming an increase this qtr or more of the same?
5. When do you think the company is going to turn FCF -ve?
6. You mentioned if they sold BTC in Q2, this should offset some of their one time restructuring costs. However, BTC was higher on 03/31 than it was on 06/30. Shouldn't that be a negative? I am not strong at accounting so please pardon my ignorance or if this is a stupid question
7. What do you think about the Q3 and Q4 delivery numbers given the headwinds from
a) pull fwd demand from Q3 into Q2 due to low interest financing, this will not last.
b) Q2 numbers were also higher by at least 30K due to a large number of these cars which should have been delivered in Q1 but got stuck due to red sea issues/ Musk deliberately slowing things down in end of Q1 by having employees do more of an FSD demo etc. This was a one time uplift for Q2
c) new EU tariffs which will hit china exports and therefore impede demand
Musk said in Q1 earnings that they will exceed 2023 delivery numbers. However he also pivoted his narrative that Tesla is no longer about auto business. I am skeptical how far he will continue to support the annual delivery guidance because if they have to exceed 1.8M , that means 969,234 more vehicles in Q3 and Q4 which would average to 485K each of the remaining qtrs. This seems completely unrealistic
Thanks for reading my report and the kind words. I don't have the time to answer all of your questions, but keep reading and I'm sure you'll find your answers.
In short, BTC holdings at June end were still big enough to cover any restructuring, 0.99% loans are at least $3K-$4K hit to prices up front (if not more), EU tariffs (and next Canadian as well?) for China-made cars is a negative, as it's less exports from Shanghai, Tesla's most profitable plant, but could be covered by Fremont.
For Q3, I've got 412K deliveries and for Q4 I've got 426K. Full year should be 1.669 million.
Thanks
I love to read what Motorhead has to say about Tesla.
I actually agree that the Q2/2024 numbers will probably disappoint wall street analysts. Does it matter? I don't think so
Extreme price moves seem to be pretty normal recently. Even based on great earnings, the price moves for Nvidia make no rational sense either.
So what is causing the increase in prices? As always, more people buying the stock than selling.
Could that continue? - sure. People could believe TSLA is an AI company, or an FSD company, or an energy storage company, or an AGI-robots company - or they could create a totally new category that has new rules for valuation by analysts.
Describing the results of gambling in the short-term wall street casinos and speculating what numbers will fall on the next roulette wheel spin is fund and makes for great articles.
Two quick corrections:
1. Tesla Megapacks don't use Lithium ion - they use LFP since 2022
2. I don't agree that Cybertruck is not a new vehicle or that Tesla had no new vehicles the last 2 years. Even Motorhead would normally consider Model 3 Highland a new vehicle if it were from GM or Ford or Toyota, but a totally newly launch vehicle should count - even for Motorhead.
The Cybertruck is a niche model only for the North American market. It will never come close to making even half the money for Tesla that the Models 3/Y did.
The Model 3 Highland is an attempted refresh of the 8-year-old Model 3. As can be seen, Tesla spent minimal time and money to do a proper refresh (one where the exterior makes it look different from the 1st generation model), which is why it saw discounts in China and the EU soon after launch. Despite these price cuts, the refreshed Model 3 saw sales drop by 5% YoY in Q2.
After 5-6 years, all carmakers do a "full model change" by releasing the next-generation version of an existing model. Successful full model changes can reinvigorate sales substantially (e.g. Porsche's 2nd generation Panamera, etc), yet Tesla can't (won't?) do full model changes, which is why the Models S/X are all but dead and plunged by 45% YoY in Q2.
Finally, I find it hard to see Tesla coming up with something new the way that Amazon or Apple did in the past. Tesla can barely make good cars. I doubt they can do good AI. But we'll see.
Well, the Cybertruck might be niche, even though the planned production of 150K units would be substantial in my view, but my point was that you wrote there had been no new model and niche or not, it is a new model available in the market.
As for the Model 3 we might agree or disagree. The sales numbers might be due to minor design changes not qualifying as a real refresh, or they could be due to economic conditions that make it harder to sell cars in that price range.
We will know if they can do AI pretty soon. If you watch the FSD videos online, not with a bias to find flaws but to compare to other offerings, Tesla seems to be on a pretty good track. We will both have to wait and see if their safety statistics will prove a multiple-time safer result than humans. If that develops, I think it could become a great revenue source and both FSD and Optimus use the same massive dataset.
I suspect your skeptical position and my optimistic position will ultimately find common ground in the middle - as we both keep watching for the next decade 😉
Judging FSD by YouTube videos is not a good measure for how good or bad FSD is. "Miles driven before critical disengagements" is the best measure and FSD is dead last at 119 miles vs Waymo at 12K and Zoox at 25K.
Furthermore, Tesla itself has yet to even apply for Level 4-5 validation at the two respective US government agencies. This is another sign that they may be far away from being 99.999% safe.
Yep, all true
I referred to the videos more so people who have no idea what it does can get an impression.
You are right that the true measure is “critical disengagements”.
I like to point back to where we started: Share price - as far as I learned - is a reflection of the current value and the expected future value.
I believe part of the reason for the significant jump recently is the expectation that Tesla will solve FSD to a point where a NTSA-accepted definition of “critical disengagement” is consistently 5k or 10k or whatever distance is deemed “significantly better than human drivers”. That’s the true measure.
As long as enough people think that will soon be reached, they will buy the stock as that will generate more profits for the company.
If that expectation, or the one for massive growth in energy storage, or the one for the $25K car, or the one for robotaxi, or any of the AI-services option, or the one for Optimus, or all of them together don’t seem to materialize, the share price will go down.
Right now there appears to be optimism that at least some of these opportunities will turn into massive revenue and profit growth.
All you and I can do is observe and track and see what they actually get done - probably late, as always 😘😉😊
Q2 earnings could be a rug pull if fElon forgot a pump but could also be blowout if fElon sold enough bitcoin and recognized enough deferred FSD revenue. With passive as forced buyers on the pump and a cult over the moon about 8/8 and “Optimus” I will be waiting until at least 8/8 to even psychologically short. We could turn around at the $300 resistance level on 8/8 or 8/9.
There’s still some money to be made if you observe the lines and see in your securities tool when the sentiment is turning and capital moves out of Tesla all of a sudden (like it did at the $259 peak). But it’s indeed risky and it’s a few brave people. Basically the Spartans against 1 million Simps.
1 million simps (or more) are winning at the moment.
Don’t think so. Stock market is a close circuit, meaning if those people sell their Calls then someone is stupid enough to think otherwise and will lose money. That’s one group of the simps albeit lesser. I think most of them are seeing the stock run, were pitched the “Tesla to the moon, you have to get in, $2600 bull case” story by the various stock pumpers, both WS analyst (Hello Dan), Cathie Woods and the classic Tesla ones (Farzad and his gang etc.).
As was pointed out in this article by Brad, there’s just not enough shorts per definition and per stats to suffer those losses that will feed those wins. I mean $15 up today from low to high? It’s just when so many people are blindly running towards an impossible target, some will indeed succeed. But fundamentals will always win long-term, so let’s wait and see. In the meantime, the extreme volatility gives ample chances to make money on both directions.
If you’re not too greedy or Fomo takes over ;-)