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  • Tesla's Gigafactory: A Risk Assessment [View article]
    @Rik1381 --And how do you explain the Q3-to-Q4 sequential decline in Calif sales?


    Also explain why the California order backlog shrank in Q3-Q4?

    It's definitely starting to look like the bloom is off the rose. This isn't exponential growth. It's flat-to-declining sales in Calif, which will turn out to be a barometer for the nation.
    Mar 4, 2014. 03:02 PM | 2 Likes Like |Link to Comment
  • Tesla's Gigafactory: A Risk Assessment [View article]
    Ummm, Johnny, the subject is stats showing Declining Demand IN CALIFORNIA per VIN numbers...

    How do you mean cars were shipped elsewhere? Elsewhere in California?

    The point is California was an early market for Tesla. California has a lot of wealthy greenies. From the VIN stats showing declining California sales, one might conclude that the low-hanging fruit have been picked. Using Calif as a barometer for the rest of the country (and the world), the same will probably be true.

    TSLA moves into a market, picks the low hanging fruit, and then sales decline because there simply aren't enough wealthy greenies in each state or country to keep the pace of initial sales.

    Thus one of the premises of the author's article that TSLA will get to 100,000 or 500,000 car sales a year DEFINITELY could be in question because demand probably won't be sustainable for luxury green sportscars after the initial novelty sales are captured.
    Mar 4, 2014. 02:50 PM | Likes Like |Link to Comment
  • Tesla's Gigafactory: A Risk Assessment [View article]
    @PeteVV - Sounds like denial to me...

    You state that the cars were sold elsewhere (not California) as a reason California sales posted sequential declines every quarter in 2013. Granted, that may be only partly true.

    However, wouldn't that also imply that TSLA was discriminating against sales to California in favor of its new markets? --

    --Which would also imply that if California really does have sufficient continuing demand for TSLA that wasn't satisfied, there theoretically should be a HUGE California backlog in California now because all those cars were delivered to other markets (but you fail to note that there IS NO HUGE BACKLOG in California).

    How do you explain that the delivery times in California SHRANK substantially in 2013 and there is now virtually NO BACKLOG in California. Ramped up production is only part of the answer because VIN sales need to confirm true sales.

    The declining demand in the primary California market for Model S's is one of the reasons in Q2 2013, they had to offer a lease deal to move more metal.

    I'm truly amazed at the lack of logic & reason among Tesla investors. Reasoned responses welcome...
    Mar 4, 2014. 02:38 PM | Likes Like |Link to Comment
  • Tesla's Gigafactory: A Risk Assessment [View article]
    No I didn't intentionally exclude the Dec 5th date - it's recent enough, though John Peterson's post below seems to indicate TSLA has "answered the SEC questions without answering some of them." Read it and you will see what I mean, specifically about the "Please revise to disclose the number of units sold and the number delivered under resale value guarantee terms and accounted for as operating leases" question.

    Note these SEC questions are AFTER the lack of transparency in TSLA's earnings releases had already burned some shorts and made money for some longs, which is not how the markets are supposed to work.

    As you know so well, Musk is known for softshoeing the costs of his projects in his announcements, for example in his much-hyped "Supercharge" announcement, he ONLY mentioned the cost to BUILD them, but conveniently glossed over the costs of the "Free" energy to charge all these vehicles -- instead perhaps preferring to hope that the sheeple will believe that the tiny solar panel footprint on top of the supercharger is enough to provide the juice for all the charges (on a good day, that Sqft of solar panels can charge perhaps 1-3 cars). Also no mention of the space rent and maintenance/cleaning/T... removal for each Supercharger.
    Mar 4, 2014. 02:18 PM | 3 Likes Like |Link to Comment
  • Tesla's Gigafactory: A Risk Assessment [View article]
    The risk of failure would seem high given the early-adopter state's Tesla sales figures (California) that show SEQUENTIAL SALES DECLINES in every quarter of 2013:

    According to CNCDA this shows the DECLINE Tesla Model S registrations in California during 2013:

    And this decline is in spite of the fact that California gives EV buyers a special welfare check AND they get to use the HOV lanes.

