Near-future quarterly financial projections

[erha]

Here's the email Elon Musk sent Tesla employees with 10 days left in Q3

Seems like we are all expecting about 140k deliveries, but this email makes it sound like it is more like 115k.

In addition, Tesla might have to set aside more money for CEO options package because of the valuation of the company.

 

[Beltsbear]

Here's the email Elon Musk sent Tesla employees with 10 days left in Q3

Seems like we are all expecting about 140k deliveries, but this email makes it sound like it is more like 115k.

In addition, Tesla might have to set aside more money for CEO options package because of the valuation of the company.

Most probably it is 115k from just Cali. That is a stretch goal, probably be less.

 

[tmp131]

Here's the email Elon Musk sent Tesla employees with 10 days left in Q3

Seems like we are all expecting about 140k deliveries, but this email makes it sound like it is more like 115k.

In addition, Tesla might have to set aside more money for CEO options package because of the valuation of the company.

Thanks for the link. FactSet analysts expects 144K delivery which is consistent with the expected EPS for Q3. The email is vague, but yeah I can see how it can be interpreted as just greater than 112K vehicles delivered.

 

[Thekiwi]

October Y production is going to Europe. So higher margin cars. They will also probably remove the Y $3K discount in the U.S. I assume January Y production will go to Europe too.

It's possible, but not guaranteed.

Current US shipping times for Model Y custom orders is 5-9 weeks. 5 weeks from now is Oct 25th, meaning EU Y production would only be for 3 and a half weeks in Q4 before US focused Y production started again. possible but why not produce more for what would likely be a lot more EU demand?

it might make more sense if it was Performance/AWD Y models for China & the APAC markets.

Are there any EU markets that might have end of year expiring tax subsidies/credits that Tesla might want to catch with the high priced Model Y variants?

 

[Thekiwi]

People are way overthinking that Elon email. its obvious he is just encouraging everyone for the traditional end of quarter production & delivery push, and the "record" deliveries is basically in the bag already.

 

[Thekiwi]

Here's the email Elon Musk sent Tesla employees with 10 days left in Q3

Seems like we are all expecting about 140k deliveries, but this email makes it sound like it is more like 115k.

In addition, Tesla might have to set aside more money for CEO options package because of the valuation of the company.

suddenly it seems like most wall street analysts are following @Troy:

"According to a survey of analysts by FactSet, Wall Street expects Tesla to report vehicle deliveries of 144,000 for the quarter. The estimates range from 123,000 to 190,000."​

 

[TSLAopt]

suddenly it seems like most wall street analysts are following @Troy:

"According to a survey of analysts by FactSet, Wall Street expects Tesla to report vehicle deliveries of 144,000 for the quarter. The estimates range from 123,000 to 190,000."​

who the heck is estimating 190k throwing off their average? (Possible manipulation by some tsla
Bear like a Gordon Johnson?)
Trip Chowdrey no longer being counted, ha

 

[zecar]

.....Are there any EU markets that might have end of year expiring tax subsidies/credits that Tesla might want to catch with the high priced Model Y variants

Does it matter? I assume Tesla could sell the entire Y Q4 production to Europe.

For me the only question is whether Tesla is confident that they can sell 3000 MY/week in the U.S through all of Q4. If not, what is plan B? They cut price by $3K in July because they weren't confident they could sell 2000/week through the summer. This summer it was easier to buy a Y than a 3 in the U.S.

Nothing at all is wrong with Y demand IMO. Just car allocation. Europe buying a lot a 3 because of no Y availability.

I think my logic is sound, but undoubtedly there are important hidden facts.

