Q3 countdown

You are invited to participate in an experiment from "The Wisdom of Crowds" that reports if guessing the weight of a champion steer, averaging all results came very close to the actual value: Subscribe to read | Financial Times

In 1906, the great statistician Francis Galton observed a competition to guess the weight of an ox at a country fair. Eight hundred people entered. Galton, being the kind of man he was, ran statistical tests on the numbers. He discovered that the average guess (1,197lb) was extremely close to the actual weight (1,198lb) of the ox. This story was told by James Surowiecki, in his entertaining book The Wisdom of Crowds.​

What will the Q3 Tesla gross profit or loss be?

On September 30, I'll post the average and as early as the next day we are likely to see tweets, press releases, or interviews. End of October, we can get the final number from the SEC filings.

Thanks,
Bob Wilson

 

My expectation for the 12 weeks of Q3:

• Model 3 - 12 wk * 5000/wk * (30% * $55,000/car) ~= $990M
• Model X - 3000 * (28% * $130,000/car) ~= $109M
• Model S - 3000 * (28% * $90,000/car) ~= $76M
• $1,175M = $990M + $109M + $76M

FYI, the day after the Q3 results are released:

• Fox Business will report 'Tesla is doomed' and can only be saved by removing Elon Musk
• CNBC will report 'Tesla is struggling' and must reduce Elon Musk responsibilities

Elon Musk will hopefully tweet one of these:

• "Fox and CNBC, you add funny."
• "Just bought another $42M of TSLA."
• "Hey Chanos, I've got some $420 TSLA stock for you."

Bob Wilson

 

In about nine calendar days, Monday Oct 1 2018, Tesla's Q3 will end and we'll see within four weeks, the Q3 financials. Before then, we'll probably see some Tesla press releases. This is a no cost, no risk poll of what you think. But there is another for-fee poll:

• Buy Tesla stock - do this if you think Q3 profit and loss numbers will be great.
• Short Tesla stock - do this if you think Q3 profit and loss numbers will be terrible.

Full disclosure, I've bought Tesla stock from a small part of my 401k money. I have a financial interest in TSLA success. So let's start with a review of why my investment in Tesla stock was a bad idea:

• Legal problems - when Musk proposed going private, stock prices shot up and later dropped. There are at least two law firms advertising, ". . . Law Firm Reminds Shareholders with Losses on their Investment in Tesla, Inc. of Class Action Lawsuit and Upcoming Deadline – TSLA". There is an SEC investigation to see if this speculation about going private was illegal stock manipulation. Ex-employee suits about wrongful termination. On and off again California safety investigations.
• Governance - Musk has a high turnover of senior managers. Some have gone to future product efforts to compete or compliment Tesla products. Musk tweets and emails unwisely and is known to have tasted whisky, pot, and Ambien. Works too many hours, 120 hrs in a 168 hour week. A demanding micromanager, he has also shown emotions during interviews. Some people just can't stand him.
• Bottlenecks - initially the Gigafactory battery manufacturing; then Fremont manufacturing facility, and; now distribution to end customers.
• Competition - companies that have lost luxury car market share to the Model S and X have announced their Tesla competition. On the low end, the Bolt, Leaf, BMW i3, e.t.c. are good alternatives to the $50-70k Model 3. Tesla products are too expensive. Worse, there are no independent Tesla dealers, just Tesla stores.
• Loses money - Tesla has only had a few quarters with nearly insignificant profits. Ramping up for Model 3 production, Tesla spent more than $2B and has too many employees making too few cars. Furthermore, Tesla builds, operates, and maintains a proprietary charging network instead of doing just cars. Also, asked for money back from suppliers that is the difference between a Tesla profit or loss.
• Inflated stock price - the Friday close stock price, ~$299, is nearly 17 times the IPO price, $17.
• Terrible cars - people have died in accidents; not enough knobs, buttons, and levers, and; 'had to be pushed off the Top Gear track.' There are gaps and squeaks in some of them. Not enough of the right kind of mechanical parts. Soon to lose the $7.5k Federal Tax credit that discounts their cars.

Have I left anything off?

Bob Wilson

 

Sorry, I missed leaving that one off my list. The edit window is still open so I added it.

Bob Wilson

 

That is too broad as I see it as a threat to the USA economy. But that risks turning this into a Fred's House of Politics thread. Still I appreciate the suggestion just I didn't see a 'hair on fire' problem in the Q2 financials.

Bob Wilson

 

Your pension or age description suit?

Bob Wilson

 

Two business days and two weekend days, on Monday Oct 1 we should start hearing facts and data.

Bob Wilson