    Plus Tesla gets ZEV credits for sales in CA.

    PLUS Tesla is offering special financing in CA.

    Yet, the sales keep dropping sequentially quarter over quarter. How does Musk expect to ramp up to 100,000 sales a year if sales are already declining in the most liberal populous state in the US? It's clear that the easy fruit have been picked.

    So there is a great risk of the Gigafactory "investment" of other people's money failing to pay off.
    Mar 4, 2014. 10:40 AM | 4 Likes Like |Link to Comment
  • Tesla's Gigafactory: A Risk Assessment [View article]
    Looks like the SEC is chasing down TSLA's slick accounting principles too:

    Tesla Motors, Inc.
    Form 10-K for Fiscal Year Ended December 31, 2012
    Filed March 7, 2013
    Form 10-Q for Quarterly Period Ended September 30, 2013
    Filed November 8, 2013
    File No. 001-34756
    Dear Mr. Musk:
    We have reviewed your filing and have the following comments. In some of our comments, we may ask you to provide us with information so we may better understand your disclosure.
    Please respond to this letter within 10 business days by confirming that you will revise your document in future filings (unless otherwise indicated) and providing any requested information. If you do not believe our comments apply to your facts and circumstances, please tell us why in your response.
    After reviewing the information you provide in response to these comments, we may have additional comments.
    Form 10-K for Fiscal Year Ended December 31, 2012
    Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

    Critical Accounting Policies and Estimates, page 69
    1. Please include your policy for estimating residual values guaranteed to customers who finance their vehicles through your banking partners as a critical accounting policy. Include a discussion of the methodology and assumptions applied in determining the estimated residual amounts and the likelihood of materially different reported results if different assumptions or conditions were to exist.


    Page 2
    Revenues, page 78
    2. Please quantify the amount of vehicle service revenue included in vehicle, options and related sales and discuss any significant changes in the amount from the prior period as well as the factor(s) causing such changes. In addition, if management expects the introduction of the prepaid maintenance programs to have a material impact on the timing of recognizing service revenue, please discuss this change in trend and its expected impact on service sales.

    Notes to Consolidated Financial Statements, page 98
    Maintenance Programs
    3. We note per page 12 of your Business section that you announced a prepaid maintenance program to include plans covering maintenance costs at either a fixed price per visit or unlimited visits. Please disclose your policy for accounting for both types of plans.
    Form 10-Q for Quarterly Period Ended September 30, 2013
    Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

    Results of Operations, page 27
    4. Please revise to disclose the number of units sold and the number delivered under resale value guarantee terms and accounted for as operating leases.

    Liquidity and Capital Resources, page 32
    5. We note that at the end of May 2013 you announced the significant expansion of your Supercharger network to include coverage on the U.S. west and east costs and around the rest of the country. Please discuss your expansion plan in more detail including the expected associated costs to achieve your goal.

    Note 2. Summary of Significant Accounting Policies
    Resale value guarantee, page 10
    6. We note your disclosure that in April 2013 you began offering resale value guarantees on certain sales financed through your banking partners. We also note you account for such transactions as operating leases. With regard to measurement of expense during the term of the operating lease, you disclose that you depreciate the cost of the respective operating lease vehicles less the resale value guarantee amount to cost of automotive sales over the contractual term of the guarantee program. Please explain to us the basis under GAAP for your use of this method, in which the depreciable basis excludes the resale value guarantee amount and in which the depreciation rate is not based on the useful life of the vehicles. In this regard, ASC 840-10-55-18 requires equipment to be depreciated following the manufacturer’s normal depreciation policy.

    7. We also note your disclosure that you will adjust your depreciation estimates as needed, if the resale value is projected to be lower in future periods. Please explain to us the basis under GAAP for your use of this method.

    8. Please revise the presentation on your statements of operations to separately classify resale value guarantee sales as operating lease revenue and to separately present associated costs (depreciation) within cost of revenues.

    9. Please confirm to us that in future periods you will separately quantify product sales revenue and associated cost of revenues related to previously delivered vehicles for which customers did not elect to sell vehicles back to you under the resale value guarantee.

