Near-future quarterly financial projections

[Reality]

Oh, fascinating. If Bloomberg is right, consensus estimates for Q2 are still better that luvb2b's estimates on most things....

eps adj -2.908 (-3.38 luvb2b)
eps gaap -3.66 (-4.26 luvb2b)
rev 3.97b (4.00b luvb2b)
gr margin 14.8% (not calculated)
op profit -388.5m (-604m luvb2b)
ebit -452.2m (not calculated)
ebitda 68m (not calculated)
pre-tax prof -597.7m (-770m luvbwb)
net inc adj -508.2m (not calculated)
net inc gaap -644.2m (-790m luvb2b)
net debt 8.8b (not calculated)
depreciation 413.1m (not calculated)
fcf -900.5m (not calculated)
capex -704m (not calculated)

If luvb2b is correct, and I tend to think he probably is, we may get an astounding buying opportunity: short-sighted Wall Streeters will see an "earnings miss" in Q2 and drive the stock price down, while Tesla will reiterate that they're going to show profits in Q3 and Q4. The Q3 report, coming circa November 1 and showing a profit, would then be a bombshell.

luv does calc most of these other than the non gaap stuff


The biggest difference is luv has FCF at around (450m) and this model has (900m) which is an enormous difference.

In general tho, I agree with you that these 'estimates' are being set at a very reasonable level and will likely be beaten

 

[neroden]

Fair enough luvb2b. I don't think liquidity concerns are a real thing, I think they're largely made-up. We're talking about a company with $2 billion in cash which is now pumping out in excess of 52000 Model 3/quarter at prices exceeding $49K and cash gross margins estimated in excess of 30%. (And a lot of the costs were already in place in Q1 or Q2, and are being cut.) I guess there is a theoretical way to generate an artificial liquidity crunch by convincing suppliers to supply bad terms, but even those wouldn't have any effect until next March and by then the suppliers will very clearly see that Tesla is a going concern.

But I don't know how Wall Street will react. Predicting the psychology of the fools on Wall Street -- and worse, their computerized program trading -- is not my strong suit.

 

[neroden]

You're sounding bullish. What did you do with the real @schonelucht ?

He's always been bullish, he's just a pessimistic bull. That's why I love him

I get where schonelucht is coming from -- I usually take the most pessimistic *plausible* (that word is important) model I can make, and if that lets me break even, I'm very well protected on the downside. Then the rest is upside potential. It's a decent analysis method.

 

[neroden]

What would prompt you to be concerned about liquidity?

I can't answer for VA, but for myself, what would make me concerned about liquidity would be a failure to have anywhere near expected levels of cash generation from high production/delivery rates for Model 3. That would be extremely unexpected, since we have two independent teardowns giving us clues as to the cash gross margin, and they'd both have to be wrong. Obviously Model 3 deliveries are providing most of the cash for the company for the next several quarters, so it has to be there. Since Model 3 wasn't delivering high numbers in Q2, we won't find anything out about this from the Q2 report.

We will not find this information out until the Q3 report. So I am unconcerned until November and if we get awful news in November (which we won't), then I'll be concerned.

 

[jbcarioca]

I can't answer for VA, but for myself, what would make me concerned about liquidity would be a failure to have anywhere near expected levels of cash generation from high production/delivery rates for Model 3. That would be extremely unexpected, since we have two independent teardowns giving us clues as to the cash gross margin, and they'd both have to be wrong. Obviously Model 3 deliveries are providing most of the cash for the company for the next several quarters, so it has to be there. Since Model 3 wasn't delivering high numbers in Q2, we won't find anything out about this from the Q2 report.

We will not find this information out until the Q3 report. So I am unconcerned until November and if we get awful news in November (which we won't), then I'll be concerned.

You should probably also consider that TE has been thus far a cash-burner and loss-maker. Beginning in Q3 there are numerous deployments for stationary storage, utility-scale, residential and commercial, plus scaling of solar roof. The worst Q3 outcome for TE is probably a roughly breakeven on GAAP with positive cash flow. The largest TE unknown is how the large number of Puerto Rico projects are financed and the consequent earnings impact for TSLA. In my opinion the aggregate will become quite impressive in Q3. Sadly, for my optimistic view, there is inadequate public information to permit responsible projections.

 

[luvb2b]

fcf i thought i had cash from ops of -185m and -700m capex, meaning -885m, no?

luv does calc most of these other than the non gaap stuff


The biggest difference is luv has FCF at around (450m) and this model has (900m) which is an enormous difference.

