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Near-future quarterly financial projections
- Thread starter luvb2b
- Start date
Fact Checking
Well-Known Member
The bi-weekly reports should be very accurate in terms of equities short position, it's reported back to Nasdaq by market makers.
I believe what is happening is similar to what happened in 2013: some shorts are getting squeezed, but new shorts are jumping on the all-time-highs of an "blatantly overvalued company". Then those new shorts are taken out too, while collective short interest never drops dramatically.
In 2013 there was an epic short squeeze from ~$40 to ~$190 that took about 5 months to play out until late 2013 the last round of new shorts had the final say about the peak valuation of (at that time) obviously overvalued company.
To recap the 2013 short squeeze on the weekly chart:
A bullish macro environment in the second half of 2013 was also conductive to the short squeeze:
The +30% rally in most other equities gave shorts a lot of new trading power to short TSLA.
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SageBrush
REJECT Fascism
Is that the data that @Papafox is relaying through the charts of Ihor something or other ?
If so, he has said repeatedly that the data is polluted by combination reporting, meaning that if any transaction of any company included in the report was a short, then all the companies are so tagged.
I've thought about the notion of old shorts leaving and new shorts coming in. It is possible but it implies an impressive pool of new gamblers who are even more speculative than the old ones, albeit gamblers who have not been burned by their old TSLA short holdings.
Use this thread for quarterly projections only, not for a discussion about short interest.
twitter case study is a good one.
there is a pool of hedge funds that does index arb trading, and some large cap managers who take active weightings work around that as well. in recent years the number of hedge funds is down and active managers have lost assets to index funds.
so comparatively, the difference between the number of dollars that will "need to buy" on an index add vs the number of professional dollars available to front run the trade is probably as wide as its ever been.
but there's another problem, tesla brings big volatility. an arbitrageur putting on a $100m of long tesla vs. short s&p for an index add is probably taking meaningful var on his trade book, this forces somewhat lower size. the pool of existing arbs is not going to be able to front run in the same size they normally would (i think) due to this volatility aspect.
this year you will also have tesla finally crossing to a ttm profit, and that also brings a slew of earnings momentum investors who usually have positive earnings as a pre-requisite to buy.
all this, plus it's a bull market you know.
there is a pool of hedge funds that does index arb trading, and some large cap managers who take active weightings work around that as well. in recent years the number of hedge funds is down and active managers have lost assets to index funds.
so comparatively, the difference between the number of dollars that will "need to buy" on an index add vs the number of professional dollars available to front run the trade is probably as wide as its ever been.
but there's another problem, tesla brings big volatility. an arbitrageur putting on a $100m of long tesla vs. short s&p for an index add is probably taking meaningful var on his trade book, this forces somewhat lower size. the pool of existing arbs is not going to be able to front run in the same size they normally would (i think) due to this volatility aspect.
this year you will also have tesla finally crossing to a ttm profit, and that also brings a slew of earnings momentum investors who usually have positive earnings as a pre-requisite to buy.
all this, plus it's a bull market you know.
@luvb2b Is there a reason why you are not raising ASP for Model S/X but keeping it steady at 95k? Earlier quarters saw some steep discounting, especially during the last weeks, but in Q4 we've not seen any evidence of Tesla trying to get rid of stock with discounts. Shouldn't this translate into a higher ASP?
Same for Model 3, no evidence of discounts. If fact, it actually saw a few price increases during the quarter. And the SR+ pent-up demand probably peaked in earlier quarters. But you are keeping ASP steady at 50k.
Do you prefer using conservative estimates?
What is everyone using for income tax rate on profitable quarters going forward? does Tesla have a large amount of offsetting tax losses from pass quarters that will reduce tax bill in 2020?
EVNow
Well-Known Member
Tesla has accumulated deficits of $6B. It would take 2 or 3 years to wipe that off. Amazon still doesn't pay any income tax.
But they have to pay income tax in other countries.
Thanks for replying. I did think it was a bit strange they were paying income tax on Q1 & Q2 results, when there were large net losses.
So do we have any idea if the income tax paid in other countries will scale larger as the overall company grows? Or are those income taxes for subsidiaries that aren’t growing in the same manner as the overall parent company is?
EVNow
Well-Known Member
They will be paying more income tax as GF3 and GF4 comes online and they sell more overseas.
I updated my Q4'19 model a little bit:
Energy:
Automotive
Income
Cash Flows
- I lowered credits by $50M, because I feel like they'll push some to Q1'20 to help with S&P 500 inclusion, if they have this flexibility.
- I removed restructuring and other OPEX expenses, because after digging through some SEC filings, the types of expenses that have been counted here in the past (lay-offs, store closing, energy division restructuring, office closing, legal fees vs SEC in 2018, etc.) don't sound like costs they have incurred in Q4'19.
- Made some other tiny adjustments here and there.
