we'll get some more data after the insideev's august estimates. but i think they are having problems with deliveries.
They probably are; I'm assuming only a modest decrease in cars in transit (maybe from 11K to 10K, for example).
at the end of august, maybe they got to 16-17k deliveries? that would be a substantial 20% month over month improvement. electrek noted yesterday they are trying to build out a delivery department (oh hello more opex).
2k model 3's should not make so much difference, right? 2k x 60k = 120m revenue x 16% gross margin = approx 20m in additional gross profit or around 10c/diluted share. diluted share counts should jump due to profits to 180m.
Yes, this is about what I was estimating. I think the difference between 9c/diluted share and 19c/diluted shares is actually going to be meaningful to the Wall Street traders, thoough.
I think ~52k produced is pretty solid (based on Troy's spreadsheet). The interesting thing is that this gives enough room so that if you're overoptimistic about Services and Other -- and you said it could amount to an 18c/share swing -- the company will still show a profit (01c/share).
<rant>
i didn't mean the work is burning me out, i meant that the constant need to revise numbers lower one quarter after another is what's burning me out. there's another thing which bugs me, which is the readiness with which shortsellers are blamed for various problems. in the past when i have seen this by a company it almost always means there's not enough self-reflection going on: rather than finding problems internally the problems are all cast as caused by dark outside forces.
I suppose it's a matter of perspective whether malware in the paint shop robots is caused by internal problems (yes, poor hiring practices / poor security / poor management oversight) or dark outside forces (yes, saboteurs planted in the factory). Both really...
i try to recall a case in 20 years of investing where this has been a good thing, but struggle to do so.
most professional shorts don't put on adequately large individual positions to matter. oft-cited villain chanos maybe has a 2-4% short allocation to tesla, at best. touting their best shorts is to raise visibility to attract more capital, if they get the call right. in fact, in some cases they don't even have to get the direction right to get paid, as long as the stock underperforms the index they still get paid. i guess what i'm saying is that on a $2b short book, the total bet might be $80m. if the stock drops 50% and the manager adds to the position, the profit might be $80m. at 1/20 hedge fund fees, the incremental profit contribution to the firm is like $16m. and while that may seem like a lot of money, it's really not in the grand scheme of things. i bet i know 4 individuals who put together have more at risk on the long side than $16m.
that's not to say there haven't been short villains (sac capital comes to mind). but the vast majority of professional shorts simply don't have bets large enough to bother, many are not dirty players either. so when a saboteur comes around, why aren't labor unions, other automakers, oil proxies, or foreign governments suspected? all of those actors have much more to gain than probably 99% of shorts.
True.
i guess this especially bugs me in the context of opex, which i still don't understand. i mentioned it before: we scraped the barnacles. we scrutinized all the expense items. we laid of 9% of the workforce. we took out one-time charges due to layoffs. and we even excluded the stock-based comp jump from the calculations. and after all that, expenses went up about 3% for the quarter. there's definitely more upside opex pressure than i had expected.
</rant>
Well, I think we don't have a lot of clarity on the internals in opex. I have been expecting a large opex increase when they *finally* get the service centers ramped up, which they haven't really *started* doing yet, but this does seem to be somewhere else. Hmm.
recession has been on my mind a lot lately. weakness is developing in emerging markets due to currency issues. european equities have not made new highs since may. and mega caps in the usa have been on a monster run which is somewhat typical of the action near the end of a bull market. related to tesla, they are in a situation where they need to get the pedal to the floor and keep it there. payables expansion is great for cash flow but when there's a slow down it bites the other way, and luxury car sales tend to be sensitive to slowdowns. last thing, at present 2/3 of our models are cars. and the existing trend for car sales is:
View attachment 330629
can you imagine how this looks in a slowdown?
It'll be fine. (For Tesla. Some of the gas car makers may go under completely.) My most fundamental Tesla investment thesis is that people will buy a Tesla in preference to a gasoline car, and that demand will not drop off until nobody is selling gasoline cars in the same price bracket. The Ford Model T expanded its sales *during* recessions, remember, and didn't start being hurt by downturns until market saturation for motorcars was reached. If we hit market saturation sooner than I think (because the "other guys" make millions of electric cars) that would be different -- but that still seems extremely implausible.
Frankly, I'm not expecting a recession or bear market any time soon. There are two reasons, one fundamental and one psychological:
(1) The psychological -- too many people are expecting a recession or bear market. The psychological collapse happens when exuberance is the order of the day and *nobody* is expecting a bear market. Waaaay too much gloom-n-doom on the business press right now.
(2) The fundamental -- the solar / wind / battery boom is an economic boost on the order of the introduction of the railroads. You don't typically get a recession with such a powerful economic driver happening -- not until there's actual overbuilding of solar / wind / batteries beyond practical needs, which we have not come close to. Even if you *do*, it is a recession which spares the sector which is driving the boom (just as Ford continued to boom during recessions as motor-car adoption took off and replaced horses and buggies.)
