Near-future quarterly financial projections

[luvb2b]

yes i agree that exact scenario seems unlikely. there are other scenarios as well and all have been hashed over by bears many times.

i guess my message was directed to those who may have made the same mistake i made, which is to get over-invested in a single security on the false premise that i could know enough about it to ignore sound risk management discipline.

as we have seen there are always these insane wildcards that are not quantifiable, and at every turn it seems the market has known more about what is happening sooner than we have. it's not like i didn't know this after 20 years of investing, i somehow got to a point where i stopped believing it.

when you own and love the products, respect the founder, are inspired by the technology, want the company to succeed, and then congregate with like-minded people... see how i got into poor risk management habits?

the mere fact that tesla was a large enough holding that it required me to build such a complex model to understand means i was already lost. i built the crutch to hold strong my views, rather than letting sensible risk management and investing principles guide my trading. in the latter case i would surely have been less invested and have a much simpler framework.

manage risk sensibly and it matters little if you win this battle or war, for in the long-term your returns will reflect that sound risk management philosophy. at least that's what i have come to believe over the years.

I've considered this...


...but Tesla is coming into the third quarter with 2.2 billion in cash and 3 billion in payables.

Some of the suppliers might demand earlier payment, but how many?

You're thinking an increase of 1.8 billion in accounts payable for Q3 and then an actual reduction in accounts payable for Q4.

I haven't heard anything in the way of rumors of major suppliers demanding shorter payment terms; we know Panasonic is actually being *more* generous. Others have Tesla as a major customer and wouldn't want to harm them financially. On the other hand, several of Tesla's major suppliers are companies whose businesses are as generic and diversified as steel and aluminum companies, who are large and tend to offer absolutely standard terms to everyone, not individualized terms based on credit rating.

Tesla would have to have a large percentage of the payables called in early to have a cash flow crisis. For Q3, it seems like would have to be 39%; for Q4, 53%. It currently seems quite implausible to me. Even if 10% or 20% of the accounts payable demanded upfront payment, I don't see a problem.

 

[bdohmeyer]

Please forgive me if this has already been discussed. I'm a new member. (also just picked up our new MX 100D w/ performance wheels and EAP on 9/29 - it was a madhouse. And it is amazing!)

How does luvb2b's model of AP work? I was thinking that recent flat CAPX could result in lower AP growth than what is modeled

 

[Fact Checking]

i made a few adjustments and corrections based on comments received. one meaningful correction is i had leased s/x vehicles too low at 7% - this causes revenue to skew higher. another correction was i had depreciation too low in the cash flow statement. adjusted balance sheet for comments about common equity varying too much vs. net income. moved the sec settlement into q4 per brian.

thanks for all your comments.

i also want to kick myself for thinking analysts would adjust their estimates higher. most analysts are out with notes today and they all seem to have the same negative ratings as usual. i feel dumb for thinking they would get to the same page as me.

sorry have no idea how to eliminate whitespace below.

…

s deliveries

x deliveries

s+x deliveries

3 deliveries

3 production

lease s/x % veh

avg price s+x

avg price model 3

revenue

auto sales ex 3

auto sales mod 3

auto leasing

1 time autopilot

zev credits

total auto

energy storage

solarcity

grohmann

services/other

total revenue

cost of revenue

auto sales ex 3

auto sales mod 3

auto leasing

total auto

energy storage

solarcity

grohmann

services & other

total cost of rev

gross profit

auto gaap ex 3 gm

auto-zev ex 3 gm

model 3 gm

auto-zev incl 3 gm

storage gm

scty gm

grohmann gm

services gm

opex

tesla r&d

tesla sg&a

1 time costs

solarcity r&d

solarcity sg&a

total opex

op income

interest inc

interest exp

scty interest

other income exp

1time scty gain

pretax income

income tax

net income

non-cont int.

net inc to common

basic shares

diluted shares

diluted gaap eps

gaap net income

+ stock based comp

+ one time scty

non-gaap net income

non-gaap diluted eps

dio

dpo

balance sheet

current assets

cash & eq.

restricted cash

accts rcvbl

inventory

prepaids+other

total current assets

op lease vehicles

solar energy sys

pp&e

intangible assets

goodwill

mypower rcvbls

restricted cash

other assets

total assets

current liabiliites

accts payable

accrued liabs+other

deferred revenue

resale value guar

cust deposits

curr debt+leases

curr solar bonds

total current liabs

lt debt+leases

solar bonds

rel party conv debt

deferred revenue

resale value guar

other lt liabilities

comm stk warrants

capital lease oblg

total liabilities

commits/contings

rdmbl ncis in subs

conv senior notes

nci in subsidiaries

common equity

cash flow statement

cash flows from ops

net loss

dep/amortization

stock-based comp

am of debt discount

inv write-down

loss on disposals

forex loss (gain)

