q1 2018 earnings estimates

[neroden]

Having looked at a lot of balance sheets, I find Tesla's accounting methods remarkably transparent. (Try looking at any oil company, any bank, any railroad, General Electric, Berkshire Hathaway, or Amazon; everything important is obscured massively.)

That said, the 2018 (revenue) and 2019 (lease) changes to GAAP will help make Tesla's accounting substantially more comprehensible; GAAP required misleading nonsense previously. There should be a very large one-time balance sheet adjustment at the bottom this quarter, and there might be another one in Q1 2019.

The legacy SolarCity numbers are going to have to be completely recalculated and may swamp the changes to car leasing numbers, though I'm not sure how much of that goes through now (probably PPAs and loans) and how much in 2019 (probably leases). Large quantities of revenue will be brought forward, where it was to be booked in distant out-years under the previous rules. The key issue is the more complicated contracts where the payments varied depending on multiple things; they will get recognized earlier. Hunks of income will be shifted to "interest received", in addition.

The modified retrospective approach attaches a "catch-up" revenue (or negative revenue) to the revenue for the first quarter of the new rules. So we may see large revenues (or even negative revenues) booked for Q1 2018 just due to the accounting change.

Honestly, I'm waiting for Q2 numbers for the dust to settle. I don't think the Q1 numbers will be very readable.

 

[luvb2b]

updated my q1 model to reflect some things i have learned from the community:
1. asp nudged slightly higher
2. increasing interest expense to resemble last quarter
3. change in lease accounting resulting in fewer vehicles being accounted for as leases.
4. i have not incorporated changes to solar leases although i understand there may be some accounting changes around those.
5. there are some historical changes based on re-estimating some of the solarcity splits.

overall the changes increase revenue a bit, and slightly impact the bottom line (most of the gain is consumed by raising interest expense).

…

ls veh % total

avg price s+x

avg price model 3

revenue

auto sales ex 3

auto sales mod 3

auto leasing

1 time autopilot

zev credits

total auto

energy storage

solarcity

grohmann

services/other

total revenue

cost of revenue

auto sales ex 3

auto sales mod 3

auto leasing

total auto

energy storage

solarcity

grohmann

services & other

total cost of rev

gross profit

auto gaap ex 3 gm

auto-zev ex 3 gm

model 3 gm

auto-zev incl 3 gm

storage gm

scty gm

grohmann gm

services gm

opex

tesla r&d

tesla sg&a

1time acq cost

solarcity r&d

solarcity sg&a

total opex

op income

interest inc

interest exp

scty interest

other income exp

1time scty gain

pretax income

income tax

net income

non-cont int.