    10. Please revise your footnotes to include a table that rolls forward accounts related to resale value guarantee operating leases for all periods presented.
    Form 8-K furnished November 5, 2013
    Exhibit 99.1

    11. We note the subheading of your third quarter shareholder letter cites non-GAAP gross margin and net income without also citing the most directly comparable GAAP measures. Please revise to present, with equal or greater prominence, results on a GAAP basis throughout your press releases. Refer to Item 2.02 of Form 8-K and Item 10(e)(1)(i)(A) of Regulation S-K.
    12. Page 10 of your third quarter shareholder letter includes a full non-GAAP income statement. Please revise to discontinue such presentation pursuant to question 102.10 of the C&DIs on non-GAAP financial measures.
    We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the filing to be certain that the filing includes the information the Securities Exchange Act of 1934 and all applicable Exchange Act rules require. Since the company and its management are in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy and adequacy of the disclosures they have made.
    In responding to our comments, please provide a written statement from the company acknowledging that:
     the company is responsible for the adequacy and accuracy of the disclosure in the filing;

    Page 4
     staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and
     the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

    You may contact Theresa Messinese at 202-551-3307 if you have questions regarding comments on the financial statements and related matters. Please contact me at 202-551-3380 with any other questions.

    /s/ Lyn Shenk
    Lyn Shenk
    Branch Chief
    cc: Mark B. Baudler, Esq.
    Wilson Sonsini
    Mar 4, 2014. 10:26 AM | 6 Likes Like |Link to Comment
  • JetBlue Shares Undervalued With New Business Initiatives And Live TV Subsidiary [View article]
    Ummm, regarding JBLU's "Fly-Fi" offering being cheaper than GOGO's Wi-Fi offering, the author would do well to visit the JetBlue website and note that the stated pricing for their "Fly-fi" is $9/hour for broadband access.
    Comparing apples to apples, GOGO's broadband access is $14/hour for a 24-hr period (e.g. multiple flight connections). Clearly if people want to kill time, they're going to want MORE than ONE $9.00 hour of Wi-Fi as provided by JBLU.
    For most in-flight wi-fi subscribers, GOGO's fixed $14 for 24 hours would actually be CHEAPER than JBLU -- not the other way around as stated in the article.
    JBLU is "beta-testing" their "Fly-Fi" until June 2014 and it will take JBLU until 2016 to install their Fly-Fi on their entire fleet.
    By contrast, here's a quick list of why GOGO's market position is far superior to JBLU's:
    1.10-year contracts with 5major U.S airlines
    2.1000 FAA ku band certificates approval for international expansion
    3.Delta 150 fleet international wifi this year
    4.Partnership with Inmarsat for a Global coverage
    5.AirMexico added last quarter
    6.Canada wifi complete this quarter
    7.Business Aviation private jet segment 42% up in last quarter
    8.Signed first foreign-based carrier contract with Japan Airlines (JAL) to provide Gogo's in-flight Internet service on JAL's entire domestic mainline fleet of 77 aircraft
    9.Announced Ground-To-Orbit (GTO), a new proprietary hybrid technology that blends satellite and ATG technologies. GTO is expected to increase peak speeds to an aircraft to 70 mbps and is targeted to launch in late summer of 2014
    10.Signed a five-year contract extension with Virgin America that includes a commitment for technology upgrades and establishes Virgin America as our launch partner for GTO
    11.Introduced Gogo Text & Talk for BA, a revolutionary new service that allows passengers to send and receive text messages, and to place and receive calls, using their own phone and their own number
    12.All major U.S airlines reported good quarters which bodes well for GOGO
    Stock is oversold and undervalued. Will reflect real value long term. Westjet as and when announced will be another feather in the cap
    13.GOGO will have a strong international presence later this year for trans-oceanic flights. International flights will have a MUCH higher usage of Gogo's inflight wi-fi, so profitability will jump considerably - later in 2014 and 2015. Short-haul carriers like JetBlue with limited trans-ocean flights (only Carribean and Venzuela) won't have near the profit margins because the shorter the flight, the less likely they'll get as high percentage of in-flight wi-fi subscribers.
    Feb 8, 2014. 02:38 AM | 4 Likes Like |Link to Comment
  • Tesla's Ambitious SuperCharger Infrastructure Build Is SuperExpensive [View article]

    You state my solar power generation calculations for the tiny Supercharger roof were "way off" but you offered no substantial math calculations to support your point.

