q1 2018 earnings estimates

[Reality]

Total opinion piece:

I think there may be a couple (or more) categories of shorts that get blended.
Selling long or short would have been financially advantages when TSLA hit $380. That is not debatable (in hindsight).
The animosity occurs depending on what people do after it goes back down to $250. If you are long, that looks a great place to buy in, if you are short and cover, that is also a wise move (just swapping buy and sell to sell and buy).
However, if a short trader holds their position at $250, or sells at $250 (or sold short way below $250), then starts manipulating the narrative to justify their position, that is not good information sharing (or a logical approach, modify the hypothesis, not that data)

Pushing back on over-exuberance is a good thing and can be helpful, but warping data to support a dive to zero is not. Example regarding cash 'burn': Cash balance is important for paying the bills, but investing in a new manufacturing line is not the same as dropping that money on a company wide trip to Hawaii.

Agreed, calling Tesla a startup or "VC funded" is nothing short of silly as well

 

[mongo]

Agreed, calling Tesla a startup or "VC funded" is nothing short of silly as well

yeah, and nah. In terms of time it existed and money involved, it is not a startup. In terms of crazy levels of growth/ infrastructure investment/ expansion and capEx vs income it shares many aspects of a startup. Some might say, in terms of risk/reward, buying the stock is similar to providing venture capital.

 

[MattEnth]

I don't remember 2.5k/week being referenced as a sustained rate. Do you have a link to that?

It's their Q4 shareholder letter: Tesla (TSLA) announces Q4 2017 earnings: record revenue of ~$3.3 billion and wide losses

"Weekly production" implies a sustained rate imo.

Mod: This is intentionally misleading. Here is the actual full extract. We don't tolerate this kind of behavior for very long. --ggr.

We continue to target weekly Model 3 production rates of 2,500 by the end of Q1 and 5,000 by the end of Q2. It is important to note that while these are the levels we are focused on hitting and we have plans in place to achieve them, our prior experience on the Model 3 ramp has demonstrated the difficulty of accurately forecasting specific production rates at specific points in time. What we can say with confidence is that we are taking many actions to systematically address bottlenecks and add capacity in places like the battery module line where we have experienced constraints, and these actions should result in our production rate significantly increasing during the rest of Q1 and through Q2.”

 

[ikjadoon]

It's their Q4 shareholder letter: Tesla (TSLA) announces Q4 2017 earnings: record revenue of ~$3.3 billion and wide losses

"Weekly production" implies a sustained rate imo.

Mod: This is intentionally misleading. Here is the actual full extract. We don't tolerate this kind of behavior for very long. --ggr.

What was misleading? The link to the full letter was given by the OP: that isn't enough? I'm clarifying for myself when I post.

On the actual point, Tesla said "we have plans in place to achieve them" on "weekly Model 3 production rates". This wording absolutely does mean sustained rates. Tesla says they have difficulty predicting "at specific points in time", but this is over a month ago. I think enough leeway has been given on 2.5k/week to call it a "miss".

Of course everyone can interpret the impact of the "miss", but it is still a miss. What exactly was misleading again?...

 

[schonelucht]

Yeah. This is bullshit by the moderator and I hope they apologize. Especially when threatening to remove a user when the mod themselves is clearly in the wrong. That’s double bad. The 2500/week goal was clearly meant to be sustainable. For additional color on that one can also see the conference call transcript for 2017q4.

 

[Henchman]

Trying to decide whether to sell My may 4th calls now, or wait until Thursday.

 

[Esme Es Mejor]

Trying to decide whether to sell My may 4th calls now, or wait until Thursday.

May the 4th be with you...

Couldn’t resist.

 

[omgwtfbyobbq]

It's their Q4 shareholder letter: Tesla (TSLA) announces Q4 2017 earnings: record revenue of ~$3.3 billion and wide losses

"Weekly production" implies a sustained rate imo.

Mod: This is intentionally misleading. Here is the actual full extract. We don't tolerate this kind of behavior for very long. --ggr.

It's not just "weekly production" alone, it's the references to it being a "target" that they're trying to "hit", which to me imply they're referring to maximum throughput for the duration they're referencing (weekly in this case). If I want to hit my sales target of 100 widgets per month, then once I sell 100 widgets in a month, I've hit that target. If I do that for several months, then I've hit my target several times.