net inc to common

basic shares

diluted shares

diluted gaap eps

gaap net income

- stock based comp

- one time scty

non-gaap net income

non-gaap diluted eps

[TD2] luv q1-18 [/TD2][TD2] Dec-17 [/TD2][TD2] Sep-17 [/TD2][TD2] Mar-17 [/TD2] [TD2] 0.15 [/TD2][TD2] 0.23 [/TD2][TD2] 0.21 [/TD2][TD2] 0.26 [/TD2] [TD2] 99.00 [/TD2][TD2] 98.15 [/TD2][TD2] 100.84 [/TD2][TD2] 108.06 [/TD2] [TD2] 53.00 [/TD2][TD2] 53.00 [/TD2][TD2] 53.00 [/TD2][TD2] 0.00 [/TD2] [TD2]1,834,470[/TD2][TD2]2,148,241[/TD2][TD2]2,064,390[/TD2][TD2]2,000,060[/TD2] [TD2]433,540[/TD2][TD2]81,726[/TD2][TD2]11,766[/TD2][TD2]0[/TD2] [TD2]349,755[/TD2][TD2]293,086[/TD2][TD2]286,158[/TD2][TD2]254,540[/TD2] [TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2][TD2]35,000[/TD2] [TD2]0[/TD2][TD2]179,142[/TD2][TD2]575[/TD2][TD2]0[/TD2] [TD2] 2,617,765 [/TD2][TD2] 2,702,195 [/TD2][TD2] 2,362,889 [/TD2][TD2] 2,289,600 [/TD2] [TD2]171,828[/TD2][TD2]80,037[/TD2][TD2]44,505[/TD2][TD2]5,244[/TD2] [TD2]218,000[/TD2][TD2]218,000[/TD2][TD2]273,000[/TD2][TD2]208,700[/TD2] [TD2]-3,000[/TD2][TD2]-2,600[/TD2][TD2]11,100[/TD2][TD2]22,400[/TD2] [TD2]300,000[/TD2][TD2]290,617[/TD2][TD2]293,181[/TD2][TD2]170,326[/TD2] [TD2] 3,304,593 [/TD2][TD2] 3,288,249 [/TD2][TD2] 2,984,675 [/TD2][TD2] 2,696,270 [/TD2] [TD2]1,413,528[/TD2][TD2]1,740,075[/TD2][TD2]1,661,834[/TD2][TD2]1,496,649[/TD2] [TD2]553,150[/TD2][TD2]259,556[/TD2][TD2]93,788[/TD2][TD2]0[/TD2] [TD2]224,641[/TD2][TD2]191,541[/TD2][TD2]175,224[/TD2][TD2]166,026[/TD2] [TD2] 2,191,319 [/TD2][TD2] 2,191,172 [/TD2][TD2] 1,930,846 [/TD2][TD2] 1,662,675 [/TD2] [TD2]189,010[/TD2][TD2]137,835[/TD2][TD2]59,188[/TD2][TD2]6,373[/TD2] [TD2]152,600[/TD2][TD2]143,880[/TD2][TD2]178,100[/TD2][TD2]145,400[/TD2] [TD2]11,000[/TD2][TD2]11,000[/TD2][TD2]10,100[/TD2][TD2]14,900[/TD2] [TD2]366,000[/TD2][TD2]365,576[/TD2][TD2]357,301[/TD2][TD2]198,976[/TD2] [TD2] 2,909,929 [/TD2][TD2] 2,849,463 [/TD2][TD2] 2,535,535 [/TD2][TD2] 2,028,324 [/TD2] [TD2] 394,663 [/TD2][TD2] 438,786 [/TD2][TD2] 449,140 [/TD2][TD2] 667,946 [/TD2] [TD2]25.0%[/TD2][TD2]20.9%[/TD2][TD2]21.8%[/TD2][TD2]27.4%[/TD2] [TD2]25.0%[/TD2][TD2]20.9%[/TD2][TD2]21.8%[/TD2][TD2]26.3%[/TD2] [TD2]-27.6%[/TD2][TD2]-217.6%[/TD2][TD2]-697.1%[/TD2][TD2]0.0%[/TD2] [TD2]16.3%[/TD2][TD2]13.2%[/TD2][TD2]18.3%[/TD2][TD2]26.3%[/TD2] [TD2]-10.0%[/TD2][TD2]-72.2%[/TD2][TD2]-33.0%[/TD2][TD2]-21.5%[/TD2] [TD2]30.0%[/TD2][TD2]34.0%[/TD2][TD2]34.8%[/TD2][TD2]30.3%[/TD2] [TD2]466.7%[/TD2][TD2]523.1%[/TD2][TD2]9.0%[/TD2][TD2]33.5%[/TD2] [TD2]-22.0%[/TD2][TD2]-25.8%[/TD2][TD2]-21.9%[/TD2][TD2]-16.8%[/TD2] [TD2]320,000[/TD2][TD2]319,637[/TD2][TD2]301,622[/TD2][TD2]239,070[/TD2] [TD2]540,000[/TD2][TD2]542,290[/TD2][TD2]512,998[/TD2][TD2]446,637[/TD2] [TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2][TD2]67,000[/TD2] [TD2]35,000[/TD2][TD2]35,000[/TD2][TD2]30,000[/TD2][TD2]44,800[/TD2] [TD2]140,000[/TD2][TD2]140,000[/TD2][TD2]140,000[/TD2][TD2]127,988[/TD2] [TD2] 1,035,000 [/TD2][TD2] 1,036,927 [/TD2][TD2] 984,620 [/TD2][TD2] 925,495 [/TD2] [TD2] -640,337 [/TD2][TD2] -598,141 [/TD2][TD2] -535,480 [/TD2][TD2] -257,549 [/TD2] [TD2]6,000[/TD2][TD2]6,280[/TD2][TD2]5,531[/TD2][TD2]3,090[/TD2] [TD2]-100,000[/TD2][TD2]-99,363[/TD2][TD2]-68,409[/TD2][TD2]-46,146[/TD2] [TD2]-53,000[/TD2][TD2]-47,000[/TD2][TD2]-48,700[/TD2][TD2]-53,200[/TD2] [TD2]-12,000[/TD2][TD2]-41,677[/TD2][TD2]-24,390[/TD2][TD2]-18,098[/TD2] [TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2] [TD2] -799,337 [/TD2][TD2] -779,901 [/TD2][TD2] -671,448 [/TD2][TD2] -371,903 [/TD2] [TD2]20,000[/TD2][TD2]-9,094[/TD2][TD2]-285[/TD2][TD2]25,278[/TD2] [TD2] -819,337 [/TD2][TD2] -770,807 [/TD2][TD2] -671,163 [/TD2][TD2] -397,181 [/TD2] [TD2]-50,000[/TD2][TD2]-95,457[/TD2][TD2]-51,787[/TD2][TD2]-66,904[/TD2] [TD2] -769,337 [/TD2][TD2] -675,350 [/TD2][TD2] -619,376 [/TD2][TD2] -330,277 [/TD2] [TD2]170,000[/TD2][TD2]168,314[/TD2][TD2]167,294[/TD2][TD2]162,129[/TD2] [TD2]170,000[/TD2][TD2]168,314[/TD2][TD2]167,294[/TD2][TD2]162,129[/TD2] [TD2] -4.53 [/TD2][TD2] -4.01 [/TD2][TD2] -3.70 [/TD2][TD2] -2.04 [/TD2] [TD2]-769,337[/TD2][TD2]-675,350[/TD2][TD2]-619,376[/TD2][TD2]-330,277[/TD2] [TD2]140,000[/TD2][TD2]134,348[/TD2][TD2]112,653[/TD2][TD2]103,717[/TD2] [TD2]0[/TD2][TD2]27,950[/TD2][TD2]18,225[/TD2][TD2]11,571[/TD2] [TD2]-629,337[/TD2][TD2]-513,052[/TD2][TD2]-488,498[/TD2][TD2]-214,989[/TD2] [TD2] -3.70 [/TD2][TD2] -3.05 [/TD2][TD2] -2.92 [/TD2][TD2] -1.33 [/TD2]