- Automotive Revenue = $6.21B
- Automotive Sales Gross Margin Excluding Credits = 20.6%
- Automotive Sales Gross Margin Including Credits = 22.0%
- Total Revenue = $7.22B
- Gross Profit = $1.43B
- EBIT = $467M
- GAAP EPS = $1.39
- Non-GAAP EPS = $2.47
- Free Cash Flow = $787M
Energy:
Automotive
Income
Cash Flows
4Q19 Earnings and Cash Flow Model:
I'm posting here given its a weekend, but if you have comments on the model please reply in the Earnings Projections Thread: Near-future quarterly financial projections
Q419 Earnings Estimates:
P&L
Revenue $7,325m (+$1,022m QoQ, +$100m YoY):
Gross Profit $1,430m
Opex $970m
Net Income $269m (+$58m YoY, +$118m QoQ)
GAAP diluted EPS $1.5, Non GAAP EPS $2.6:
Key Revenue & Margin Assumptions:
In this model I have kept Model 3 gross margins flat QoQ. This excludes credit revenue, one off software upgrades (Acceleration boost), deferred FSD recognition and China one off ramp costs which have all been broken out separately.
I think flat margin QoQ is likely conservative - Tesla has consistently reduced production costs QoQ & > production drives > margins (fixed cost leverage, < staff hours/car, supplier scale saving passed on). Main risks are larger one off GF3 headwind & more +ve one offs in Q
Cash Flow
Operating Cash Flow: $1,476m ($1,031m before Working Capital)
Free Cash Flow: $976m
My cash flow statements use different presentation & include many estimates for past Q line items but Operating Cash Flow & Free Cash Flow for Q4 uses Tesla definition.
My Cash Gross Profit Line = Gross Profit plus non cash cost addbacks for Depreciation, Warranty Reserve and Net Deferred Revenue
Net debt down $871m QoQ to $6,266m.
Net debt/EBITDA down to 2.6x from 4.4x at 4Q18.
Net recourse debt down more than half YoY to $1,765m from $3,702m at 4Q18. This includes $4,200m converts which are all in the money (but not convertible until 3 months before maturity).
Q4 Total Liquidity: $9,666m.
Including $6,233m unrestricted cash and $3,433m undrawn bank lines.
I would expect to see credit rating upgrades after Q4.
Artful Dodger
"Neko no me"
Tesla doesn't plan to resume large volume deliveries in the US until the end of Q1 (likely March). In 2018Q4, we saw approx. 2 mths 'pull-fwd' of demand from 2019Q1, and a recovery to 'nominal' demand levels by March.
Its very possible that Tesla has calculated that US sales won't suffer at all by March, and the ROW will absorb production fully in Jan/Feb. With anecdotal evidence from S. Korea and rejuvenated tax policies in the UK and Germany, Tesla likely continues to remain Production limited throughout 2020Q1.
Then in 2020Q2, and throughout 2020H2, the continued rampup of GF3 MIC Models 3 and MIF* Models Y will unlease a massive wave of pent-up demand, which Tesla's soaring production rates will struggle mightily to satisfy.
Imma call it: 600K vehicles produced in 2020, for a >50% increase in production. It won't be enough.
Cheers!
*Made in Fremont
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Artful Dodger
"Neko no me"
Thanks for this effort, ReflexFunds. True service to the community. Outstanding.
I notice one of your assumptions is an FSD take rate of 50%. I've seen other estimates of 25%. There's been an attempt to model FSD take by dividing deferred FSD revenue by the number of HW2+ units produced since Oct 2016.
Do you have a source estimating FSD take rate? This seems it would have an outsized effect on gross margin per unit.
Cheers!
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EVNow
Well-Known Member
Here is my corrected model.
The correction is to bring the auto-margin forecast inline with the previous margin calculation. There was an error earlier where for past quarters I was calculating the margin including the regulatory credits, but the forecast excluded the credits. This inflated the profit.
EVNow
Well-Known Member
Regulatory credits - line 18.
I've assumed the same credit in Q4 as in Q3, ~$135M.
FCA will start paying from Q1 '20 - where I've included $200M. We know the total value is some 2B Euro over 2 years. But we don't know whether it replaces what Tesla has been getting or whether it is in addition. Conservatively, I've assumed it replaces the credits Tesla has been getting.
ps : 1.8B Euros over 2 years. We don't know how it is structured - it could be based on # of cars sold by Tesla in EU. Also, the reports said Tesla will account for 80% of credits in 2020 and only 15% of credits in 2021. So, of those 1.8B Euro, a vast majority could be in 2020, which could mean closer to $350M in credits per quarter, rather than $200M.
BTW, all this assumes FCA can greatly reduce their emissions in 2021, which I doubt. So, FCA will probably have to pay a lot more than $1.8B to Tesla over 2 years.
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EVNow
Well-Known Member
ASPs are real ASPs payed by the customer - so excluding credits, including 100% of FSD cost and subtracting no deferred revenue.
The revenue line items in the P&L use further adjustments to the ASP to account for the deferred revenue/FSD etc.
