I hope it'll be a blow out Qtr. But there are four major elements to beat vs guidance (IMO):
Cars delivered (revenue aka "top line") versus guidance
Cars produced vs guidance
EPS vs guidance (bottom-line)
Demand
EPS in my view is the big question. It's got a lot of variables including:
- Amount of ZEV credits
- gm% (production efficiency gains & procurement)
- effect of "leasing" on profit recognition
Here is my contribution to some of the "elements" above:
Cars delivered and Cars produced:
Yes, should be a big surprise, same type of sandbagging/surprise as in Q1. My VIN tracking show 5700 difference between end of Q2 and end of Q1, but even if there are only few cars in transport to Europe there must be some VINs "skipped". Otherwise VINs and all reports on actual production rate (e.g., TESLIVE factory tour figure of 5454, Elon statement of yearly prod at 25000, etc) don't ad up. My guess is that some 200-300 VINS are outstanding somehow, 400 cars are new show room cars, loaners (300 now in Q2 said during general session at TESLIVE), some increased effect of even more cars in transit etc, and that we are at slightly more than 5000 cars delivered for Q2. Still a nifty surprise toward guidance! Note that this aligns very well with guidance of 4500 + 500 cars that never became "in transit to EU".
EPS and effect of leasing:
I think that a major uncertainty here for the market reaction at the release of Q2 result are the accounting of leasing revenue. My understanding is that this will have a rather big impact on EPS. Deepak Ahuja said in the Q1 conference call that there was 25% rate of financing, and Elon have said in interviews that there was a "significant increase in demand" after leasing was introduced. It is safe to assume that a rather big proportion of sold cars in Q2 are leased, without full revenue recognition. With full recognition (without ZEM, GHG, CAFE credits) I estimate 440 million MS revenue for Q2 (but with the number of P85+ sold lately, this might even be low :smile:
). Let's say 30% are financed by the new lease, and that they only recognize
the down payment of 15%. That leaves 440*(0.7+0.3*0.15)=~330 millon, 25% less! Of course the is also less cost, I assume this is distributed in the same way over 36 M, but bottom line and EPS is still greatly impacted due to operating exp.
In my book it is almost a full 1$ EPS difference (from +0.25 to -0.73). What do you guys think? What would be the market reaction to a blowout production / delivery, but loss due to lease? What will be the impression?
And any input on how to model the lease warmly welcome! I though there would be some guidance from Tesla on this, but have not seen any so far?
/Buran - Swedish fan and LONG since model S was released last year, hoping for the TSLA and SCTY investments to pay for my Gen III, so I think I will be long over many Q-calls to come no matter what...