 

[MitchJi]

I would imagine Model 3 average selling price would increase in quarters three and four because of all wheel drive and performance versions. Do you agree and are you including this?

By Q4, if not in Q3 they’ll start selling SR Packs and non-premium interiors.

 

[trentbridge]

Working backwards from your numbers...

Q4 Model 3 deliveries at 1550 X $53,000 = $82,150,000 Gross Revenue
Q4 Model 3 cost of production: $259,556,000

So if we calculate "normal full production actual component and labor cost" of Model 3 at $42,000 (high)
that would make the normal cost of 1550 Model 3s = $65,100,000.

So "overhead" = $259,556,000 less $65,100,000 = $194,466,000.

Q1 Model 3 deliveries at 8180 X $53,000 = $433,540,000 Gross Revenue
Q1 Model 3 cost of production: $553,150,000

So if we calculate "normal full production actual component and labor cost" of Model 3 at $42,000 (high)
that would make the normal cost of 8180 Model 3s = $343,560,000

So "overhead" = $553,150,000 less $343,560,000 = $209,590,000

In my opinion, the "overhead" for Q1 should be equal to, or lower than Q4.. because we are further down the learning curve..

So, I'd expect the loss on the Model 3 to be $15,000,000 less than you anticipate..

 

[kbM3]

By Q4, if not in Q3 they’ll start selling SR Packs and non-premium interiors.

I’m going by the “Late 2018” availability for the SR version and assuming that means sometime in December or in limited quantities at first.

We will see how it shakes out.