If Tesla said their goal is to hit 2,500 cars/week for several weeks, that's what you're describing. The part that's a little confusing IMO is the use of "rates", which initially looks like Tesla is trying to hit the 2,500 rate for multiple weeks, but after reading further appears to apply to the two (plural) production targets (2,500 and 5,000).

We continue to target weekly Model 3 production rates of 2,500 by the end of Q1 and 5,000 by the end of Q2. It is important to note that while these are the levels we are focused on hitting and we have plans in place to achieve them, our prior experience on the Model 3 ramp has demonstrated the difficulty of accurately forecasting specific production rates at specific points in time. What we can say with confidence is that we are taking many actions to systematically address bottlenecks and add capacity in places like the battery module line where we have experienced constraints, and these actions should result in our production rate significantly increasing during the rest of Q1 and through Q2.

 

[Henchman]

I think its pretty funny to see people thinking they won't hit the target.

 

[omgwtfbyobbq]

Yeah. This is bullshit by the moderator and I hope they apologize. Especially when threatening to remove a user when the mod themselves is clearly in the wrong. That’s double bad. The 2500/week goal was clearly meant to be sustainable. For additional color on that one can also see the conference call transcript for 2017q4.

I think the mod considered it misleading because they didn't include the text they referenced. It's like me saying that Elon said "I will always fail" because the words "I", "will", "always", and "fail" were in an interview he had.

It's not that bad, but it's still misleading, especially given the language Tesla used, which is to hit those weekly production targets, not to hit a sustained production rate over several or many weeks.

 

[Waiting4M3]

Can we stay on topic about q1 earnings and not try to parse what 2500/wk mean again? There are (and have been) plenty of other discussions on that already.

 

[MattEnth]

Can we stay on topic about q1 earnings and not try to parse what 2500/wk mean again? There are (and have been) plenty of other discussions on that already.

I'm not sure why the 2500/week isn't relevant to Q1 earnings and Q2 forecasts?

I anticipate that Musk will be asked directly if TSLA has had a week in which 2500 Model 3s were produced, and how that shifts the timeline for the 5000 Model 3 weekly production.

I think investors will expect and press for more firm dates and timelines than what the leaked email suggested. Especially with the Model 3 line being down for several days in April and anticipated to be down for a few days in May.

Earnings could be all over the place given the change to lease accounting and ZEV credits. They might even clock in the 600M loss range.

I think a lot of the Q1 info is already priced in, which is why forecasts (or "targets") will be important and scrutinized. A big determinant of Q2 income will be Model 3 production, which is why guidance there matters.

--------------------

I also just want to voice my opposition to the mod comment. I made that post (and this one) from my phone. I linked the article. And it's a huge double-standard (can someone link an instance where a bull was forced to post full article text?)

 

[Waiting4M3]

I'm not sure why the 2500/week isn't relevant to Q1 earnings and Q2 forecasts?

I anticipate that Musk will be asked directly if TSLA has had a week in which 2500 Model 3s were produced, and how that shifts the timeline for the 5000 Model 3 weekly production.

I think investors will expect and press for more firm dates and timelines than what the leaked email suggested. Especially with the Model 3 line being down for several days in April and anticipated to be down for a few days in May.

Earnings could be all over the place given the change to lease accounting and ZEV credits. They might even clock in the 600M loss range.

I think a lot of the Q1 info is already priced in, which is why forecasts (or "targets") will be important and scrutinized. A big determinant of Q2 income will be Model 3 production, which is why guidance there matters.

--------------------

I also just want to voice my opposition to the mod comment. I made that post (and this one) from my phone. I linked the article. And it's a huge double-standard (can someone link an instance where a bull was forced to post full article text?)

The 2500/wk at the end of March is irrelevant to Q1 since we already know the Q1 total.

The 2500/wk # is almost irrelevant to Q2 because we know the following more relevant info:

• They build 2020, 2071, 2250 cars in the 3 weeks starting end of Q1
• They had a shutdown, after which they're targeting 3k-4k/wk in May
• They will have another shutdown in late May, after which they're targeting 5k-6k in June

And they will likely give feedback calibrating the effectiveness of the shutdown tomorrow

For the purpose of discussing Q1/Q2 earnings, discussing 2.5k/wk at the end of March is a waste of time.

If you want to point finger at Elon and say "I told you so", like I said, there are other places for it.