    If you read the comments preceding you, my calculations were confirmed by others, for example, a comment above by user "Uselesslogin" I quote:

    "Hi ddharriman,
    On point number 6 what do you mean by the guess is way off? I am going by a website I will reference below but a 100 watt panel in California produces 0.8 kWh/day in the summer and 0.5kWh/day in the winter. So if there are 100 panels then it would produce 80 kWh/day in the summer and 50kWh/day in the winter. This is actually worse since it only is enough to charge one car per day.
    Assuming I can put a link in here is my source:

    As a Tesla bull, tell me I'm wrong, but I basically see solar panels in this case as a gimmick though a harmless one because they do generate useful power.

    Also, I would like people to stop talking about putting solar panels on the Tesla. That idea is ridiculous since it wouldn't even generate a single kWh on a sunny day which would get you precisely 3 extra miles of range. Plus they would be ugly.
    Feb 2, 2014. 03:12 PM | Likes Like |Link to Comment
  • Both Apollo And Career Education Shares Went Parabolic This Week. Which One To Short? [View article]
    Musicmaker - You don't seem to read charts, nor articles thoroughly.

    The article was all about short-term movements of the stock based on the massive short squeeze in late October. Those who shorted APOL at that time made good money because the short squeeze did get ahead of itself and DID implode like clockwork.

    Look at the chart and you'll see what I mean.

    And look at the comment I posted on October 31st right above yours... Compare those dates with the chart pattern in late Oct and November and you'll be obliged to retract your misplaced comment. Congrats if you were long for this pop. You don't sound like a short-term trader because you didn't grasp the concepts in the article. I have no position in APOL.
    Jan 9, 2014. 03:27 AM | 1 Like Like |Link to Comment
  • The Best Oil And Gas Independents To Own In Q1 [View article]
    Indeed, Pioneer Natural Resources (PXD) has compelling (potential) net asset value.

    But before jumping in head first, I would be VERY hesitant until the dust settles on their numbers for the just-finished 4th quarter which may turn out to be the elephant in the room (to the downside) due to major November freeze-related losses - the magnitude of which have not yet been fully disclosed by the company...

    PXD's share price decline today could be because PXD Earnings Preannouncement is OVERDUE. They said “a few weeks” after Nov 27th they’d revise guidance…

    Market participants may be wondering why it’s taking the company this long to issue their earnings PRE-ANNOUNCEMENT to account for substantial freeze-related losses. Traders might be stepping aside because they don’t want to be holding PXD shares until PXD discloses the full Revenue & EPS impact of the frozen wells that occurred before Thanksgiving.

    On November 27th, their press release stated:

    1) They would “Update 4th Quarter Guidance” – once the full impact of anticipated weather-related downtime and associated repairs in the areas that were affected can be determined. -AND-

    2) “An extensive recovery period is expected, and it is likely to be A FEW WEEKS before the full impact of this event can be determined.”

    Well, it has now been at least A FEW WEEKS, so their guidance update (aka “Preannouncement/Warni... should be happening about now. I expect a5-8% hit to the stock on that day as I think it’ll be worse than the 10% miss that one analyst mentioned.

    From their Nov 27th Press Release:

    -"Pioneer Natural Resources Company ( (“Pioneer” or “the Company”) today announced that severe winter weather in Texas has significantly impacted the Company’s production and drilling operations in the Spraberry/Wolfcamp, Eagle Ford Shale and Barnett Shale Combo plays. The Spraberry/Wolfcamp area has been especially hard hit as heavy icing and low temperatures have resulted in extensive power outages, facilities freeze-ups, trucking curtailments and limited access to production and drilling facilities. An extensive recovery period is expected, and it is likely to be a few weeks before the full impact of this event can be determined.

