Hi, I’m a short seller

[ShortSeller]

@Reciprocity Are you predicting free cash flow positive in Q2?

I’m forecasting a burn similar to slightly worse than Q1, depending on the developments of Accounts Payable, Deposits, and ZEV credit sales.

 

[Reciprocity]

@Reciprocity Are you predicting free cash flow positive in Q2?

I’m forecasting a burn similar to slightly worse than Q1, depending on the developments of Accounts Payable, Deposits, and ZEV credit sales.

It's pretty simple math bro. Try it out. Q1 vs Q4 2017 cash went down by an equivalent amount to capex in Q1. About $750M. Capex dropped but it's supposed to drop big this QTR, so let's say $350M drop. Tesla shipped few S/X compared to other qtrs and only 9000ish model 3s. So 25,000 more deliveries, $250M from orders for dual and performance and lower capex will cause the cash position of the company to improve in Q2.

You are very confused about A/P. The majority of cogs is A/P due to terms on parts. Parts for 9000 cars is less then parts for 35000 cars, so the deliveries in Q2 will do be sure until Q3, this a large A/B. This hugely positive cash cycle had been tasked about on every conference call, but shorts can't hear it for some reason. As long as deliveries are increasing, this cycle will only get better with the benefit to Tesla's cash position. At some one it will level off, but by then Tesla will be cash flow positive by about $1B a qtr. Enough to fund model Y and 2 more gigafactories.

 

[Reciprocity]

It’s not that we “don’t want to hear it”. It’s that every single Elon prediction about positive cash flow and profitability has proven to be wrong in the past.

Well then trust common sense and math then.

 

[bhzmark]

Making a price announcement at midnight on a Sunday, very disruptive!

Try to focus your comments on facts reasons and evidence that really support a short thesis. Every post that makes a silly point just supports a long thesis that the shorts have no idea what they have gotten into. Try to chip away at your massive confirmation bias -- it will most definitely cost you lots of money.

 

[Krugerrand]

It’s not that we “don’t want to hear it”. It’s that every single Elon prediction about positive cash flow and profitability has proven to be wrong in the past.

Again, you’re wrong as I and others pointed that out to you. He’s said it twice in the past and has been bang on both those times.

The above post is exactly why you and other shorts don’t get any respect here, flat out lying and continue to repeat the lie in hopes others will believe you.

 

[Reciprocity]

I have seen a few different polls and data collected on model 3 and the short range, base model with just paint and/or wheel upgrade is somewhere between 15% and 25%. That is the ASP for that group more like $36-37k.

Shorts will have you believe that 80% of all reservations are in this group and will cancel their reservations in mass like a run on a bank during the great depression. They are being deceitful. The fact is that Tesla sould not sell the $35k car if they lose money on it.

To be clear, I'm not saying they can't it won't. I'm saying they shouldn't. The company has a mission bigger then some people's hurt feelings.

 

[SW2Fiddler]

Making a price announcement at midnight on a Sunday, very disruptive!

Sunday, here in Texas and I think some other weird states, is kind of a car moat.
The reason why anyone here would order/buy car on a Sunday, which we can’t, is because we can ...which we can’t*.

*disruptive car companies excepted

 

[Electroman]

It’s that every single Elon prediction about positive cash flow and profitability has proven to be wrong in the past.

Ya.. so?

 

[ShortSeller]

Ya.. so?

So I’m not expecting the latest one to be any different.

 

[ShortSeller]

Again, you’re wrong as I and others pointed that out to you. He’s said it twice in the past and has been bang on both those times.

The above post is exactly why you and other shorts don’t get any respect here, flat out lying and continue to repeat the lie in hopes others will believe you.

No problem, Q3 is going to prove one of us wrong. Place your bets.

 

[ShortSeller]

Try to focus your comments on facts reasons and evidence that really support a short thesis. Every post that makes a silly point just supports a long thesis that the shorts have no idea what they have gotten into. Try to chip away at your massive confirmation bias -- it will most definitely cost you lots of money.

I can walk and chew gum at the same time bro. My short thesis is still intact, the more cars they sell, the larger the losses.

 

[Krugerrand]

No problem, Q3 is going to prove one of us wrong. Place your bets.

Placed my bet 6 years ago. I’ve long since been proven right regardless if Q3. And I didn’t have to lie to myself or anyone else to do it.

 

[Electroman]

So I’m not expecting the latest one to be any different.

Ya sure. Past performance is the prediction for the future. Is that how the shorts do investment?

Every one of Elon's prediction (atleast most of them), not just about cash flow but also about production run rate etc.. was based on the trajectory Tesla was in, and the information he had at that time. And things change.

For instance:

- Given the huge popularity of 'S', and the fact that his team saw a great untapped market in energy storage, he realized that having access to huge amount of battery cells is key to grow 'exponentially'. Elon had two choices:

• Continue the same path and become the 'Porsche' of EV industry
• Or, disrupt the battery and energy storage industry and grow much larger

Gigafactory was born out of that. Path to quick profitability was pushed by a few years due to all the investments needed for Gigafactory. Bulls loved it. Naysayers screamed, 'Elon is liar. No profitability'​

- Given the huge popularity and reservation list of '3', Elon decided that the only way to seize the opportunity is to accelerate the production of 500K M3s from original plan of 2020 to 2018. Not easy. It means lot more cash burn in a shorter time frame, and possibility of missteps due to accelerated schedule. Elon had two choices:

• Continue the same path with a slow ramp-up and risk losing a lot of reservation holders
• Or, go for an aggressive schedule and solve problems as they come.

