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Tesla Motors, Inc. Message Board

  • germantrader71 germantrader71 May 5, 2011 5:43 AM Flag

    Analyst roundup, quite bullish, targets up, financing further out?

    Morgan Stanley:

    Tesla Motors Inc.
    They Just Keep Delivering,
    with Credibility Improving
    Tesla 1Q11 operating results were stronger than we
    expected with Model S reservations and key
    milestones on track. The key feature of the quarter
    was strong revenue (14% higher than our forecast) and
    gross margin (37% vs. our 31% estimate). Cash
    consumption was also better than we expected, with
    Tesla consuming $64mm vs. our expectations of
    $83mm burn. However, this was mainly due to capex
    that was around one-half our forecast and should
    catch-up through the remainder of the year. Tesla
    raised its full year revenue guidance by $10m (approx
    6%). Model S reservations are running at a clip of 300
    per month, more than double our expectations.
    Key 1Q11 numbers:
    • Revenues. $49mm vs. MSe $43mm and cons.
    $43mm. A 14% beat. The revenue beat was split
    between Roadster revenue and Powertrain, while
    Development Services was in line. Roadster revenue
    per unit was roughly 10% higher than we expected.
    • Operating loss (US GAAP). Came to ($47mm) vs.
    MSe ($54mm) driven by gross margin and lower
    SG&A. Stock-based comp was slightly lower than we
    expected, implying better cash earnings quality.
    • EPS (US GAAP). ($0.51) vs. MSe ($0.57).
    • Net Debt. Net debt came to $2mm vs. MSe $31mm,
    driven by free cash flow of negative $64mm that was
    stronger than expected vs. MSe $83mm cash burn.
    Gross liquidity stood at $506mm vs. $566mm at the
    start of the year and our end-of year forecast of
    2011 Outlook: Tesla seems on track on all its milestone
    fronts, with its 15 Model S alpha builds complete and a
    beta build on track for completion by end-of-summer and
    ready for journalists to drive. Likely direction of
    consensus estimates: modestly positive. This is a
    decent beat with good quality results and an optimistic
    FY outlook that could trigger some relief for the stock.

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    • Musk said they try to use other suppliers, but when the other suppliers have problems delivering MB come back to Tesla. It could be a good thing over time.

    • Sourcing and partnerships are two distinctly different things. I worked with Daimler. I know the culture. When it comes to product, Daimler shares with no one. Why would Tesla be any different?

    • Thanks germantrade, GREAT info.

    • Daimler has a lot of industrial partners (BYD, Tesla, Evonik).
      They even co-operate with BMW in sourcing.

      Chrysler was a takeover that went terribly wrong.
      Partnerships can work. If its strategic it might need more than 10% share ownership.

    • Germantrade, when was the last time (or first) when Daimler actually considered another auto company as a partner in the auto business? Not a supplier, a true partner. Chrysler? As we both know, that was no partnership.

      Daimler certainly doesn't need Tesla. If EVs are the wave of the future, there's no doubt in my mind Daimler is NOT looking at taking on a symbiotic relationship with an EV producer/retailer.

    • I think apart from results which where better than expected it is noteworthy that TSLA's net debt situation is far better than expected, pushing financing needs further out.

      Here's some statements from JP Morgan on financing:
      "While maintaining that currently available cash resources are
      sufficient, additional capital would likely help the company to accelerate
      the launch timing of Model X (crossover variant of Model S), perhaps to
      within 3-4 quarters of the Model S launch. Alpha version of Model X will
      be unveiled this December, soon after the release of Beta version of Model
      S in September. We believe Model X will require $150MM of capital
      investment, significantly below Model S’ (~$500MM) as capital required to
      develop platforms, powertrain, etc. will not be carried over. Further,
      additional capital may be required to expand production capacity from one
      shift to two shifts. All things considered, this suggests any potential
      secondary dilution would be relatively modest compared to the company’s
      current $2.6B equity market cap."

      It seems that equity issuance will be limited in size and will occur later than some expected. TSLA can afford to be very opportunistic and can wait for further good order flow for the Model S.

      Maybe this is one of the things shorts hoped for (big dilution). So it will be interesting to see how shorts (28,3% of free float) will act to this report and to a very positive tone in analysts reports.