 

[luvb2b]

i think hannah montana (skeptic) said he thought it could be 13%.

we'll be dancing in the streets if so.

Working backwards from your numbers...

Q4 Model 3 deliveries at 1550 X $53,000 = $82,150,000 Gross Revenue
Q4 Model 3 cost of production: $259,556,000

So if we calculate "normal full production actual component and labor cost" of Model 3 at $42,000 (high)
that would make the normal cost of 1550 Model 3s = $65,100,000.

So "overhead" = $259,556,000 less $65,100,000 = $194,466,000.

Q1 Model 3 deliveries at 8180 X $53,000 = $433,540,000 Gross Revenue
Q1 Model 3 cost of production: $553,150,000

So if we calculate "normal full production actual component and labor cost" of Model 3 at $42,000 (high)
that would make the normal cost of 8180 Model 3s = $343,560,000

So "overhead" = $553,150,000 less $343,560,000 = $209,590,000

In my opinion, the "overhead" for Q1 should be equal to, or lower than Q4.. because we are further down the learning curve..

So, I'd expect the loss on the Model 3 to be $15,000,000 less than you anticipate..

 

[Reality]

After reading more ASC 606 this week, i think that unlimited supercharging is going to have to be assigned some value to the sale. Probably not a lot, but im guessing like 2% of the sales price will have to be deferred if they do it right.

ASC 606 is kind of a monster of an accounting change. It might be tough to make heads or tails out of some companies, especially when there are performance obligations attached to a sales (ie superchargers).

This isnt just for Tesla, but for all companies that have stuff like this.

 

[luvb2b]

i think they're already setting aside for supercharging, my understanding was 1.5k per car but haven't looked in a while. it goes into cogs.

After reading more ASC 606 this week, i think that unlimited supercharging is going to have to be assigned some value to the sale. Probably not a lot, but im guessing like 2% of the sales price will have to be deferred if they do it right.

ASC 606 is kind of a monster of an accounting change. It might be tough to make heads or tails out of some companies, especially when there are performance obligations attached to a sales (ie superchargers).

This isnt just for Tesla, but for all companies that have stuff like this.

 

[Reality]

i think they're already setting aside for supercharging, my understanding was 1.5k per car but haven't looked in a while. it goes into cogs.

Even if they are taking the expense already to COGS, i think the new standard would require the revenue to be deferred separately, likely requiring the expense to be amortized out over the same period as well. Still it would be a small amount, not worth modeling out unless we see something significantly different in this Q.

 

[luvb2b]

right, if it goes from cogs to deferred revenue affects top line but not gross margin dollars.

Even if they are taking the expense already to COGS, i think the new standard would require the revenue to be deferred separately, likely requiring the expense to be amortized out over the same period as well. Still it would be a small amount, not worth modeling out unless we see something significantly different in this Q.

 

[MitchJi]

These numbers explain the sense of urgency. 24/7 , 2 shifts etc

I believe that they always intended to eventually go to 24-7 at Fremont. The reason that they waited was that Gigafactory production was the bottleneck. So I think that means that they have the Grohmann line installed.

 

[Do It]

updated my q1 model to reflect some things i have learned from the community:
1. asp nudged slightly higher
2. increasing interest expense to resemble last quarter
3. change in lease accounting resulting in fewer vehicles being accounted for as leases.
4. i have not incorporated changes to solar leases although i understand there may be some accounting changes around those.
5. there are some historical changes based on re-estimating some of the solarcity splits.

overall the changes increase revenue a bit, and slightly impact the bottom line (most of the gain is consumed by raising interest expense).

Great information and thanks! Can you share more details of how you come up with M3 margin? Do you agree with trentbridge's analysis of 200M fixed cost per quarter, 53k asp, and 42k material and labor cost per car? Also, I would like very much to hear your thoughts on how tsla might achieve profitability in Q3 and Q4. If trantbridge's analysis is correct then 4k/w M3 in Q3 will contribute 328M profit.

