Tesla closing above 280, and also hit 285 on Friday is an indication of how strong this
stock still is.
The stock essentially recovering from any efforts the FED can throw at it, in order
to slow down the economy, and now less than 7% away from hitting the 300 mark, a big barrier,
that if broken, we may see it keep running.
With a lot going on next week, there is a real chance we might break that barrier.
Giga Texas has just produced the its first Cybertruck.
Which means we might expect the hand off event even sooner than most people were expecting
in September.
The first Model 3 was produced in July 8 2017, and the hand off event was 20 days later on
the 28th of July.
If that is anything to go by, we might see the Cybertruck hand off event potentially
in early August.
This event will likely be accompanied with all the new and latest updates and specifications
that the vehicle is now carrying, which according to Elon should be very impressive.
It's going to be a huge event for the company, an engineering feat that many said would never
happen, or was simply not possible.
Yet now we are seeing evidence that we are getting close.
This achievement feels really exciting and will no doubt add additional exuberance to
the stock price, when the market opens next week, added to the fact that earnings are
also next week, the stock price is going to be all about these events.
Of course there are two parts to earnings, the report and the call.
In the report the thing most investors care about are the margins, which are expected
to be between 18 and 19%, including regulatory credits, which is anyone's guess, the credits
seem to have been getting higher lately, around 500 million, but we usually expect around
350 million dollars, if I had to guess it might be around 400 million, but that's about
all we can do with credits, is guess.
Margins were 19.3% in Q1, but we have seen a bit of discounting in Q2, so they are expected
to be lower, however we have also seen some commodity prices lower as well, so there some
mixed opinions, I would guess it will be around 18.5%.
This is just gross margin for autos.
So this is the most important number investors are looking for and will have the most effect
on the stock price assuming there isn't anything else too crazy, like suddenly energy is up
considerably.
Energy should have increased, but I still think we are waiting for more supply for cells
yet, from the new CATL factory.
Then we should start seeing some even better growth there.
However, the margins are really more shortsightedness of the temporary stock price, and most investors
now, at least retail, have moved on from the quarter over quarter results, and are more
focused on the longer term horizon.
I mean what does it matter if margins are down 1% from last quarter, particularly when
we are experiencing times of high interest rates and low consumer auto demand, when Tesla
have a massive new factory on the way, and a new one to be announced later this year.
With something like double the output we currently have, which we might see in the next few years.
Seriously how many companies this size do you know of that plan on doubling sales in
just the next few years, and that's just for one part of the business.
Which is why the report is only really useful for the day to day stock price.
Most likely the stock price will drop, as traders take profits, when the financials
come out.
But this report is not nearly as important as the next part of the earnings, the call
with Elon Musk.
When we hear about the actual future of this company and where it is headed over the next
few years.
The problem with the earnings call, is it is quite frustrating hearing the questions
being asked, often they have already been answered, or if you are a big enough fan,
you know the answer anyway, and they tend to focus on the short term, or we get questions
that are more for the avid Tesla consumer rather than investor.
What I would most like to be asked would be obviously an update on the Cybertruck, now
we have seen that one has actually been produced in Texas, we are getting close, and I am sure
someone will ask, if Elon hasn't already given an update, as to when they expect the hand
off to take place.
I mean it really looks like its happening this quarter, and admittedly I had my doubts,
that it may be pushed back to Q4 perhaps, almost like it was too good to be true, as
it kind of is.
But it is true, it really looks like its happening, and when something that many think is too
good to be true, becomes true, then the stock price reacts.
Investors could start to consider other sides of the business more seriously too, FSD, robots,
are also too good to be true, but what if they also come into fruition soon too.
If Tesla can mass produce the Cybertruck, then maybe they can be successful with robots
and robotaxis too.
We don't know what kind of momentum the stock price might experience at times.
But we have seen it double in the space of a few months in the past, so anything is possible,
particularly with Tesla.
I am a big fan of the Model 3 Highland, I think it is going to be a really cool car,
I can't wait to see what it looks like, along with the new specifications.
This is starting to sound like Tesla's biggest refresh ever with one of their models.
It would be great if someone at least asked about the model.
Even if Elon replied with something like "this is not the place we announce new models",
then at least that could be implied that it is on the way.
But everyone always like to discuss the potential osborne effect when it comes to new Tesla
products, as we expect them to be such a step change in progress, that any rational consumer
would simply wait for the new product, so we can understand why Tesla have been so coy
about the update.
But we have witnessed pictures of this refresh, and other leaked rumors, so there is a high
chance it is coming sometime.
And the car is 6 years old, so it could do with some refreshing to pump demand a bit
more, along with some cost cutting processes.
You know what though, in reality, this update itself isn't really that big a deal, it will
only improve margin a bit due to lower costs, and potentially more demand resulting in higher
prices, but the Model 3 doesn't sell anywhere near as well as the Y.
What will be interesting though, will be seeing how the new battery can perform, along with
some of the other updates like hardware 4.
It won't dramatically increase profits.
However, when the similar update is applied to the Model Y, what with that being Tesla's
best selling vehicle, then that might have some impact.
Anyway, in reality I am not expecting any mention of this car from Tesla yet.
I would hope that someone asks about Mexico, and what sort of timelines we might expect
there, perhaps we will get some indication of when they plan on breaking ground and models
start coming off the production line.
I would love an update on the gen 3 vehicle too, but I don't think the earnings call will
be the event to get much more information on that product.
It would be good to get an update on 4680 cells though and how they are progressing.
We haven't had an official progress update since Q4 earnings call, so its been about
half a year.
The last we heard then, was that they were planning on ramping the cells next year.
Although the announcement we got from the 4680 line at Giga Texas was not overly encouraging,
with results that would show minimal impact in vehicle production.
I seem to be of the more unpopular opinion that 4680s wont be used in Cybertruck as a
result.
Bear in mind they have the same energy density as LFP cells, and imagine placing LFP cells
into a Cybertruck, unless they are going to launch with perhaps mid 200 mile range.
2170 cells seem like the solution for now, and yes, they can be used, it doesn't require
cell to vehicle structural packs.
Anyway, if Elon can deliver a positive earnings call, I think there is a really strong chance,
then we will see 300 again next week.
And then with the anticipation that the Cybertruck is actually going to start deliveries, then
we could see the stock run up to that event too, I feel like saying 330, but who knows,
it could be anything.
And if any other major news gets announced, like a Highland, or Mexico breaking ground,
then it could be like pouring gasoline on the fire, and the stock may even return to
all time highs.
Nothing surprises me any more with this stock.