loss on acq scty

non-cash int/other

chgs in op as/lb

accts rcbl

inv / op leases

prepaids/other ca

mypower rcvbls + other

accts pybl/accr liabs

deferred revenue

customer deposits

other lt liabs

net cash from ops

cash flows from inv

pp&e purchases

purchase solar sys

net cash from inv

cash flows from fin

stock issued

debt issued

debt repayments

rel pty solar repaids

coll lease borrowing

stock option excrs

capital lease paids

stock+debt issue cost

investment by nci in subs

dist to nci in subs

buyouts of nci in subs

net cash from fin

forex effect

net change in cash

cash & eq start

cash & eq end

[TD2] luv q4-18e [/TD2][TD2] luv q3-18e [/TD2][TD2] Jun-18 [/TD2][TD2] Mar-18 [/TD2] [TD2]15,000[/TD2][TD2]14,470[/TD2][TD2]10,939[/TD2][TD2]11,738[/TD2] [TD2]13,000[/TD2][TD2]13,190[/TD2][TD2]11,380[/TD2][TD2]10,077[/TD2] [TD2] 28,000 [/TD2][TD2] 27,660 [/TD2][TD2] 22,319 [/TD2][TD2] 21,815 [/TD2] [TD2] 60,000 [/TD2][TD2] 55,840 [/TD2][TD2] 18,449 [/TD2][TD2] 8,182 [/TD2] [TD2] 60,000 [/TD2][TD2] 53,239 [/TD2][TD2] 28,578 [/TD2][TD2] 9,766 [/TD2] [TD2] 0.11 [/TD2][TD2] 0.11 [/TD2][TD2] 0.11 [/TD2][TD2] 0.11 [/TD2] [TD2] 103.00 [/TD2][TD2] 104.00 [/TD2][TD2] 105.14 [/TD2][TD2] 105.42 [/TD2] [TD2] 58.00 [/TD2][TD2] 59.00 [/TD2][TD2] 55.80 [/TD2][TD2] 56.80 [/TD2] [TD2]2,566,760[/TD2][TD2]2,560,210[/TD2][TD2]2,088,411[/TD2][TD2]2,046,829[/TD2] [TD2]3,480,000[/TD2][TD2]3,294,560[/TD2][TD2]1,029,454[/TD2][TD2]464,738[/TD2] [TD2]213,652[/TD2][TD2]209,683[/TD2][TD2]239,816[/TD2][TD2]173,436[/TD2] [TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2] [TD2]100,000[/TD2][TD2]100,000[/TD2][TD2]0[/TD2][TD2]50,314[/TD2] [TD2] 6,360,412 [/TD2][TD2] 6,164,452 [/TD2][TD2] 3,357,681 [/TD2][TD2] 2,735,317 [/TD2] [TD2]185,500[/TD2][TD2]140,450[/TD2][TD2]111,651[/TD2][TD2]185,022[/TD2] [TD2]237,600[/TD2][TD2]231,000[/TD2][TD2]262,757[/TD2][TD2]225,000[/TD2] [TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2] [TD2]300,000[/TD2][TD2]300,000[/TD2][TD2]270,142[/TD2][TD2]263,412[/TD2] [TD2] 7,083,512 [/TD2][TD2] 6,835,902 [/TD2][TD2] 4,002,231 [/TD2][TD2] 3,408,751 [/TD2] [TD2]1,897,237[/TD2][TD2]1,892,018[/TD2][TD2]1,546,610[/TD2][TD2]1,517,446[/TD2] [TD2]2,714,400[/TD2][TD2]2,767,430[/TD2][TD2]983,129[/TD2][TD2]573,951[/TD2] [TD2]132,465[/TD2][TD2]130,003[/TD2][TD2]136,915[/TD2][TD2]104,496[/TD2] [TD2] 4,744,101 [/TD2][TD2] 4,789,452 [/TD2][TD2] 2,666,654 [/TD2][TD2] 2,195,893 [/TD2] [TD2]185,500[/TD2][TD2]147,473[/TD2][TD2]146,343[/TD2][TD2]217,863[/TD2] [TD2]166,320[/TD2][TD2]161,700[/TD2][TD2]183,930[/TD2][TD2]157,500[/TD2] [TD2]10,999[/TD2][TD2]10,999[/TD2][TD2]11,000[/TD2][TD2]11,000[/TD2] [TD2]375,000[/TD2][TD2]384,000[/TD2][TD2]375,374[/TD2][TD2]369,969[/TD2] [TD2] 5,481,920 [/TD2][TD2] 5,493,623 [/TD2][TD2] 3,383,301 [/TD2][TD2] 2,952,225 [/TD2] [TD2] 1,601,592 [/TD2][TD2] 1,342,279 [/TD2][TD2] 618,930 [/TD2][TD2] 456,526 [/TD2] [TD2]29.5%[/TD2][TD2]29.5%[/TD2][TD2]27.7%[/TD2][TD2]28.6%[/TD2] [TD2]27.0%[/TD2][TD2]27.0%[/TD2][TD2]27.7%[/TD2][TD2]26.9%[/TD2] [TD2]22.0%[/TD2][TD2]16.0%[/TD2][TD2]4.5%[/TD2][TD2]-23.5%[/TD2] [TD2]24.2%[/TD2][TD2]21.0%[/TD2][TD2]20.6%[/TD2][TD2]18.2%[/TD2] [TD2]0.0%[/TD2][TD2]-5.0%[/TD2][TD2]-31.1%[/TD2][TD2]-17.7%[/TD2] [TD2]30.0%[/TD2][TD2]30.0%[/TD2][TD2]30.0%[/TD2][TD2]30.0%[/TD2] [TD2]-100.0%[/TD2][TD2]-100.0%[/TD2][TD2]-100.0%[/TD2][TD2]-100.0%[/TD2] [TD2]-25.0%[/TD2][TD2]-28.0%[/TD2][TD2]-39.0%[/TD2][TD2]-40.5%[/TD2] [TD2]360,000[/TD2][TD2]350,000[/TD2][TD2]341,129[/TD2][TD2]322,096[/TD2] [TD2]630,000[/TD2][TD2]620,000[/TD2][TD2]610,759[/TD2][TD2]551,404[/TD2] [TD2]20,000[/TD2][TD2]0[/TD2][TD2]103,434[/TD2][TD2]0[/TD2] [TD2]50,000[/TD2][TD2]45,000[/TD2][TD2]45,000[/TD2][TD2]45,000[/TD2] [TD2]145,000[/TD2][TD2]140,000[/TD2][TD2]140,000[/TD2][TD2]135,000[/TD2] [TD2] 