    This unforeseen severe weather event was not accounted for in
    Pioneer’s production and financial guidance for the fourth quarter of 2013, which was provided in the Company’s earnings release on November 4, 2013. Pioneer expects to update its fourth quarter guidance once the full impact of anticipated weather-related downtime and associated repairs in the areas that were affected can be determined."



    1) The freeze probably knocked out a substantial amount of the PXD's key operations (Revenue) in the Permian Basin, perhaps representing up to 1-2 weeks of production.

    2) Suppose the Q4 loss over 1-2 weeks of downtime was equivalent to 1 week of revenue out of the 12-week quarter... (averaging wells that were freeze-damage or offline vs. the few wells still able to function during the freeze).

    3) Last quarter's Oil & Gas revenues were $908M.

    4) 1/12th of $908M would represent $75.6M of lost revenues due to freeze loss

    5) Last quarter's Net income attributable to common stockholders was $91.1M

    6) So if we subtract the lost "Revenues due to November Freeze" from Net Income last quarter: $91.1M - $75.6M = $15.5M Net income in this quarter.

    7) $15.5M Net income represents an EPS of only about $0.21/share!! This compares to Current Analyst Consensus Estimate of $1.18/share.

    *NOTE: This back-of-the-envelope calculation does NOT even include Capital Asset Losses due to the freeze and labor/material cost to repair those assets!! So in addition to lost revenues, there will be higher EXPENSES (capex and opex).

    If the aforementioned freeze-related EXPENSES are subtracted, it looks like PXD might even be looking at a BREAKEVEN or loss for the quarter.

    **NOTE: Current Analyst Consensus Estimate of $1.18/share has come down from $1.26/share in the past 30 days since the Nov 27th Freeze Announcement. Clearly, estimates will need to come down a lot more after their earnings pre-announcement.
    Jan 2, 2014. 10:05 PM | 1 Like Like |Link to Comment
  • Both Apollo And Career Education Shares Went Parabolic This Week. Which One To Short? [View article]
    ---"And the prediction is that when it turns, APOL will have a more rapid decline when the short squeeze runs out of gas (tune in on Wed/Thurs/Fri and you will see what I meant)."

    ...Well, here we are and it's only Thursday and APOL's short squeeze fizzled out just as projected: A 13% decline since the high point of the short squeeze frenzy.

    CECO had little symptoms of a short-squeeze after the initial pop and faded each day.
    Oct 31, 2013. 11:04 AM | 2 Likes Like |Link to Comment
  • Both Apollo And Career Education Shares Went Parabolic This Week. Which One To Short? [View article]
    Mr. Pchan:

    Again, no need for ridicule & condescension in this forum please. Thanks.

    Traders/investors have different opinions... That's what makes a market. Always remember that the guy taking the opposite side of your trade wants you to lose money.

    Also note that you can learn from your opposition (my sense is that you're not interested in learning from the astute observations I've made here). I'm being kind and magnanimous in sharing some of my wisdom with you as I've been in the markets far longer than you have.

    As for your comment: "i mean seriously, shorting apol is your best play on the collapse of the dollar? that's ridiculous."

    Nowhere did I mention that shorting APOL is my BEST PLAY on the collapse of the dollar. You completely twisted reality on that one.

    I did mention the collapse of the dollar in the context of numerous other forward-looking negatives that could burden the economy and thus burden the education sector. Nothing more.

    Rather, your continual focus on FUNDAMENTALS without any consideration of TECHNICAL ANALYSIS and SHORT INTEREST METRICS is evidence you missed the article's key point. -- which was mostly focused on the short-term effects of short squeezes on either APOL or CECO. And the conclusion was that APOL had much higher short interest and thus a much larger short squeeze component to its rise than CECO.

    And the prediction is that when it turns, APOL will have a more rapid decline when the short squeeze runs out of gas (tune in on Wed/Thurs/Fri and you will see what I meant).

    -my last post to you-

    P.S. If you have strong opinions and can write well, I encourage you to write your own SeekingAlpha article extolling the virtues of APOL as you seem to be an unwavering APOL long.
    Oct 30, 2013. 01:13 AM | 1 Like Like |Link to Comment
  • Both Apollo And Career Education Shares Went Parabolic This Week. Which One To Short? [View article]
    Today appears to be the LAST GASP of the massive short squeeze that has been at play with APOL. CECO seems to be retreating in profit taking moves as would be typical of a stock that isn't as heavily shorted as APOL.