 

[MattEnth]

The 2500/wk # is almost irrelevant to Q2 because we know the following more relevant info:

• They build 2020, 2071, 2250 cars in the 3 weeks starting end of Q1
• They had a shutdown, after which they're targeting 3k-4k/wk in May
• They will have another shutdown in late May, after which they're targeting 5k-6k in June

And they will likely give feedback calibrating the effectiveness of the shutdown tomorrow

For the purpose of discussing Q1/Q2 earnings, discussing 2.5k/wk at the end of March is a waste of time.

The bolded portion of your post is what I'm saying; we have no idea if they're on track for 5k (or 6k) by the end of this quarter. And we have no idea how many Model 3s they expect to deliver this quarter (I could see ranges from 20k on the bear side to 40k on the bull side). That range represents a billion dollar difference in Q2 revenue.

I mention the 2500/week estimate because they're still at least 1 month behind that timeline, and they'd initially said 2.5k by end of March, 5k by end of June. So are they moving out the 5k target timeline as well? How far?

 

[bhzmark]

I wonder what would happen if you looked at what Tesla actually accomplished compared to, say other car mfrs, instead of just comparing it to their own internal targets.

I'll bet gm sets much lower targets for their volt and bolt sales... and maybe they exceed those low boring targets.

Which company creates more shareholder value? One that sets high kick ass goals, and often achieves, although with some delay? Or one that targets the easy, and no surprise, hits it religiously on time.

Innovation is messy and unpredictable and lumpy, and often creates massive staggering shareholder value in the long run.

I mention the 2500/week estimate because they're still at least 1 month behind that timeline, and they'd initially said 2.5k by end of March, 5k by end of June. So are they moving out the 5k target timeline as well? How far?

 

[Lbkmxp100d]

I wonder what would happen if you looked at what Tesla actually accomplished compared to, say other car mfrs, instead of just comparing it to their own internal targets.

I'll bet gm sets much lower targets for their volt and bolt sales... and maybe they exceed those low boring targets.

Which company creates more shareholder value? One that sets high kick ass goals, and often achieves, although with some delay? Or one that targets the easy, and no surprise, hits it religiously on time.

Innovation is messy and unpredictable and lumpy, and often creates massive staggering shareholder value in the long run.

Amen! Obviously Elon is extremely ambitious and most of the time projects timelines that can’t be met. That being said, bc of his projections he is crucified but I suspect it also pushes the company to do things that a “realistic” timeline wouldn’t do. Ex: if Elon had said 5k by end of 2018 he wouldn’t catch so much grief but I bet bc of his 10k projection they are able to produce close to the 10k number.

 

[Esme Es Mejor]

I really hope that no timelines are offered for Model Y. Just let us know the rate they intend to achieve (eventually) & that they will get there as fast as they can.

I try to judge people by their deeds, not their words. Clearly, this is not the norm. I’ve seen bulls foolishly get exuberant over ambitious timelines, and I’ve seen bears pointlessly attack Tesla for not meeting those same timelines. They’re both wrong.

 

[luvb2b]

@Reality, the decline in sg&a as a percent of auto revenue is so clear with appropriate adjustments for solarcity that i still don't understand how you can't see it. part of shortselling is peeling off layers management uses to confuse financials to get a truer picture of a business. you mentioned it's too hard to make the adjustments but you clearly have the analysis chops to do the work. if you're in deep, do the work because it in a quarter or two it may well be too late.

 

[Reciprocity]

Total opinion piece:
Pushing back on over-exuberance is a good thing and can be helpful, but warping data to support a dive to zero is not. Example regarding cash 'burn': Cash balance is important for paying the bills, but investing in a new manufacturing line is not the same as dropping that money on a company wide trip to Hawaii.

GM burned a lot of cash on the recent earnings as well. The big difference is gm spends $3.4B on advertising while Tesla spent it on factories. One goes out into the ether and evaporates and the other can manufacture cars for decades. Cars that people are lining up to buy.

 

[jeewee3000]

GM burned a lot of cash on the recent earnings as well. The big difference is gm spends $3.4B on advertising while Tesla spent it on factories. One goes out into the ether and evaporates and the other can manufacture cars for decades. Cars that people are lining up to buy.

Yes, the word cash 'burn' is misused so much it annoys me.

Looking forward to the ER conference though just to hear some updates. Not betting on the outcome.