1,205,000 [/TD2][TD2] 1,155,000 [/TD2][TD2] 1,240,322 [/TD2][TD2] 1,053,500 [/TD2] [TD2] 396,592 [/TD2][TD2] 187,279 [/TD2][TD2] -621,392 [/TD2][TD2] -596,974 [/TD2] [TD2]6,000[/TD2][TD2]6,000[/TD2][TD2]5,064[/TD2][TD2]5,214[/TD2] [TD2]-107,000[/TD2][TD2]-107,000[/TD2][TD2]-110,582[/TD2][TD2]-102,546[/TD2] [TD2]-53,000[/TD2][TD2]-53,000[/TD2][TD2]-53,000[/TD2][TD2]-47,000[/TD2] [TD2]-12,000[/TD2][TD2]-12,000[/TD2][TD2]50,911[/TD2][TD2]-37,716[/TD2] [TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2] [TD2] 230,592 [/TD2][TD2] 21,279 [/TD2][TD2] -728,999 [/TD2][TD2] -779,022 [/TD2] [TD2]19,999[/TD2][TD2]19,999[/TD2][TD2]13,707[/TD2][TD2]5,605[/TD2] [TD2] 210,593 [/TD2][TD2] 1,280 [/TD2][TD2] -742,706 [/TD2][TD2] -784,627 [/TD2] [TD2]-50,001[/TD2][TD2]-50,001[/TD2][TD2]-25,167[/TD2][TD2]-75,076[/TD2] [TD2] 260,594 [/TD2][TD2] 51,281 [/TD2][TD2] -717,539 [/TD2][TD2] -709,551 [/TD2] [TD2]172,000[/TD2][TD2]170,900[/TD2][TD2]169,997[/TD2][TD2]169,146[/TD2] [TD2]183,000[/TD2][TD2]181,900[/TD2][TD2]169,997[/TD2][TD2]169,146[/TD2] [TD2] 1.42 [/TD2][TD2] 0.28 [/TD2][TD2] -4.22 [/TD2][TD2] -4.19 [/TD2] [TD2]260,594[/TD2][TD2]51,281[/TD2][TD2]-717,539[/TD2][TD2]-709,551[/TD2] [TD2]208,000[/TD2][TD2]200,000[/TD2][TD2]197,344[/TD2][TD2]141,639[/TD2] [TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2] [TD2]468,594[/TD2][TD2]251,281[/TD2][TD2]-520,195[/TD2][TD2]-567,912[/TD2] [TD2] 2.56 [/TD2][TD2] 1.38 [/TD2][TD2] -3.06 [/TD2][TD2] -3.36 [/TD2] [TD2] 72.00 [/TD2][TD2] 80.00 [/TD2][TD2] 89.67 [/TD2][TD2] 79.31 [/TD2] [TD2] 77.00 [/TD2][TD2] 81.00 [/TD2][TD2] 81.73 [/TD2][TD2] 80.47 [/TD2] [TD2]3,410,108[/TD2][TD2]2,868,614[/TD2][TD2]2,236,424[/TD2][TD2]2,665,673[/TD2] [TD2]150,000[/TD2][TD2]130,000[/TD2][TD2]146,822[/TD2][TD2]120,194[/TD2] [TD2]1,164,413[/TD2][TD2]1,123,710[/TD2][TD2]569,874[/TD2][TD2]652,848[/TD2] [TD2]4,325,460[/TD2][TD2]4,816,327[/TD2][TD2]3,324,643[/TD2][TD2]2,565,826[/TD2] [TD2]381,125[/TD2][TD2]364,418[/TD2][TD2]422,034[/TD2][TD2]379,379[/TD2] [TD2] 9,431,106 [/TD2][TD2] 9,303,070 [/TD2][TD2] 6,699,797 [/TD2][TD2] 6,383,920 [/TD2] [TD2]2,388,916[/TD2][TD2]2,344,277[/TD2][TD2]2,282,047[/TD2][TD2]2,315,124[/TD2] [TD2]6,333,264[/TD2][TD2]6,336,631[/TD2][TD2]6,340,031[/TD2][TD2]6,346,374[/TD2] [TD2]11,933,736[/TD2][TD2]11,404,808[/TD2][TD2]10,969,348[/TD2][TD2]10,519,226[/TD2] [TD2]320,000[/TD2][TD2]320,000[/TD2][TD2]300,406[/TD2][TD2]346,428[/TD2] [TD2]60,237[/TD2][TD2]60,237[/TD2][TD2]64,284[/TD2][TD2]61,284[/TD2] [TD2]420,841[/TD2][TD2]427,841[/TD2][TD2]434,841[/TD2][TD2]449,754[/TD2] [TD2]400,000[/TD2][TD2]400,000[/TD2][TD2]399,992[/TD2][TD2]433,841[/TD2] [TD2]273,123[/TD2][TD2]273,123[/TD2][TD2]419,254[/TD2][TD2]415,478[/TD2] [TD2] 31,561,224 [/TD2][TD2] 30,869,987 [/TD2][TD2] 27,910,000 [/TD2][TD2] 27,271,429 [/TD2] [TD2]4,625,839[/TD2][TD2]4,876,531[/TD2][TD2]3,030,493[/TD2][TD2]2,603,498[/TD2] [TD2]2,410,000[/TD2][TD2]2,252,250[/TD2][TD2]1,814,979[/TD2][TD2]1,898,431[/TD2] [TD2]573,340[/TD2][TD2]562,627[/TD2][TD2]576,321[/TD2][TD2]536,465[/TD2] [TD2]600,000[/TD2][TD2]600,000[/TD2][TD2]674,255[/TD2][TD2]629,112[/TD2] [TD2]965,000[/TD2][TD2]965,000[/TD2][TD2]942,129[/TD2][TD2]984,823[/TD2] [TD2]1,500,000[/TD2][TD2]1,500,000[/TD2][TD2]2,020,685[/TD2][TD2]1,915,530[/TD2] [TD2]100,000[/TD2][TD2]100,000[/TD2][TD2]82,500[/TD2][TD2]82,500[/TD2] [TD2] 10,774,179 [/TD2][TD2] 10,856,408 [/TD2][TD2] 9,141,362 [/TD2][TD2] 8,650,359 [/TD2] [TD2]9,600,000[/TD2][TD2]9,600,000[/TD2][TD2]9,510,696[/TD2][TD2]8,761,070[/TD2] [TD2]100[/TD2][TD2]100[/TD2][TD2]100[/TD2][TD2]100[/TD2] [TD2]2,519[/TD2][TD2]2,519[/TD2][TD2]2,594[/TD2][TD2]2,556[/TD2] [TD2]836,121[/TD2][TD2]820,497[/TD2][TD2]795,820[/TD2][TD2]818,250[/TD2] [TD2]650,000[/TD2][TD2]670,000[/TD2][TD2]584,857[/TD2][TD2]756,800[/TD2] [TD2]3,313,750[/TD2][TD2]3,118,500[/TD2][TD2]2,607,458[/TD2][TD2]2,561,886[/TD2] [TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2] [TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2] [TD2] 25,176,669 [/TD2][TD2] 25,068,024 [/TD2][TD2] 22,642,887 [/TD2][TD2] 21,551,021 [/TD2] [TD2]540,000[/TD2][TD2]540,000[/TD2][TD2]539,536[/TD2][TD2]405,835[/TD2] [TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2][TD2]2[/TD2] [TD2]900,000[/TD2][TD2]900,000[/TD2][TD2]821,156[/TD2][TD2]863,876[/TD2] [TD2] 4,944,555 [/TD2][TD2] 4,361,963 [/TD2][TD2] 3,906,421 [/TD2][TD2] 4,450,695 [/TD2] [TD2]210,593[/TD2][TD2]1,280[/TD2][TD2]-742,706[/TD2][TD2]-784,627[/TD2] [TD2]501,217[/TD2][TD2]479,002[/TD2][TD2]485,255[/TD2][TD2]416,233[/TD2] [TD2]208,000[/TD2][TD2]200,000[/TD2][TD2]197,344[/TD2][TD2]141,639[/TD2] [TD2]35,000[/TD2][TD2]35,000[/TD2][TD2]35,074[/TD2][TD2]39,345[/TD2] [TD2]48,163[/TD2][TD2]33,246[/TD2][TD2]27,552[/TD2][TD2]18,546[/TD2] [TD2]45,000[/TD2][TD2]45,000[/TD2][TD2]66,613[/TD2][TD2]52,237[/TD2] [TD2]25,000[/TD2][TD2]25,000[/TD2][TD2]-41,476[/TD2][TD2]47,661[/TD2] [TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2] [TD2]0[/TD2][TD2]0[/TD2][TD2]9,669[/TD2][TD2]-3,984[/TD2] [TD2]-40,703[/TD2][TD2]-553,836[/TD2][TD2]70,633[/TD2][TD2]-169,142[/TD2] [TD2]446,228[/TD2][TD2]-1,553,914[/TD2][TD2]-822,487[/TD2][TD2]-419,277[/TD2] [TD2]0[/TD2][TD2]0[/TD2][TD2]-45,193[/TD2][TD2]-50,001[/TD2] [TD2]-15,000[/TD2][TD2]-15,000[/TD2][TD2]-1,863[/TD2][TD2]-57,583[/TD2] [TD2]-142,942[/TD2][TD2]2,233,309[/TD2][TD2]591,737[/TD2][TD2]317,983[/TD2] [TD2]75,000[/TD2][TD2]65,000[/TD2][TD2]61,702[/TD2][TD2]45,795[/TD2] [TD2]0[/TD2][TD2]22,871[/TD2][TD2]-24,439[/TD2][TD2]67,359[/TD2] [TD2]0[/TD2][TD2]0[/TD2][TD2]42,484[/TD2][TD2]-60,560[/TD2] [TD2] 1,395,556 [/TD2][TD2] 1,016,958 [/TD2][TD2] -129,664 [/TD2][TD2] -398,376 [/TD2] [TD2]-700,000[/TD2][TD2]-600,000[/TD2][TD2]-609,813[/TD2][TD2]-655,662[/TD2] [TD2]-60,000[/TD2][TD2]-60,000[/TD2][TD2]-67,400[/TD2][TD2]-72,975[/TD2] [TD2] -760,000 [/TD2][TD2] -660,000 [/TD2][TD2] -682,817 [/TD2][TD2] -728,637 [/TD2] [TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2] [TD2]100,000[/TD2][TD2]100,000[/TD2][TD2]1,267,746[/TD2][TD2]1,775,481[/TD2] [TD2]-400,000[/TD2][TD2]0[/TD2][TD2]-879,328[/TD2][TD2]-1,389,388[/TD2] [TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2][TD2]-17,500[/TD2] [TD2]100,000[/TD2][TD2]100,000[/TD2][TD2]-113,426[/TD2][TD2]-87,092[/TD2] [TD2]75,000[/TD2][TD2]75,000[/TD2][TD2]31,053[/TD2][TD2]94,018[/TD2] [TD2]-30,000[/TD2][TD2]-30,000[/TD2][TD2]-29,395[/TD2][TD2]-18,787[/TD2] [TD2]-12,000[/TD2][TD2]-12,000[/TD2][TD2]-758[/TD2][TD2]-2,913[/TD2] [TD2]75,000[/TD2][TD2]75,000[/TD2][TD2]179,333[/TD2][TD2]73,704[/TD2] [TD2]-50,000[/TD2][TD2]-50,000[/TD2][TD2]-56,603[/TD2][TD2]-52,942[/TD2] [TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2][TD2]-2,921[/TD2] [TD2] -142,000 [/TD2][TD2] 258,000 [/TD2][TD2] 398,622 [/TD2][TD2] 371,660 [/TD2] [TD2]47,937[/TD2][TD2]17,232[/TD2][TD2]-22,611[/TD2][TD2]10,102[/TD2] [TD2] 541,493 [/TD2][TD2] 632,190 [/TD2][TD2] -436,470 [/TD2][TD2] -745,251 [/TD2] [TD2] 2,868,614 [/TD2][TD2] 2,236,424 [/TD2][TD2] 2,665,673 [/TD2][TD2] 3,367,914 [/TD2] [TD2] 3,410,108 [/TD2][TD2] 2,868,614 [/TD2][TD2] 2,236,424 [/TD2][TD2] 2,665,673 [/TD2]