 

[luvb2b]

i use a similar linear fixed/variable cost estimation for model 3 as trentbridge. all of this type of modeling will lead to similar end results.

you should be careful to rely too much on any overly simplified model. common sense can be a good guide too.

my opinion is the fixed portion of the cost has trended higher over time as:
1. manual labor had to do jobs that were thought to be automated
2. new tooling and robots came online, increasing depreciation that spreads across units.
3. the amount of space used in gf, fremont, and for deliveries has increased

i won't argue if someone says that based on the above i need to increase my variable cost. it's just not the way i did it.

i think the variable portion of the cost is much lower than most think. for example, the lr battery is a 9k (?) upgrade. it doesn't cost probably even half that amount. premium upgrades similar. autopilot is 90%+ margins. my other reasoning is that tesla likely planned to have 10% gross margin on the base model, building up to average 20-25% margin based on upgrades/options.

so 17q3 i used 86m fixed cost w/36k variable. cogs of model 3 = 93.8m
17q4 i used 204m fixed cost w/36k variable. cogs of model 3 = 260m
18q1 i used 260m fixed cost w/36k variable. estimate cogs of model 3 = 553m

if you use 200m and 42k as @trentbridge then estimate cogs of model 3 = 543m. really not meaningful differences. 10-15m here or there is mice nuts in the grand scheme of things.

in q3, if you want to run with 48k model 3 with perhaps performance/all wheel drive mixed in...
give a slightly better asp for higher end options: so maybe 53k becomes 55k.
add cost per vehicle of 1k for high end stuff (margin on high end options is historically high).
raise "fixed" cost to incorporate full tooling and shifts operating.
18q3 48k model 3 x 55k asp = 2.64b revenue
18q3 360m fixed cost w/37k variable. estimate cogs of model 3 = 2.14b (works to about 19% gross margin).

@trentbridge may come up with 2.21b (a 70m differential with his numbers). you can see the numbers end up generally in the same place - if you believe they can actually produce the 3 at a profit.

i would expect 500m gross profit contribution from the model 3 at 48k per quarter in q3. vs my 18q1 estimate it's +620m differential to gross profit. this one item alone could turn us nearly profitable on a non-gaap basis in q3. cash flow from operations will turn dramatically.

also in q3 expect s/x to be running normally with 26k units or so, that will add another 100m or so to gross profit.
seasonal factors kick in for solarcity which should increase gross profit another 50-100m.
sales of zev credits will throw in a 50-100m boost somewhere along the way too.
and then there's the hope i hold out of tesla energy turning to positive gross margin as the gigafactory ramps up.

the combination of these items mean we could very easily be gaap profitable in q3. i could see this in the financials before elon said he believed the same.

i expect tesla to be running at max capacity as the 7.5k us tax credit starts to sunset. that's why also for q4 i have been expecting the company to be gaap profitable. even the shorts know a demand spike is coming very soon from the tax credit expiration, they just don't believe the company will ever make a profit. if we can turn 2 quarters of gaap profit on the back of the tax credit spike and expansion of the 3, i think the company could stay profitable because the cost to increase production from 5k to 10k per week is going to be much lower (all the problems basically solved and it's simple replication). the speed of doubling production will be much faster too - no 3 quarter of delay as we are experiencing now.

the shorts also know that 2 quarters of gaap profitability will bring talk of s&p 500 index addition on the table. if it starts to look like we will have a string of 4 quarters of gaap profits, that's something no short will want to sit through, because every large cap manager in the country will be trying to buy shares of tesla either ahead of or during a potential s&p 500 inclusion.

i expanded a bit on my opinion to include later this year because it's why i stay bullish despite knowing 18q1 will be a total disaster of a report.

i hope all longs are prepared to see horrific q1 numbers. they could even be worse than the horrible we already expect if tesla "kitchen sinks" other expenses into this quarter. i've seen that happen before - a company knows this quarter is bad so they toss all sorts of extra losses into it, inventory writedowns and reserves for this and that... and then the later quarters can (temporarily) show better profits.

if they put up terrifying numbers but end up over 2.5b in cash and tell us 5k/week production is on track, that will be just fine with me.

