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Q2 2018 Earnings Results
- Thread starter ValueAnalyst
- Start date
i changed my vote to a mild negative due to an article from elsewhere, and my suspicion about the 200,000, and an greatly oversubscribed convention put on by local Washington DC electric company PEPCO, (I had 4 reservatins and 3 were canceled due to too many people wanting to go) basically about getting readu for the flood of EV's coming and the excerpt from an article
"200k Tax Threshold For Cars Sold Into The US
.......company passed the 200k vehicles sold into the US. This confirms that the company held back vehicles from deliveries into the US during Q2. I estimate that approximately 10k cars * $55k = $550 million in sales was shifted from Q2 to Q3....strategy was beneficial to customers.....But it will also make Q2 financial numbers look worse than they really are......net profits in Q3 and Q4 are far more important than an increased loss in Q2 2018."
and maybe this "bill H.R.6274 by Rep. Peter Welch, or some other bill like it to pass so that Tesla does not lose out on tax credits."
however, IF you change the question to 2H of 2018........ vs 2Q of 2018, but again, i'm just psychic guessing
"200k Tax Threshold For Cars Sold Into The US
.......company passed the 200k vehicles sold into the US. This confirms that the company held back vehicles from deliveries into the US during Q2. I estimate that approximately 10k cars * $55k = $550 million in sales was shifted from Q2 to Q3....strategy was beneficial to customers.....But it will also make Q2 financial numbers look worse than they really are......net profits in Q3 and Q4 are far more important than an increased loss in Q2 2018."
and maybe this "bill H.R.6274 by Rep. Peter Welch, or some other bill like it to pass so that Tesla does not lose out on tax credits."
however, IF you change the question to 2H of 2018........ vs 2Q of 2018, but again, i'm just psychic guessing
bdy0627
Active Member
Judging by the poll results, Q2 seems to be a head-scratcher. There are votes for positive all the way to run for the hills, and everything in between. Here I thought it was obvious that Q2 would be an ugly quarter financially, so this surprises me.
The low number of responses and wide range of estimates, in my opinion, illustrate two lessons:
- Most retail investors do not understand accounting to the level they can predict earnings results; and
- Model 3's true profitability is yet to be determined.
As for me, I am comfortable with my $3 per share Q2 loss estimate, which has turned out to be the median of the poll. I look forward to the next six months, when short positions blow up.
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It is obvious. Many people voting in this poll are living in their own imagined universe that has no resemblance to reality.
This will be an ugly quarter. I am forecasting GAAP loss to be right around the same as Q1 ~ (4.20). I am expecting 0 sales of ZEV credits as Tesla will want those stockpiled for the back end of the year. Also expecting some form of restructuring charge probably in the realm of 50-70m for the severance due to 9% of laid off workforce.
Potentially included would be write downs for automation equipment that either does not work, or has been repurposed. Nothing in the Q1 or Q42017 reports and I believe Tesla will want to get that charge on the books as well to pave an easier path for profitability in Q3 and Q4. If there are write downs then combined with the restructuring charge you could easily have one-time expenses over $100m.
The last reason I believe it will be a difficult quarter for them is King Dollar went on a rampage in Q2. While Tesla was intentionally sending as many deliveries as they could to international markets per avoidance of 200k US delivery, the dollar strengthened materially against the currencies of Tesla's most important non-US markets. That will be a dent to revenue and crimp S/X margins for the quarter.
Potentially included would be write downs for automation equipment that either does not work, or has been repurposed. Nothing in the Q1 or Q42017 reports and I believe Tesla will want to get that charge on the books as well to pave an easier path for profitability in Q3 and Q4. If there are write downs then combined with the restructuring charge you could easily have one-time expenses over $100m.
The last reason I believe it will be a difficult quarter for them is King Dollar went on a rampage in Q2. While Tesla was intentionally sending as many deliveries as they could to international markets per avoidance of 200k US delivery, the dollar strengthened materially against the currencies of Tesla's most important non-US markets. That will be a dent to revenue and crimp S/X margins for the quarter.
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Agreed; however, all of Q2 negatives you noted are transitory and not fundamental to Tesla's future.
Key fundamental factors are Model 3 profitability:
Tesla Model 3 teardown shows over 30% profitability as Munro research firm ‘eats crow’
Munro: Model 3 Electronics "Like a Symphony of Engineering" | CleanTechnica
Tesla Model 3 teardown points to only $28,000 in potential material and production cost
Tesla Model 3 exceeds 30% profit, says Sandy Munro after teardown analysis
& market share:
First Test Drive of the Tesla Model 3 Performance: A Thrilling, Modern Marvel
Tesla had over 7,000 new orders (5,000 Model 3’s and 2,000 S/X) last week, says Elon Musk
Monthly Plug-In Sales Scorecard
In short, shorts are fcked.
Absolutely, without a doubt, fcked.