 

[The Accountant]

My latest Q3 P&L Forecast
Key Comments:

• Revenues of $8.3B, GAAP Income of $372m and non-GAAP Income of $822m would all be all-time highs.
• Tesla generates GAAP profit not dependent on Reg Credits which I have estimated at $230m.
• SG&A and Stock Based Compensation include $260m for the CEO Award.
• For R&D and SG&A, keep in mind Q2 pay cuts were reversed in Q3 (compensation increases vs Q2)
• There is a potential for the CEO Award to be higher by $60m to $80m
• There is a potential that Tesla recognizes a large portion of their $1.9B Deferred Tax Valuation Allowance (I have not included anything for Q3)

Since my last forecast I have:

• increased Revenue by $91m as US$ is weaker (non-US sales convert to higher US dollars).
• increased COGS by $5m and SG&A by $3m due to weaker US$ (driven by non-US costs)
• improved Other Income (Expense) by $8m (favorable) for transaction gains due to weaker US$
• increased revenues by $8m for the latest EAP offer
• increased Income Taxe Expense to 14% rate

 

[The Accountant]

.....and here is my Q3 2020 estimate compared to Q3 2019

Notice the huge operating leverage:
- Revenues should grow at 31.4% while Operating Income grows at 146.6% and GAAP income at 160.3%

Mod edit: see Model Y row correction in subsequent post!

 

[Doggydogworld]

.....and here is my Q3 2020 estimate compared to Q3 2019

Notice the huge operating leverage:
- Revenues should grow at 31.4% while Operating Income grows at 146.6% and GAAP income at 160.3%

View attachment 591253

Model Y deliveries down 2400 y/y, that's awful

I'm not as optimistic about auto gross margin, but I agree Q3 will be profitable. The one thing that gives me pause is the EAP deal, which seems a bit like a last-minute trick to goose net income.

I'm still undecided if "a shot at record deliveries" applies globally or just to Fremont. The email went to "everyone", which implies global, but I guess we won't know until next Friday.

 

[StarFoxisDown!]

Model Y deliveries down 2400 y/y, that's awful

I'm not as optimistic about auto gross margin, but I agree Q3 will be profitable. The one thing that gives me pause is the EAP deal, which seems a bit like a last-minute trick to goose net income.

I'm still undecided if "a shot at record deliveries" applies globally or just to Fremont. The email went to "everyone", which implies global, but I guess we won't know until next Friday.

The guidance by Elon during the Shareholders meeting part practically confirms that the email was just talking about Fremont production. If the email was referring to all Tesla production/deliveries and thus deliveries came in at say 120k(a slight beat of the previous record), just to hit the low end of the guidance he gave(which was something like 480k), they'd have to deliver around 185k vehicles in Q4. I don't see that happening if they could only produce and deliver 120k across Fremont & Giga 3 in Q3.

If Tesla were trying to hit the midpoint of the guidance he gave which was 500k vehicle, they'd have to deliver 200k vehicles in Q4. The numbers simply don't compute with guidance if the email is referring to total production from Fremont and Giga 3.

 

[The Accountant]

Model Y deliveries down 2400 y/y, that's awful

Thanks. Error now fixed. No change to the financials - just the Model Y row.

 

[zecar]

Model Y deliveries down 2400 y/y, that's awful

I'm not as optimistic about auto gross margin, but I agree Q3 will be profitable. The one thing that gives me pause is the EAP deal, which seems a bit like a last-minute trick to goose net income.

I'm still undecided if "a shot at record deliveries" applies globally or just to Fremont. The email went to "everyone", which implies global, but I guess we won't know until next Friday.

We now have EAP and acceleration boost. I suspect that they have a number of sales that they think won't get delivered until the first week of october. No reason to sell Acceleration Boost now except to generate revenue without expense. What did the quarter look like when they sold that feature for Model 3?

If some September sales have fallen into October and they ship higher margin Model Y to Europe Q4 then Tesla would not be concerned about Q4.

 

[vikings123]

We now have EAP and acceleration boost. I suspect that they have a number of sales that they think won't get delivered until the first week of october. No reason to sell Acceleration Boost now except to generate revenue without expense. What did the quarter look like when they sold that feature for Model 3?

If some September sales have fallen into October and they ship higher margin Model Y to Europe Q4 then Tesla would not be concerned about Q4.

It could just be that this feature has now been completed and they are making it available to boost Q3 numbers.

Model 3 acceleration boost was launched in Dec 2019 and we all know Q4 2019 was a profitable quarter with record deliveries.