    It is likely that APOL will follow CECO with a retreat/retracement that is perhaps more substantial. There's a reason why APOL's short squeeze has lasted 4 days:

    As anyone who has had a margin call knows, brokerages usually give you 3-4 days to wire in funds. Today is the 4th day of APOL's short squeeze, so the short-cover buying activity will most likely evaporate tomorrow.

    Here is the sequence of the recent short squeeze as I see it now:

    ---DAY 1, Thurs Oct 24th - 28% rise caused brokerages to forcibly liquidate some short positions who had too much exposure and not enough equity in their accounts.

    ---DAY 2, Fri Oct 25th - A further rise when brokerages called in other short positions and forcibly liquidated the rest that didn't get forcibly liquidated on Day 1.

    ---DAY 3, Mon Oct 28th - The remaining shorts who were not liquidated FORCIBLY by brokers are the ones who were given 3-4 days to wire in funds. Those that didn't get funds wired in by the close on Monday saw more forced margin call liquidations. That explains the huge jump trading volume in the last half hour and a surge to $27.95.

    ---DAY 4, Tues Oct 29th - Final day of margin call liquidations as shorts who didn't get their money in on Day 3, were seemingly immediately liquidated at the open. The stock shot up to $28.91 in the first 8 minutes of trading from a close of $27.95 (no news on the company to explain the rise).

    As Day 4 of the massive short squeeze comes to a close, the stock is fading into the close -- evidence that the short cover buying activity is depleted. Market makers know this (they have access to the limit-order book).

    Thus concludes the anatomy of an absolutely CLASSIC SHORT SQUEEZE...

    And it would seem as of tomorrow, APOL will lose a lot of its buoyancy. Shorts will probably profit from the forthcoming downside of at least 5-10% within the next few trading days.

    Longs would have been wise to take profit on the 4th day of short margin call buying-to-cover (today).
    Oct 29, 2013. 03:54 PM | Likes Like |Link to Comment
  • Both Apollo And Career Education Shares Went Parabolic This Week. Which One To Short? [View article]
    It looks SP Capital disagrees with me on CECO (but perhaps agrees that the educational sector is a SELL):


    (S&P Capital IQ) We raise our target price by $2.50 to $4.00, using price-to-tangible book value, as we think CECO's agreement to sell its European schools will greatly improve its balance sheet. Shares are up sharply this morning after CECO announces it is selling the schools to Apax Partners, a private equity firm, for $276.5M in cash. We think CECO did an excellent job negotiating that level of payment for schools that account for only 9% of its revenues. However, we continue to think demand will stay very soft for CECO's educational programs, and its losses will go on for an extended period.


    So perhaps S&P Capital thinks demand for the entire sector will remain very soft for an extended period.
    Oct 28, 2013. 09:57 PM | Likes Like |Link to Comment
  • Both Apollo And Career Education Shares Went Parabolic This Week. Which One To Short? [View article]
    Indeed, when people posted rosy comments here looking way into the future, it's natural to respond by providing a balanced forward-looking perspective, including prospects of higher interest rates (affecting student loan rates), and the inevitable collapse of the dollar (affecting inflationary pressure on the cost side).

    In terms of deciding to go long or short for short-term trades, OF COURSE one must always keep an eye on future aspects (after all, many of us have, at times, entered what we thought was a short-term trade, only to find we had to ride it down & up. Or the trade went so well that we stayed on for the ride). So one should always be prepared to be in a trade for longer than expected. So that implies one must survey the future as well.

    If you don't doubt the collapse of the dollar is coming to a neighborhood near you, I've got some good reading material for you:

    And, oddly enough, these stories are from "mainstream media" sources that usually softpedal how bad the economy is. Try reading some of Peter Schiff's great stuff:

    As for the adage, yes, I am usually quite astute at figuring out who the sucker is at the table, thank you... No need for subliminal ad-homs in this forum please
    Oct 28, 2013. 09:54 PM | 1 Like Like |Link to Comment