I'm wondering how the depreciation math works in your model when a car crosses a quarter boundary: made in Q2 but delivered in Q3.

If there's say $200m of straight line dep/am costs per quarter, specific to the Model 3 and a direct cost, then does this get assigned as CoG at the time of production, based on $200/units_in_quarter, or does it get this fixed cost component assigned at delivery time?

The difference appears to be pretty significant: if it's carried across quarter boundaries then the 11k Model 3s made in Q2 (40% of the 28k total) carry about 40% of the fixed costs from Q2 into Q3.

So I'm wondering what assumptions you are making here.

 

[generalenthu]

I'm wondering how the depreciation math works in your model when a car crosses a quarter boundary: made in Q2 but delivered in Q3.

If there's say $200m of straight line dep/am costs per quarter, specific to the Model 3 and a direct cost, then does this get assigned as CoG at the time of production, based on $200/units_in_quarter, or does it get this fixed cost component assigned at delivery time?

The difference appears to be pretty significant: if it's carried across quarter boundaries then the 11k Model 3s made in Q2 (40% of the 28k total) carry about 40% of the fixed costs from Q2 into Q3.

So I'm wondering what assumptions you are making here.

This was discussed before. Depreciation in luv's model was originally based on deliveries and she adjusted it to be based on production.

This was a tailwind in q2 as we were looking to increased production as the GM improves even if all the built cars are not delivered, mainly because of the bigger base for time based depreciation items.

 

[Fact Checking]

Think about inventory that is built, but not delivered. You have to hold it at lower of cost or market. So how do you calculate the cost of this inventory without accounting for depreciation (whether time based or unit based)?

If you spread your depreciation only on delivered items, what is the COGS of cars that have been built using this machinery, but delivered after the machinery was retired? It doesn't fit.

(Based on your comment I found this old discussion about depreciation math that I missed - is this the one you referred to?)

I don't think assigning depreciation at "delivery time" would fit worse than doing it at "production time":

• When assigning it at production time you already have to wait until end of quarter, to get the "units manufactured" number - so it's not instantaneous.
• When assigning it at delivery time this simply means that straight line equipment depreciation costs are distributed among fewer units. This is no more artificial than a machine breaking irreparably two weeks into the quarter, yet all cars made in the quarter carrying the write-off cost.
• It doesn't break the depreciation schedule: when a piece of equipment is retired on schedule, it will have its full capital value depreciated.

So I think arguments can be made in favor of delivery time depreciation accounting as well - the question is: do we have strong evidence which method Tesla is using, either via GAAP rules, or disclosed in the past, or strongly inferred from changes to the gross margin and cost of goods numbers in Q1 and Q2?

 

[generalenthu]

(Based on your comment I found this old discussion about depreciation math that I missed - is this the one you referred to?)

I don't think assigning depreciation at "delivery time" would fit worse than doing it at "production time":

• When assigning it at production time you already have to wait until end of quarter, to get the "units manufactured" number - so it's not instantaneous.
• When assigning it at delivery time this simply means that straight line equipment depreciation costs are distributed among fewer units. This is no more artificial than a machine breaking irreparably two weeks into the quarter, yet all cars made in the quarter carrying the write-off cost.
• It doesn't break the depreciation schedule: when a piece of equipment is retired on schedule, it will have its full capital value depreciated.