Great information and thanks! Can you share more details of how you come up with M3 margin? Do you agree with trentbridge's analysis of 200M fixed cost per quarter, 53k asp, and 42k material and labor cost per car? Also, I would like very much to hear your thoughts on how tsla might achieve profitability in Q3 and Q4. If trantbridge's analysis is correct then 4k/w M3 in Q3 will contribute 328M profit.

 

[luvb2b]

In my opinion, the "overhead" for Q1 should be equal to, or lower than Q4.. because we are further down the learning curve..
So, I'd expect the loss on the Model 3 to be $15,000,000 less than you anticipate..

in q4 they started manual processes to do what the new grohmann lines should be doing. the cost of those manual processes was only for part of the quarter. this quarter will be a full quarter of cost for the manual processes and that alone should boost the fixed cost of the line, i think.

 

[bdy0627]

i use a similar linear fixed/variable cost estimation for model 3 as trentbridge. all of this type of modeling will lead to similar end results.

you should be careful to rely too much on any overly simplified model. common sense can be a good guide too.

my opinion is the fixed portion of the cost has trended higher over time as:
1. manual labor had to do jobs that were thought to be automated
2. new tooling and robots came online, increasing depreciation that spreads across units.
3. the amount of space used in gf, fremont, and for deliveries has increased

i won't argue if someone says that based on the above i need to increase my variable cost. it's just not the way i did it.

i think the variable portion of the cost is much lower than most think. for example, the lr battery is a 9k (?) upgrade. it doesn't cost probably even half that amount. premium upgrades similar. autopilot is 90%+ margins. my other reasoning is that tesla likely planned to have 10% gross margin on the base model, building up to average 20-25% margin based on upgrades/options.

so 17q3 i used 86m fixed cost w/36k variable. cogs of model 3 = 93.8m
17q4 i used 204m fixed cost w/36k variable. cogs of model 3 = 260m
18q1 i used 260m fixed cost w/36k variable. estimate cogs of model 3 = 553m

if you use 200m and 42k as @trentbridge then estimate cogs of model 3 = 543m. really not meaningful differences. 10-15m here or there is mice nuts in the grand scheme of things.

in q3, if you want to run with 48k model 3 with perhaps performance/all wheel drive mixed in...
give a slightly better asp for higher end options: so maybe 53k becomes 55k.
add cost per vehicle of 1k for high end stuff (margin on high end options is historically high).
raise "fixed" cost to incorporate full tooling and shifts operating.
18q3 48k model 3 x 55k asp = 2.64b revenue
18q3 360m fixed cost w/37k variable. estimate cogs of model 3 = 2.14b (works to about 19% gross margin).

@trentbridge may come up with 2.21b (a 70m differential with his numbers). you can see the numbers end up generally in the same place - if you believe they can actually produce the 3 at a profit.

i would expect 500m gross profit contribution from the model 3 at 48k per quarter in q3. vs my 18q1 estimate it's +620m differential to gross profit. this one item alone could turn us nearly profitable on a non-gaap basis in q3. cash flow from operations will turn dramatically.

also in q3 expect s/x to be running normally with 26k units or so, that will add another 100m or so to gross profit.
seasonal factors kick in for solarcity which should increase gross profit another 50-100m.
sales of zev credits will throw in a 50-100m boost somewhere along the way too.
and then there's the hope i hold out of tesla energy turning to positive gross margin as the gigafactory ramps up.

the combination of these items mean we could very easily be gaap profitable in q3. i could see this in the financials before elon said he believed the same.

i expect tesla to be running at max capacity as the 7.5k us tax credit starts to sunset. that's why also for q4 i have been expecting the company to be gaap profitable. even the shorts know a demand spike is coming very soon from the tax credit expiration, they just don't believe the company will ever make a profit. if we can turn 2 quarters of gaap profit on the back of the tax credit spike and expansion of the 3, i think the company could stay profitable because the cost to increase production from 5k to 10k per week is going to be much lower (all the problems basically solved and it's simple replication). the speed of doubling production will be much faster too - no 3 quarter of delay as we are experiencing now.

the shorts also know that 2 quarters of gaap profitability will bring talk of s&p 500 index addition on the table. if it starts to look like we will have a string of 4 quarters of gaap profits, that's something no short will want to sit through, because every large cap manager in the country will be trying to buy shares of tesla either ahead of or during a potential s&p 500 inclusion.