    • JP Morgan:

      Tesla Motors
      1Q Revenue and Margin Upside; Model S Bookings
      Grow; Equity Deal Likely ▲
      Price: $26.69
      Price Target: $35.00
      Previous: $30.00
      Automobile Manufacture
      Himanshu Patel, CFAAC
      (1-212) 622-3906
      Vivek Aalok
      (1-212) 622-0798
      Michael Kimlat
      (1-212) 622-0458

      Key messages from Q1 results: Overweight-rated Tesla reported
      encouraging revenues and gross margin in Q1, saw acceleration in Model
      S reservations, and reaffirmed that it could opportunistically tap equity
      markets. We raise our 2011e revenues to $179MM ($161MM earlier),
      which is now in line with TSLA’s revised revenue guidance of $170-
      185MM ($160-175MM earlier). We also nudge up EPS estimates to -$1.98
      in 2011 (-$2.14 previously) and -$1.51 in 2012 (-$1.56 earlier). We revise
      our DCF-based Dec 2011 price target to $35 ($30 earlier).
      Stock View: TSLA remains one of our top medium-term stock picks
      despite its high risk profile. In addition to being able to deliver an
      impressive ~300 mile pure EV driving range for the pending Model S
      (aided by what we think is a ~30-50% battery costs/kWh advantage
      versus industry peers), we think many are underestimating TSLA’s nonpowertrain
      related vehicle engineering prowess in areas such as safety,
      handling, and interior design, all critical differentiators in the luxury
      market. Our $35 revised price target is still based on a relatively
      conservative terminal value operating margin assumption of 9.0% (8.5%
      previously), still substantially below management’s long-term guidance
      of around 15% (which, all else equal, would imply a low-$50 DCF
      based fair value).
      Model-S update: TSLA has now secured 4,600 advance registrations for
      the Model S that will be launched in mid 2012 (vs. 4,300 by March-end,
      3,700 by mid February, and 3,000 by mid November 2010). Management
      believes reservations saw an upward inflection after the company
      participated in the Detroit Auto Show in January 2011. TSLA will also
      be participating in the upcoming Frankfurt Auto Show this September,
      which could further boost Model S advance bookings. It is worth noting
      that all reservations to date are being done with minimal (Model S)
      marketing efforts. TSLA has capacity to manufacture only 5K Model S
      vehicles in 2012 (20K in 2013), suggesting 2012 production capacity
      will soon be sold out.

      • 1 Reply to germantrader71
      • Goldman Sachs:

        Tesla Motors, Inc. (TSLA)
        Neutral Equity Research
        Successfully moves past another set of benchmarks in 1Q11
        What's changed
        Tesla reported a 1Q2011 adjusted EBIT loss of ($41 million), in-line with
        our estimate of ($41 million). We are revising our 2011/2012/2013 adjusted
        EBIT estimates to ($197 mn)/($64 mn)/$317 mn from the prior ($173 mn)/
        ($62 mn)/ $316 mn to reflect higher SGA expense than we had previously
        modeled, partially offset by a stronger euro assumption.
        Once again Tesla delivered consistent results which, while having limited
        direct read-through to the Model S, are encouraging as financial execution
        remains on track. The company continues to expect delivery of the first
        Model S sedans by mid-2012. Having completed the build of 15 “alpha”
        prototypes, the company will continue its significant testing before
        assembling pre production “beta prototypes” which are slated to be
        shown to the public this summer/fall. The battery segment continues to
        progress well, supported by $45 mn in remaining development service
        revenue from Toyota, the Daimler A class program which is ramping up
        and the smart EV program which increased orders by 300 units. The
        company reiterated its expectation that it should be able to complete the
        Model S launch with its current liquidity balance (which is consistent with
        our estimates, barring any delays) but highlighted again that it is likely to
        raise additional funds to support the acceleration of the Model X program
        and greater vertical integration at the manufacturing level.
        We use an average of EV/Sales, EV/EBITDA, P/E and DCF to arrive at our
        new six-month price target of $31 ($29). The largest driver of the increase
        is a lower discount rate of 20% (vs. 25% previously) which we now use to
        discount out-year values to reflect diminished execution risk with the
        Model S alpha build complete and component sourcing in place.
        Key risks
        Primary upside/downside risk would be execution on Model S.

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