So I think arguments can be made in favor of delivery time depreciation accounting as well - the question is: do we have strong evidence which method Tesla is using, either via GAAP rules, or disclosed in the past, or strongly inferred from changes to the gross margin and cost of goods numbers in Q1 and Q2?

There were a few more comments from luv and a couple other posters and the working assumption since then had been it's based on production. I believe luv incorporated it into the model shortly afterwards.

My understanding is this is the convention, if not the gaap mandated approach

 

[ValueAnalyst]

Not necessarily. It's a complicated dance between the two, depending on who has better leverage.

Tesla has better leverage.

 

[XHabjab]

I believe that's only based on stock holdings.

If we also look at derivatives such as options it's an entirely different picture:

TSLA 13F Hedge Fund and Asset Management Owners

ROYAL BANK OF CANADA       (PUT)  1,856,000 $636,515,000
GOLDMAN SACHS GROUP INC    (PUT)  1,790,600 $614,086,000
BANK OF AMERICA CORP       (PUT)  1,538,100 $527,491,000
BARCLAYS PLC               (PUT)  1,514,444 $519,378,000
UBS AG                     (PUT)  1,302,400 $446,658,000
CITIGROUP INC              (PUT)  1,175,100 $403,000,000
MORGAN STANLEY             (long) 1,030,353 $353,358,000
GOLDMAN SACHS GROUP INC    (long)   974,313 $334,141,000

Most of the major investment banks appears to be primarily short Tesla. Some have call options exposure as well, but it's much lower.

BTW., this heavy PUT option short exposure is surprising and is very likely not market maker exposure which would be delta hedged, because the PUT/CALL ratio is still above 2:1, so market maker exposure should be on the PUT written side, i.e. long exposure.

I.e. I think this is genuine prop trading short exposure of these major investment banks, which isn't hedged.

BTW.:

SUSQUEHANNA INTERNATIONAL GROUP, LLP (PUT)  13,235,400 $4,539,081,000

Does anyone know who these guys are?

They own by far the biggest Tesla short PUT options position listed.

Just thinking out loud here ... has anybody on this forum shorted any of the above "investors"?

 

[Thekiwi]

Just thinking out loud here ... has anybody on this forum shorted any of the above "investors"?

Not a bad idea to explore - are any of them listed on the sharemarket though?

 

[Thekiwi]

Just to focus on Q3 cashflow for a bit - can anyone give me some idea on the following?

- given payment terms, what period can we confidently say that cars delivered (and payment received) have not yet had to be paid for in Q3? In other words, could we use a delivery estimate for September, and say none of those vehicles have had much of their cost paid for in Q3
- what would the maximum cost paid for in Q3 be for these same vehicles for Expenses Tesla accounts for as upfront costs (eg Labour etc)? Would $10k be too high? Too low?
- Lastly, what would be an appropriate delta to use for the same sort of vehicles shipped in the previous quarter (eg those vehicles that were delivered in July but where most costs were paid for in Q3?

I’m hoping the above would give some ballpark estimate for positive cashflow attributable from the growing shipment numbers and 30-60 day payment terms to suppliers.

For instance, hypothetically speaking, if we know that in Q2 we had 17500 cars that were delivered in July (but not paid for until Q3), and we had 27500 delivered in September (but not paid for until Q4), then we could say that there was an increase in cash of 10,000 cars at Q3 end.

And after accounting for costs already incurred on those cars, we could possibly say the average cash increase for those 10,000 cars was 50k per unit. Which would mean there was a $500 million benefit to cashflow.

Thoughts?

(Obviously if you have different estimates for the figures I used above, that positive cashflow number would increase/decrease)

Should also be noted this cashflow is generated regardless of profitability.

 

[Singer3000]

https://ftalphaville.ft.com/2018/10/10/1539144000000/About-that-Tesla-third-quarter--profitability-/

For your collective consideration...,the folks at the Financial Times are obsessed with this company and have painted it as a bankruptcy waiting to happen as long as I can remember. Their base case for Q3 is a net loss of $273m. Their upside case is a loss of $129m.

In case you were wondering what you need to get a job at the FT these days, the author's background is a degree in film making and Russian, four years selling vintage furniture, four years selling video and technology equipment to schools and an entry level certificate in investment management.

 

[sundaymorning]

https://ftalphaville.ft.com/2018/10/10/1539144000000/About-that-Tesla-third-quarter--profitability-/

For your collective consideration...,the folks at the Financial Times are obsessed with this company and have painted it as a bankruptcy waiting to happen as long as I can remember. Their base case for Q3 is a net loss of $273m. Their upside case is a loss of $129m.

In case you were wondering what you need to get a job at the FT these days, the author's background is a degree in film making and Russian, four years selling vintage furniture, four years selling video and technology equipment to schools and an entry level certificate in investment management.

Someone please go straight to the Panasonic board and give them this paper to persuade them from investing any further money into the GF. I’m talking about those 3 lines they’re putting in for Tesla in order to ramp production even higher in 4th Q. I suspect Panasonic, being a partner of Tesla at the GF (which they might not frequent every day) doesn’t know enough about production capacity/profits... all these guys are gullible lambs being led into a giant pit of production wishful thinking. Everyone is too eurphoric about Tesla these days, and that includes Australia, Norway, California, Saudi Arabia, Europe (best selling Model S flagship), China...