In general tho, I agree with you that these 'estimates' are being set at a very reasonable level and will likely be beaten

 

[neroden]

(regarding Tesla Energy)

Sadly, for my optimistic view, there is inadequate public information to permit responsible projections.

You're quite right, which is why I wish someone would ask about the ramp-up of Solar Roof, Powerwall, and Powerpack in the earnings call. Perplexingly, nobody asked at the last call. We have *very* little information and it's an appropriate question.

The very vague statements we have from Straubel and Musk say that they should be ramping battery deliveries up to "significant" numbers in Q3, and Solar Roofs in Q1 of next year, but that's really not very specific information!

 

[jbcarioca]

(regarding Tesla Energy)

...
The very vague statements we have from Straubel and Musk say that they should be ramping battery deliveries up to "significant" numbers in Q3, and Solar Roofs in Q1 of next year, but that's really not very specific information!

Exactly so.We do have very interesting but imprecise statements such as:
Tesla’s Musk: 11,000 energy projects underway in Puerto Rico
Tesla has installed a truly huge amount of energy storage

And there are the famous South Australia ones:
http://www.abc.net.au/news/2018-04-06/tesla-battery-outperforms-coal-and-gas/9625726
Tesla’s Latest South Australia Battery Project to Rival the Capacity of a Coal Plant
BTW, the second project was first rejected by the new SA government, then reaffirmed.

The aggregate of these reports plus others from Samoa and elsewhere suggest strongly that TE has reached critical mass. Still, there is exactly zero indication about the gross or net economic consequences of all this for TSLA investors. As you say, questions in the upcoming investors sessions really need to be asked.

 

[schonelucht]

Good point from Luv and neroden. Gross margins on M3 are obviously important since they are the driver for gross profit and positive cash flow. Q2 will tell us something. I have M3 gross margin for this quarter also to be roughly 0%. A few points up and down would be expected but anything more is seriously concerning regarding the quality of our modeling.

 

[schonelucht]

For the record. Somehow I need to repeat this every half year or so. I am long on Tesla and have never been short. True, I have always been critical of the company, my investment thesis is purely on the strength of the product and the absence of others on the EV market.

That said, the day there is actual competition and the company hasn’t changed is the day I walk away from Tesla because it will be eaten raw if it needs to compete as is.

 

[luvb2b]

interesting post. this would be good as far as cars not needing major rework etc. and helpful to the gross margin for model 3 having some good news in it.

Don’t Panic About the Thousands of Teslas Parked in a California Field - Orbital Insight

 

[Reality]

fcf i thought i had cash from ops of -185m and -700m capex, meaning -885m, no?

my mistake, you are right i was reading Q3

 

[Reality]

interesting post. this would be good as far as cars not needing major rework etc. and helpful to the gross margin for model 3 having some good news in it.

Don’t Panic About the Thousands of Teslas Parked in a California Field - Orbital Insight

I saw this too. Im not sure it really explains anything though other than "dont worry, they have always been this bad at logistics"

 

[luvb2b]

good luck to all. my last thought is i really thing model 3 gross margins should be very close or above zero this quarter.

 

[Boomer19]

good luck to all. my last thought is i really thing model 3 gross margins should be very close or above zero this quarter.

and you are correct, thanks for the breakdown over the last few weeks.

 

[anon]

Edit: I made a comment about cash flow, but on second thoughts look like I was confusing net cash flow and free cash flow. Need to look again.

 

[Zaxxon]

good luck to all. my last thought is i really thing model 3 gross margins should be very close or above zero this quarter.

Winner winner, chicken dinner. Kudos on a job well-done, to all our benefit.

 

[ValueAnalyst]

Model 3 production
CapEx assumptions

Both highly unlikely to play out as projected.

As predicted, warned, pointed out...

 

[schonelucht]

Quick take-away : Model 3 gross break even = good. Jump of 10% in SG&A even when excluding one-off restructuring costs = not good. No improvement in service&other = could be better. 10% jump in interest expense = also not that good, but smaller beans.

 

[ValueAnalyst]

Quick take-away : Model 3 gross break even = good. Jump of 10% in SG&A even when excluding one-off restructuring costs = not good. No improvement in service&other = could be better. 10% jump in interest expense = also not that good, but smaller beans.

Interest expense as expected. Ex-restructuring SG&A growth is fine, probably more on this on the call.

Literally everything else is highly positive, especially Model 3 profit margin.