I'll give it a shot, here's my spreadsheet - I assume $60K revenue for M3 (54K cost), $100K for MS (80K cost), $110 for MX (85K cost).
The main reason for the large loss is because of inventory holdback to keep the federal tax credit and logistical issues.
The main reason for the large loss is because of inventory holdback to keep the federal tax credit and logistical issues.
If you’re numbers are right then there will probably be a huge buying opportunity post ER. I said ($4) and I thought I was erring on the side of caution. Yikes. Might need to reposition myself to do some buying Aug 1/2.
Thank you. Could you please provide support for 20.0% and 22.7% gross margin assumptions for S/X, respectively?
bdy0627
Active Member
Do we have an analyst consensus? I'm guessing it would be somewhere around -$4. Revenue is straight forward, but no one knows for sure about expenses/depreciation. I'm not a financial analyst and have no reason to veer far from the financial estimates from @luvb2b. For long term investors, it doesn't matter how the market reacts to Q2 financials. I have a fair bit of trading money on the line from buying dips over the last month. If we take a big dive, I would obviously prefer to exit ahead and then come back in afterwards. I'm not so sure we will dive though. It comes down to trying to predict how the market will react. For me, that has proved nearly impossible even when I guess right on the financials. The market certainly must expect a seriously bad financial quarter.
Will there be somewhat of a negative or positive surprise to either the financial numbers or the information given on the conference call? The market does not appear inclined to believe Elon right now, so I tend to think the conference call may have less effect than it has in the past, assuming Elon doesn't go rogue again. If he indicates model 3 production is approaching 5,000/week sustained, I would predict perhaps somewhat of a yawn to that right now, but I really don't know.
So far in July, Tesla is averaging 453 model 3 per day according to Shabooska's numbers, which appear to be from employee leaks. I think Augkuo showed identical numbers from an employee source. If we subtract the July 4th holiday period and start the analysis from July 5th, model 3 average production is 542 per day. They aren't far off, but they haven't been able to sustain production at 700+ for more than a few days in a row so far. They could hit 5,000+ for the week leading up to the ER, which Elon could indicate. Again, I'm not sure what effect that will have. It sure seems like sustaining production at 5,000/week should improve sentiment, but there is a massive media/analyst/short FUD storm going on. The Q2 results are not likely to change that.
Will there be somewhat of a negative or positive surprise to either the financial numbers or the information given on the conference call? The market does not appear inclined to believe Elon right now, so I tend to think the conference call may have less effect than it has in the past, assuming Elon doesn't go rogue again. If he indicates model 3 production is approaching 5,000/week sustained, I would predict perhaps somewhat of a yawn to that right now, but I really don't know.
So far in July, Tesla is averaging 453 model 3 per day according to Shabooska's numbers, which appear to be from employee leaks. I think Augkuo showed identical numbers from an employee source. If we subtract the July 4th holiday period and start the analysis from July 5th, model 3 average production is 542 per day. They aren't far off, but they haven't been able to sustain production at 700+ for more than a few days in a row so far. They could hit 5,000+ for the week leading up to the ER, which Elon could indicate. Again, I'm not sure what effect that will have. It sure seems like sustaining production at 5,000/week should improve sentiment, but there is a massive media/analyst/short FUD storm going on. The Q2 results are not likely to change that.
I’m looking at gross margin and approximating from previous results. My numbers are probably best case scenario since I didn’t add in the restructuring costs, additional capital expense costs (ie the “tent” and extra line), additional shipping costs (sending lots of parts by air freight and paying spot prices for truckers) and assume that energy and the other stuff aren’t going to add to EPS that much. It might be an ugly Q2 but then there’ll be ~850 million of revenue added to Q3/Q4.
This is not how accounting works. Please look at luvb2b's thread. That's a fantastic starting point and I'd say is incredible in terms of how much detail it captures.
In any case, to point out the obvious, the gross profit is calculated from the cost of cars sold, not all the cars manufactured. Built, but not sold, are part of your assets, not expenses like you show.
I resemble that remark!
Nor do these numbers resemble what I will see in the Q2 report, thus I shield them from all but the brave...
Vs Q1 ($709.5)
10k additional Model 3 × $15k = $150
400 extra S/X × $30k = $12
Cut R&D = $80
Cut staff and take severance as one time charge = $80
Reduced services and other expense = $80
ZEV credits = $100
11k Puerto Rico installs plus first phase of 50k Australia distributed system = $100
Magic rabbit: $108
Total: $710 million improvement, unless the Holy Hand Grenade of Antioch takes out the bunny...
10k additional Model 3 × $15k = $150
400 extra S/X × $30k = $12
Cut R&D = $80
Cut staff and take severance as one time charge = $80
Reduced services and other expense = $80
ZEV credits = $100
11k Puerto Rico installs plus first phase of 50k Australia distributed system = $100
Magic rabbit: $108
Total: $710 million improvement, unless the Holy Hand Grenade of Antioch takes out the bunny...
NannerAirCraft
Member
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