Ok let’s calm down, bears/shorts where were they last quarter? Even the best of the best bears went missing during the Q2 report, none of them thought tesla would still have $2.2 billion due to high margins. I guess they’ve somehow smartened up this time around?

 

[Fact Checking]

Just thinking out loud here ... has anybody on this forum shorted any of the above "investors"?

Those options positions are probably just a (very) tiny part of the portfolio of investment banks.

Susquehanna International Group cannot be shorted - oh the hypocrisy and double standard ...

I believe it should be a requirement that for institutional shorts to be able to create short positions they have to be shortable as well, i.e. they must be publicly listed, publicly traded corporations - not shadowy private firms...

Truth in advertising and all that.

 

[Fact Checking]

https://ftalphaville.ft.com/2018/10/10/1539144000000/About-that-Tesla-third-quarter--profitability-/

For your collective consideration...,the folks at the Financial Times are obsessed with this company and have painted it as a bankruptcy waiting to happen as long as I can remember. Their base case for Q3 is a net loss of $273m. Their upside case is a loss of $129m.

In case you were wondering what you need to get a job at the FT these days, the author's background is a degree in film making and Russian, four years selling vintage furniture, four years selling video and technology equipment to schools and an entry level certificate in investment management.

Here's a quick look at the FT estimate, which is a very amusing read:

• Their total automotive revenue estimate for Q3 is actually above that of luvb2b's estimate, by +$340m.
  
• Their gross profit is -$224m - so there's a gap of $564m.
• Some of that comes from estimating total opex of $1,237m, which is $82m higher than the $1,155m in luvb2b's model. This in itself is pessimistic but defensible: Tesla aren't known for their opex discipline, a mere +$82m in opex growth they could easily consider 'flat'. I'd like to see at least one quarter of Tesla materially exceeding opex guidance, to trust their word on this. (OTOH this might just be the film-maker-turned-FT-analyst forgetting to subtract the Q2 one-time costs added to opex. We'll probably never know.)
  
• Most of the gap comes from the FT calculating total cost of revenue of $6,104m, which is a whopping ~$611m higher than most other estimates, including luvb2b's.
• Intriguingly, the FT's estimate leaves out the split between 'sales' and 'leasing' - almost as if they didn't even bother to model it.
• At this point I'm sure you are eager to learn how they arrived at that very high cost of revenue, but I have to disappoint you: they are not telling. I mean, it's not like such small details matter!
  
• Interestingly, their total gross profit percentage is actually lower at 15.0% than the 15.5% Q2 gross profit percentage. In fact, if you ... fact check their gross margin it's actually 14.6% which was rounded up to 15% to look less ridiculous? It's still misleading when listed next to 13.4% and 15.5% ...
  
• I.e. as Model 3 production is exploding in unit count the FT is estimating a drop in efficiency, in a unique 'diseconomies of scale' phenomenon I'm sure the author came up while making films and learning Russian. A future Nobel laureate in economics?
  
• So in a unique, unprecedented economic phenomenon the FT is predicting that while revenue more than doubles quarter over quarter, per unit costs actually increase at the same time - instead of being pushed down by economies of scale. (!) The gross margins of the last 4 quarters, as the Model 3 was ramped up: 23.9%, 15.0% 13.4%, 15.5%. I.e. the expansion first adds in huge fixed costs that depresses margins, then as Model 3 unit counts improve the gross margin recovers. Except in the FT's model, where double the revenue results in a drop in gross margins again, to 14.6%!
  
• At this point a cynical reader might come to the conclusion that the lack of details might also be due to the FT spreadsheet working back costs of revenue based on the 14.6% that was input as gross margin ... I.e. instead of truly modeling and calculating gross margin from business flows, they are working in the other direction...
• I.e. it's almost as if the FT author had an agenda and had known the result already, and wanted to generate fake numbers to support it. He might have learned this technique while learning Russian: Joseph Stalin was famous for conducting mass trials where the verdict was often already written before the trial started. In at least one case they even submitted the verdict into evidence during the trial, by accident, but I digress, this is 100% unrelated to the FT's Tesla coverage.
• Finally, 'FT' stands for "Fake Tables", right? If so then the name 100% verifies, job well done.

Rhetorical question: I suppose this kind of market manipulation and deception by the FT is entirely legal in the U.S.?

 

[Robertj]

Just to focus on Q3 cashflow for a bit - can anyone give me some idea on the following?

- given payment terms, what period can we confidently say that cars delivered (and payment received) have not yet had to be paid for in Q3? In other words, could we use a delivery estimate for September, and say none of those vehicles have had much of their cost paid for in Q3
- what would the maximum cost paid for in Q3 be for these same vehicles for Expenses Tesla accounts for as upfront costs (eg Labour etc)? Would $10k be too high? Too low?
- Lastly, what would be an appropriate delta to use for the same sort of vehicles shipped in the previous quarter (eg those vehicles that were delivered in July but where most costs were paid for in Q3?

I’m hoping the above would give some ballpark estimate for positive cashflow attributable from the growing shipment numbers and 30-60 day payment terms to suppliers.

For instance, hypothetically speaking, if we know that in Q2 we had 17500 cars that were delivered in July (but not paid for until Q3), and we had 27500 delivered in September (but not paid for until Q4), then we could say that there was an increase in cash of 10,000 cars at Q3 end.