Bulls loved that Elon chose the aggressive schedule. Cash burn is inevitable. Haters on their part accelerated an aggressive campaign on the bankruptcy FUD. 5000/week M3 production rate has moved down by 6 months. Big deal.
​

Many of Elon's predictions have not come through in the timeline he indicated. But there are good 'bullish' reasons for that.

 

[ShortSeller]

Ya sure. Past performance is the prediction for the future. Is that how the shorts do investment?

Every one of Elon's prediction (atleast most of them), not just about cash flow but also about production run rate etc.. was based on the trajectory Tesla was in, and the information he had at that time. And things change.

For instance:

- Given the huge popularity of 'S', and the fact that his team saw a great untapped market in energy storage, he realized that having access to huge amount of battery cells is key to grow 'exponentially'. Elon had two choices:

• Continue the same path and become the 'Porsche' of EV industry
• Or, disrupt the battery and energy storage industry and grow much larger

Gigafactory was born out of that. Path to quick profitability was pushed by a few years due to all the investments needed for Gigafactory. Bulls loved it. Naysayers screamed, 'Elon is liar. No profitability'​

- Given the huge popularity and reservation list of '3', Elon decided that the only way to seize the opportunity is to accelerate the production of 500K M3s from original plan of 2020 to 2018. Not easy. It means lot more cash burn in a shorter time frame, and possibility of missteps due to accelerated schedule. Elon had two choices:

• Continue the same path with a slow ramp-up and risk losing a lot of reservation holders
• Or, go for an aggressive schedule and solve problems as they come.

Bulls loved that Elon chose the aggressive schedule. Cash burn is inevitable. Haters on their part accelerated an aggressive campaign on the bankruptcy FUD. 5000/week M3 production rate has moved down by 6 months. Big deal.
​

Many of Elon's predictions have not come through in the timeline he indicated. But there are good 'bullish' reasons for that.

Lol, OK fair enough. It’s safe to say I take just about anything Elon says with a grain of salt. Years of missing guidance tends to shift my outlook.

 

[Electroman]

Lol, OK fair enough. It’s safe to say I take the timeline of just about anything Elon says with a grain of salt. As long as he is disrupting industries, I will stay bullish. Profits will come. I can wait.

 

[Reciprocity]

Ya sure. Past performance is the prediction for the future. Is that how the shorts do investment?

Every one of Elon's prediction (atleast most of them), not just about cash flow but also about production run rate etc.. was based on the trajectory Tesla was in, and the information he had at that time. And things change.

For instance:

- Given the huge popularity of 'S', and the fact that his team saw a great untapped market in energy storage, he realized that having access to huge amount of battery cells is key to grow 'exponentially'. Elon had two choices:

• Continue the same path and become the 'Porsche' of EV industry
• Or, disrupt the battery and energy storage industry and grow much larger

Gigafactory was born out of that. Path to quick profitability was pushed by a few years due to all the investments needed for Gigafactory. Bulls loved it. Naysayers screamed, 'Elon is liar. No profitability'​

- Given the huge popularity and reservation list of '3', Elon decided that the only way to seize the opportunity is to accelerate the production of 500K M3s from original plan of 2020 to 2018. Not easy. It means lot more cash burn in a shorter time frame, and possibility of missteps due to accelerated schedule. Elon had two choices:

• Continue the same path with a slow ramp-up and risk losing a lot of reservation holders
• Or, go for an aggressive schedule and solve problems as they come.

Bulls loved that Elon chose the aggressive schedule. Cash burn is inevitable. Haters on their part accelerated an aggressive campaign on the bankruptcy FUD. 5000/week M3 production rate has moved down by 6 months. Big deal.
​

Many of Elon's predictions have not come through in the timeline he indicated. But there are good 'bullish' reasons for that.

Bingo. Don't focus to what Elon says and instead focus on what Elon delivers. I know it's hard to separate facts and results from percolations and predictions, but if you invest based on the facts and results, you will be way better off.

The facts are stated in the original post. The biggest one being 500k model 3s pulled forward 2 years. So a 9 months late makes it still over a year early. Billions invested to make that happen, Fremont and GF1. You can't have the cars without the factories. It's not possible. All those expenses are now going to be spread out over nearly 500,000 cars next year and the next decade. That's not bad for $10B in capex that also includes a decades worth of energy storage.

 

[N5329K]

It’s safe to say I take just about anything Elon says with a grain of salt.

It's not a bad idea to bet against the timing of EM's announced goals. One of his biggest problems...and biggest strengths....is that he keeps moving them. People who work for him sweat oceans to hit his numbers, only to discover that when they do the numbers have moved, and grown.
It's a relentless, grinding process that takes its toll on everyone. But it will likely take its toll on shorts even more, because while EM's timing is snortworthy, most of his his goals do end up getting met, and the world does end up being changed for the better.
Robin

 

[mongo]

It’s that every single Elon prediction about positive cash flow and profitability has proven to be wrong in the past.

No problem, Q3 is going to prove one of us wrong. Place your bets.

You're right there, Q3 2016 already proved you wrong.
Claim
Result

 

[ShortSeller]

You're right there, Q3 2016 already proved you wrong.
Claim
Result

Ah yes, Q3 2016 a whopping $0.15/share profit, or $21.9 million in total. If I recall correctly, they sold almost $140 million in ZEV credits that quarter. Before and after that quarter, it was massive losses as usual.

 

[mongo]

Ah yes, Q3 2016 a whopping $0.15/share profit, or $21.9 million in total. If I recall correctly, they sold almost $140 million in ZEV credits that quarter. Before and after that quarter, it was massive losses as usual.

And yet 0.14 is a positive number that Elon predicted. So, it's clear who was wrong.

He also predicted profit in 2013...
Which they did in Q2 2013. (And then invested in infrastructure and Model X)