So I sat down and made some assumptions and did some calculations to try to predict the coming ER. Here are the assumptions and results
1. S and X deliveries as reported yesterday, S 12700 and X 9500
2. ASP for S at $87 k. This is based on in Q3 ER they said ASP for S decreased QoQ by 6.5% due to late introduction of P100D (4.5%) and the discounts (2%). I simply added these back because we had a full Q of P100D and no widespread discount happened. In addition the price hike of AP 2.0 would also contribute here. Note that I am accounting $1.5 k for this because out of the full 8k price of AP 2.0, I am assuming half of it (AP 1.0 function parity not achieved at end of year) got recognized. And not all deliveries in Q4 got AP 2.0 (it came out in Oct after all). The result is $87k.
3. ASP for X at $104 k. Same approach as above, only not including adding 2% back for discounts because there were few in Q3 to begin with.
4. Gross margin of S increased to 31%. Aside of a flat 2% due to no discounts, the high margins of P100D, AP 2.0, and continue improvement of supply chain/manufacture efficiency all contributed for another 2%.
5. Gross margin of X increased to 28%. Mainly due to similar reasons except for the 2% discount but more gains from manufacture efficiency.
6. Regulatory credit contribution to gross margin balanced out with the strong dollar. This is because Tesla have no horded ZEV to sell so the positive impact on gross margin would be far less. No net impact on overall automotive gross margin.
7. A nice increase in the revenue from services and others to $200 m in total mainly due to TE initial ramping up. However, I still consider gross margins on TE in Q4 very poor (around 0) so gross profit for this section is still very low - $10 m.
8. Overall I think expansion of stores and superchargers was on a similar pace with Q3, so OpEx increase the same rate QoQ, $593 m compared to $551 m in Q3.
9. No idea on the interest side but made similar assumptions in OpEx, net loss $62 m compared to $56 m in Q3.
10. Same provision for income taxes of $8 m.
With these assumptions, total revenue would be $2,295 m with $2,095 m coming from automotive. Gross profit $630 m compared to $638 m in Q3. After deducting OpEx, interest expenses, and income taxes, net loss is $33 m. However, this number is very small and could easily swing $100 m to either side. But overall I would expect to see a small loss of EPS for Q4.
As for cash flow, since in my calculation, gross profit is stable thanks to higher gross margins, I continue to assume cash flow provided by operating activities be about the same as in Q3, or $424 m. Deducting $1 b of predicted CapEx results in a negative $576 m. Full AP 2.0 could provide at least $50 m additional cash in Q4. In addition, Tesla said 2750 cars were not delivered but already paid in full. These won't count into income but I think goes in to cash flow. A nice $250+ m. Now we're at about $275 m negative on the free cash flow. However, there's also the increase of $500 m in ABL and accounts payable to soak up cash drain so maintaining a positive free cash flow is too out of this world I think. Even if SolarCity part didn't do great, the small size of this segment of the company won't make things too bad.
TL;DR. I expect close to breaking even on the EPS and slightly negative free cash flow for Q4.