 

[zecar]

It could just be that this feature has now been completed and they are making it available to boost Q3 numbers.

Model 3 acceleration boost was launched in Dec 2019 and we all know Q4 2019 was a profitable quarter with record deliveries.

good point. The non-monetary reason to release AB is the ID4. Lots of potential buyers paying attention to these two cars. Presumably Tesla will cut off AB next week to not impact MYP sales.

There had to be a reason they offered AB for Model 3 in Q4 2019. The AB offer probably needs to be a rare event to not train potential buyers to forego a Performance purchase and use AB. I presume the profitability of upgrading a purchase to Performance significantly exceeds $2K.

I wonder if Q4 2019 car margins were trending less than expected? I presume Tesla has to always work against selling too many low end 3/Y as a percent of total car sales.

 

[vikings123]

good point. The non-monetary reason to release AB is the ID4. Lots of potential buyers paying attention to these two cars. Presumably Tesla will cut off AB next week to not impact MYP sales.

There had to be a reason they offered AB for Model 3 in Q4 2019. The AB offer probably needs to be a rare event to not train potential buyers to forego a Performance purchase and use AB. I presume the profitability of upgrading a purchase to Performance significantly exceeds $2K.

I wonder if Q4 2019 car margins were trending less than expected? I presume Tesla has to always work against selling too many low end 3/Y as a percent of total car sales.

IMO this is Tesla just leveraging their software moat to help improve profitability. I believe model 3 AWD owners can still purchase AB today so I don’t expect it to be any different for Y.

Q4 2019 definitely saw a drop in margin. They did have some additional costs related to additional lines for model Y etc in this quarter. But still given that there are not too many of the AWD model Y the impact will be minimal, probably less than 10 million in additional revenue at 100% margin.

This is just another under appreciated aspect of Tesla by Wall Street, software as a service.

 

[zecar]

IMO this is Tesla just leveraging their software moat to help improve profitability. I believe model 3 AWD owners can still purchase AB today so I don’t expect it to be any different for Y.

Q4 2019 definitely saw a drop in margin. They did have some additional costs related to additional lines for model Y etc in this quarter. But still given that there are not too many of the AWD model Y the impact will be minimal, probably less than 10 million in additional revenue at 100% margin.

This is just another under appreciated aspect of Tesla by Wall Street, software as a service.

I believe that AB is still offered for the M3.

If the financial impact of MY AB is inconsequential then I look at the release as a marketing move in response to the ID4. I don't believe choices like when to realize something like AB for the Y is ever operational. I think it's a valuable piece of strategy of which the timing is carefully considered.

Playing that "chess piece" now foregoes boosting a future quarter with a meaningfully large harvest of costless revenue.

 

[Bet TSLA]

I believe that AB is still offered for the M3.

If the financial impact of MY AB is inconsequential then I look at the release as a marketing move in response to the ID4. I don't believe choices like when to realize something like AB for the Y is ever operational. I think it's a valuable piece of strategy of which the timing is carefully considered.

Playing that "chess piece" now foregoes boosting a future quarter with a meaningfully large harvest of costless revenue.

Not really. It's software, and therefore infinitely malleable. They can not only temporarily cut the price to juice sales (or equivalently announce an imminent price rise), they can add bonus features (buy now to get track mode free!, buy now to get 1000 free supercharging miles!, buy now to get $50 off your next service!).

 

[samppa]

It's possible, but not guaranteed.

Current US shipping times for Model Y custom orders is 5-9 weeks. 5 weeks from now is Oct 25th, meaning EU Y production would only be for 3 and a half weeks in Q4 before US focused Y production started again. possible but why not produce more for what would likely be a lot more EU demand?

it might make more sense if it was Performance/AWD Y models for China & the APAC markets.

Are there any EU markets that might have end of year expiring tax subsidies/credits that Tesla might want to catch with the high priced Model Y variants?

Teslas european pages still show that model Y production is supposed to begin early 2021.
I doubt they're going to import any model Y:s.