And after accounting for costs already incurred on those cars, we could possibly say the average cash increase for those 10,000 cars was 50k per unit. Which would mean there was a $500 million benefit to cashflow.

Thoughts?

(Obviously if you have different estimates for the figures I used above, that positive cashflow number would increase/decrease)

Should also be noted this cashflow is generated regardless of profitability.

The normal process to forward project the future balance sheet for accounts payable at quarter end , and the timing of that on cashflow would be

To acknowledge that , the quarters earnings are based on all the quarters costs being expensed, then calculating
the change in accounts payable from the start of the quarter to the end of the quarter.

Calculating the opening accounts payable expressed as a number of days of the prior quarters cost of sales helps predict what the next quarters accounts payable will be

I support luvb2b and believe he has done a great job in estimating this quarters accounts payable , and the change in quarters effect on cashflow

 

[mrdoubleb]

Here's a quick look at the FT estimate, which is a very amusing read:

• Their total automotive revenue estimate for Q3 is actually above that of luvb2b's estimate, by +$340m.
  
• Their gross profit is -$224m - so there's a gap of $564m.
• Some of that comes from estimating total opex of $1,237m, which is $82m higher than the $1,155m in luvb2b's model. This in itself is pessimistic but defensible: Tesla aren't known for their opex discipline, a mere +$82m in opex growth they could easily consider 'flat'. I'd like to see at least one quarter of Tesla materially exceeding opex guidance, to trust their word on this. (OTOH this might just be the film-maker-turned-FT-analyst forgetting to subtract the Q2 one-time costs added to opex. We'll probably never know.)
  
• Most of the gap comes from the FT calculating total cost of revenue of $6,104m, which is a whopping ~$611m higher than most other estimates, including luvb2b's.
• Intriguingly, the FT's estimate leaves out the split between 'sales' and 'leasing' - almost as if they didn't even bother to model it.
• At this point I'm sure you are eager to learn how they arrived at that very high cost of revenue, but I have to disappoint you: they are not telling. I mean, it's not like such small details matter!
  
• Interestingly, their total gross profit percentage is actually lower at 15.0% than the 15.5% Q2 gross profit percentage. In fact, if you ... fact check their gross margin it's actually 14.6% which was rounded up to 15% to look less ridiculous? It's still misleading when listed next to 13.4% and 15.5% ...
  
• I.e. as Model 3 production is exploding in unit count the FT is estimating a drop in efficiency, in a unique 'diseconomies of scale' phenomenon I'm sure the author came up while making films and learning Russian. A future Nobel laureate in economics?
  
• So in a unique, unprecedented economic phenomenon the FT is predicting that while revenue more than doubles quarter over quarter, per unit costs actually increase at the same time - instead of being pushed down by economies of scale. (!) The gross margins of the last 4 quarters, as the Model 3 was ramped up: 23.9%, 15.0% 13.4%, 15.5%. I.e. the expansion first adds in huge fixed costs that depresses margins, then as Model 3 unit counts improve the gross margin recovers. Except in the FT's model, where double the revenue results in a drop in gross margins again, to 14.6%!
  
• At this point a cynical reader might come to the conclusion that the lack of detail might also be a simple fact that the FT spreadsheet works back costs of revenue based on the 14.6% that was input as gross margin ... I.e. instead of truly modeling and calculating gross margin from business flows, they are working in the other direction...
• I.e. it's almost as if the FT author had an agenda and had known the result already, and wanted to generate fake numbers to support it. He might have learned this technique while learning Russian: Joseph Stalin was famous for conducting mass trials where the verdict was often already written before the trial started. In at least one case they even submitted the verdict into evidence during the trial, by accident, but I digress, this is 100% unrelated to the FT's Tesla coverage.
• Finally, 'FT' stands for "Fake Tables", right? If so then the name 100% verifies, job well done.

Rhetorical question: I suppose this kind of market manipulation and deception by the FT is entirely legal in the U.S.?

I just hope Elon doesn`t tweet out "FT = Fake Tables" like last time he got a hold of your SEC post... I am watching you @Fact Checking!

 

[mutle]

Just found the FT article on Twitter and pulled up the model here to compare myself before I saw the other posts about it. The estimate that automotive margin is dropping is ridiculous considering that AWD and P only started deliveries in Q3.

Also saw this prediction recently (from a known Tesla-hater), which assumes a higher loss in Q4 then Q3 (both being a loss):

(Final) Updated Q3 Profit Projection : RealTesla
(Just in case the author removes it after realizing just how wrong this was, I created a backup, I believe it is important to follow up on misinformation)

 

[Fact Checking]

I just hope Elon doesn`t tweet out "FT = Fake Tables" like last time he got a hold of your SEC post... I am watching you @Fact Checking!

LOL, I'm not posting this in the main investor thread, I certainly learned my lesson that there are certain things Elon must never learn about when a Twitter client is within easy reach!

(I will also never mention the true name of the FT, which stands for "F*ck Truth!", right?)

 

[mrdoubleb]

LOL, I'm not posting this in the main investor thread, I certainly learned my lesson that there are certain things Elon must never learn about when a Twitter client is within easy reach!

(I will also never mention the true name of the FT, which stands for "F*ck Truth!", right?)

Well, as a great thinker once said: "Truth isn`t truth".

 

[SwTslaGrl]

I think it would be useful to do a summary of projections after Tesla's actual numbers are out. FT and others should be held accountable for their projections.