Asia and Global Semiconductor and Tech Research

Andrew Lu

Equity Bottom-Up

<h2>What's new?</h2>According to <a href="https://www.smartkarma.com/entities/20279" target="_blank" data-smartkarma-citation="entities:20279:1">Tesla Motors Inc (TSLA US)</a>'s press release yesterday, Tesla delivered 26,150 vehicles in 3Q17, up 19% q/q and up 5% y/y (14,065 were Model S, up 17% q/q but down 12% y/y, and 11,865 were Model X, up 18% q/q and 35% y/y, 220 were Model 3). Tesla now expects 2H Model S/X deliveries to exceed that by several thousand vehicles than 1H's 47,077 with a total about 100,000 Model S/X in 2017 or 31% y/y increase.Q3 production totaled 25,336 vehicles, with 260 of them being Model…

What's new?According to Tesla Motors Inc (TSLA US)'s press release yesterday, Tesla delivered 26,150 vehicles in 3Q17, up 19% q/q and up 5% y/y (14,065 were Model S, up 17% q/q but down 12% y/y, and 11,865 were Model X, up 18% q/q and 35% y/y, 220 were Model 3). Tesla now expects 2H Model S/X deliveries to exceed that by several thousand vehicles than 1H's 47,077 with a total about 100,000 Model S/X in 2017 or 31% y/y increase.Q3 production totaled 25,336 vehicles, with 260 of them being Model…

Tesla - Missed Model 3 Deliveries as Expected; More Value at Its Suppliers than Tesla Itself

Global Automotive Stocks/EV Focus/Event Driven, SC Capital

SC Capital

Global Automotive Stocks/EV Focus/Event Driven

Over 22 years covering Japanese equities on both the sell side and the buy side. 

Bottom-up Japan Equities Research

Event-Driven

Tesla's stock price has risen by 117% to all-time highs in the past six months, with a current market cap of $58bn making it the world’s fourth highest valued carmaker after Toyota, VW, and Daimler-Benz. Tesla has never made a profit and, at 100,000 units of sales in 2017, is one of the smallest players in one of the world's most competitive and capital-intensive industries.Based on FY18 consensus estimates, Tesla's market cap per vehicle sold is $279,000/unit, whereas Toyota is only at $18,822/unit; VW is the lowest at $5,625/unit, and Daimler is $27,000/unit. All of the top three car makers have net cash on their balance sheet, while Tesla's net debt/equity ratio should be 2.8x in FY17 unless it issues more shares, which is highly likely. However, Tesla's stock has never traded on fundamentals, but more so on sentiment and technicals. Its stock has risen to such nose-bleed valuations despite repeated product launch delays, horrific negative FCF results and 56% dilution via 5 public share offerings since 2013. Because of this, there is no way to argue that Tesla's shares couldn't double again from here. Tesla's stock is a bubble that is largely supported by a dream about the future like must bubbles are. Its cult-like following in the investment community adheres to a high-minded vision of Tesla one day selling solar roof panels to its electric vehicle (EV) customers, who can then charge their EVs at home, which will eventually lead to Tesla dominating the autonomous ride-sharing industry (sound a bit like tulips or pets.com at all?). Some Wall Street analysts have even dubbed Tesla "The Next Apple".But things look set to deteriorate for Tesla and its high-flying shares over the next 6 to 12 months. It is aiming to (a) quintuple vehicle production and (b) double the number of EV charging stations and sales infrastructure by FY18. And while it will need billions to finance this, demand for new Tesla shares may decline as Tesla will face inevitable ramp-up snafus, while European luxury car makers, from early 2018, launch their own new EVs aimed at taking away Tesla's share of the market it has dominated without any competition up to now. While the Cult of Tesla may have been patient up to now due to its stellar vehicle sales growth, it is highly doubtful whether they remain happy holders of Tesla as Jaguar and Audi launch "Tesla Killers" from early 2018, with Benz and BMW close behind in 2019, which could lead to market share losses and sales declines. The biggest risk for Tesla is that, if it's no longer a growth stock, it may find it challenging to raise the billions of dollars needed to finance its bold expansion plans.If Tesla's current PBR of 19x were to come down to the 1x multiple at which its closest rivals BMW and Daimler trade, the stock would be worth $18, or 95% less than where it currently trades.

Tesla's stock price has risen by 117% to all-time highs in the past six months, with a current market cap of $58bn making it the world’s fourth highest valued carmaker after Toyota, VW, and Daimler-Benz. Tesla has never made a profit and, at 100,000 units of sales in 2017, is one of the smallest players in one of the world's most competitive and capital-intensive industries.Based on FY18 consensus estimates, Tesla's market cap per vehicle sold is $279,000/unit, whereas Toyota is only at $18,822/unit; VW is the lowest at $5,625/unit, and Daimler is $27,000/unit. All of the top three car makers have net cash on their balance sheet, while Tesla's net debt/equity ratio should be 2.8x in FY17 unless it issues more shares, which is highly likely. However, Tesla's stock has never traded on fundamentals, but more so on sentiment and technicals. Its stock has risen to such nose-bleed valuations despite repeated product launch delays, horrific negative FCF results and 56% dilution via 5 public share offerings since 2013. Because of this, there is no way to argue that Tesla's shares couldn't double again from here. Tesla's stock is a bubble that is largely supported by a dream about the future like must bubbles are. Its cult-like following in the investment community adheres to a high-minded vision of Tesla one day selling solar roof panels to its electric vehicle (EV) customers, who can then charge their EVs at home, which will eventually lead to Tesla dominating the autonomous ride-sharing industry (sound a bit like tulips or pets.com at all?). Some Wall Street analysts have even dubbed Tesla "The Next Apple".But things look set to deteriorate for Tesla and its high-flying shares over the next 6 to 12 months. It is aiming to (a) quintuple vehicle production and (b) double the number of EV charging stations and sales infrastructure by FY18. And while it will need billions to finance this, demand for new Tesla shares may decline as Tesla will face inevitable ramp-up snafus, while European luxury car makers, from early 2018, launch their own new EVs aimed at taking away Tesla's share of the market it has dominated without any competition up to now. While the Cult of Tesla may have been patient up to now due to its stellar vehicle sales growth, it is highly doubtful whether they remain happy holders of Tesla as Jaguar and Audi launch "Tesla Killers" from early 2018, with Benz and BMW close behind in 2019, which could lead to market share losses and sales declines. The biggest risk for Tesla is that, if it's no longer a growth stock, it may find it challenging to raise the billions of dollars needed to finance its bold expansion plans.If Tesla's current PBR of 19x were to come down to the 1x multiple at which its closest rivals BMW and Daimler trade, the stock would be worth $18, or 95% less than where it currently trades.

Taiwan

Solteam Incorporation manufactures electronic components. The Company produces electronic connectors, frequency controllers, power plugs, switches, adapters, controller modules, battery holders, inlets, outlets, and other products. Solteam markets its products worldwide.

Solteam Electronics (3484 TT)

Tesla - Missed Model 3 Deliveries as Expected; More Value at Its Suppliers than Tesla Itself

What's new?According to Tesla Motors Inc (TSLA US)'s press release yesterday, Tesla delivered 26,150 vehicles in 3Q17, up 19% q/q and up 5% y/y...

Andrew Lu

Tesla and Its Coming Struggle to Survive

Tesla's stock price has risen by 117% to all-time highs in the past six months, with a current market cap of $58bn making it the world’s fourth...

SC Capital