i expanded a bit on my opinion to include later this year because it's why i stay bullish despite knowing 18q1 will be a total disaster of a report.

i hope all longs are prepared to see horrific q1 numbers. they could even be worse than the horrible we already expect if tesla "kitchen sinks" other expenses into this quarter. i've seen that happen before - a company knows this quarter is bad so they toss all sorts of extra losses into it, inventory writedowns and reserves for this and that... and then the later quarters can (temporarily) show better profits.

if they put up terrifying numbers but end up over 2.5b in cash and tell us 5k/week production is on track, that will be just fine with me.

Thanks for this explanation. I don't have a financial background and can get pretty lost in the accounting. This was really helpful.

 

[adiggs]

....

i hope all longs are prepared to see horrific q1 numbers. they could even be worse than the horrible we already expect if tesla "kitchen sinks" other expenses into this quarter. i've seen that happen before - a company knows this quarter is bad so they toss all sorts of extra losses into it, inventory writedowns and reserves for this and that... and then the later quarters can (temporarily) show better profits.

if they put up terrifying numbers but end up over 2.5b in cash and tell us 5k/week production is on track, that will be just fine with me.

Here's to a kitchen sink quarter!

And maybe a nice big retreat in the stock price so we can enter even more cheaply

 

[Waiting4M3]

Here's to a kitchen sink quarter!

And maybe a nice big retreat in the stock price so we can enter even more cheaply

Yahoo finance has $-3.48/sh earnings estimate, we'll probably coming in way worse than that, so maybe don't even need the kitchen sink. How big a retreat are you looking for? $250 again?

 

[adiggs]

Yahoo finance has $-3.48/sh earnings estimate, we'll probably coming in way worse than that, so maybe don't even need the kitchen sink. How big a retreat are you looking for? $250 again?

Because of my time horizon, I'm equally indifferent to short term stock price of $200 and $400; the only differences being I'd be buying at $200, and doing what I usually do (nothing) at $400. I don't have a short term price I'm looking for.

My comment about the kitchen sink quarter, was to pile on the bad news this year. Big stuff, little stuff, get it all out this quarter. Make it as bad looking as can be. And if that happens to feed the negative narrative and yields a desirable entry point this quarter, all to the good. (But I have a 10+ year horizon, and I'm not worried about cash position in the short term).


I guess another way to think about it - if the current setup is a lovely bear trap, I'm in favor of baiting it with the most tasty of bear treats possible, ahead of the improvements I expect to see in M3 volumes and margin in Q2 and Q3.

 

[Waiting4M3]

Because of my time horizon, I'm equally indifferent to short term stock price of $200 and $400; the only differences being I'd be buying at $200, and doing what I usually do (nothing) at $400. I don't have a short term price I'm looking for.

My comment about the kitchen sink quarter, was to pile on the bad news this year. Big stuff, little stuff, get it all out this quarter. Make it as bad looking as can be. And if that happens to feed the negative narrative and yields a desirable entry point this quarter, all to the good. (But I have a 10+ year horizon, and I'm not worried about cash position in the short term).


I guess another way to think about it - if the current setup is a lovely bear trap, I'm in favor of baiting it with the most tasty of bear treats possible, ahead of the improvements I expect to see in M3 volumes and margin in Q2 and Q3.

I think Tesla won't allow stock price to drop unchecked, employee morale is at stake, especially if their stock option is a major incentive over joining a union. We see Elon and Tesla speaking up against those UAW-backed hit pieces as evidence. I don't think we will see a "kitchen sink" quarter to intentionally make the financials worse than they already are. A bear trap may already be in place even without it. Elon's Apr 10th "Place your bets" tweet may have done it.

 

[luvb2b]

yee-haw! let's fill those reserve jars with honey for those bears. as long as it's non-cash i'm happy.

I guess another way to think about it - if the current setup is a lovely bear trap, I'm in favor of baiting it with the most tasty of bear treats possible, ahead of the improvements I expect to see in M3 volumes and margin in Q2 and Q3.