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Q3 Shareholder Newsletter
- Thread starter FalconNinetyD
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- TSLA
http://files.shareholder.com/downlo...d256/Tesla Q3'13 Shareholder Letter final.pdf
The good news I drew from this report is:
-"suppliers are also ramping up their capacity to meet our productions targets"
-Panasonic battery agreement for 1.8 Billion cells over 4 years is the minimum, so there could be much more and the contract is subject to change in the upwards direction
-21% gross margin excluding ZEV credits (up from 14%)
-Cash Balance increased to $796 Million (up 49 Million) despite capital expenditures
-West coast covered with superchargers
-Q3 revenues were 603 Million, with 10 Million from ZEV credits and 19 million from GHG/CAFE credits. (this means an Average selling price for each car was $104.3K, up from 93.3K)
-Projected 6000 deliveries in Q4, increaseing guidance to 21,500 vehicles for the year
-Positive Cash flow in Q3
-Assets increased to $2,166,209 from $1,887,844
Bad News:
-They 'lost money' in this quarter depending on how you look at it but they still had positive cash flow.
-R&D will go up 25% in Q4 and SG&A will go up 20% in Q4
The good news I drew from this report is:
-"suppliers are also ramping up their capacity to meet our productions targets"
-Panasonic battery agreement for 1.8 Billion cells over 4 years is the minimum, so there could be much more and the contract is subject to change in the upwards direction
-21% gross margin excluding ZEV credits (up from 14%)
-Cash Balance increased to $796 Million (up 49 Million) despite capital expenditures
-West coast covered with superchargers
-Q3 revenues were 603 Million, with 10 Million from ZEV credits and 19 million from GHG/CAFE credits. (this means an Average selling price for each car was $104.3K, up from 93.3K)
-Projected 6000 deliveries in Q4, increaseing guidance to 21,500 vehicles for the year
-Positive Cash flow in Q3
-Assets increased to $2,166,209 from $1,887,844
Bad News:
-They 'lost money' in this quarter depending on how you look at it but they still had positive cash flow.
-R&D will go up 25% in Q4 and SG&A will go up 20% in Q4
I would say that differently:
and perhaps
Lesson: Trust Tesla's projections rather than "external experts".
NigelM
Recovering Member
Tesla exceeded their own expectations but didnt't meet 3rd party projections, so both were wrong and arguably neither can be trusted? Just food for thought.....
Krugerrand
Meow
Yes, but the former was on purpose, the latter was simply too much koolaid and brownies. :wink:
Zzzz...
Member
I think big money plugged in increased SG&A into their models and that affected forward EPS projections... I mean not only Q over Q sg&a increased from 60 to 77 millions, but Tesla guided additional 20% increase in Q4...
What SG&A you guys think will be for year 2014, I mean it obviously should be higher then 92 mil projected for Q4. I mean Tesla guided 40k units sales in 2014. If it double up, Tesla would have a hard time reaching $1 EPS for 2014(one buck EPS is a consensus from street analysts, http://www.nasdaq.com/symbol/tsla/earnings-forecast )
I disagree. Tesla's number has always been a floor not a ceiling, and the real number was pretty close to that floor.
I'd say Tesla's number was spot on. If the wind blew slightly stronger or the rain slightly harder in some of the popular delivery areas, the guidance/estimate from Tesla might have been exact. I prefer "mildly conservative" floors that are correct to "random numbers from hope and/or to provide an unrealistic bar to satisfy shorts".
Norbert
TSLA will win
My impression was always that Tesla plans to immediately re-invest any surplus. Simply since that is the fastest way to grow. Except that (probably) in front of larger investments, such as for the Gen III production line, they may save some money until they have enough to make that larger investment. So I would't expect a growing EPS number.
When they say they plan positive cash flow while growing fast, I don't take that to mean anything else than "larger than zero".
Zzzz...
Member
But reinvesting is good. I mean CAPEX do not affect earnings. SG&A on the other hand is a "boom!" - money has gone. Same thing with R&D. And Tesla guided 25% increase for R&D in Q4, that's also not helping.
Lets count: 92 mil SG&A + 70 mil R&D = 162 mil operating expenses in Q4. Gross profit was 134 mil in Q3. Even with increased GM and revenue for Q4 Tesla would have a hard time to to offset operational expenses in Q4. But what street is really modeling is forward EPS few years from now...
Or other way to look at it, gross profits increased 11% Q2 to Q3. OPEX increased 19% Q2 to Q3! But guidance for OPEX suggest even further increase of OPEX, around 22%-ish going into Q4(20% for sg&a and 25% R&D).
What I really mean - there have to be something in the Q3 shareholder letter that led to sharp drop of TSLA. Drop started way before Q&A with Musk/Deepak. So it was not something that they said. But something in this letter was a "bad news".
Otherwise I see only good things in the letter - increased sales, increased guidance. Excellent performance on GM front! What not to like? And this is exactly what I'm trying to understand - what exactly Mr. Market did not liked about this letter.
PS. For this back of napkin calculations I'm using GAAP OPEX and non-GAAP revenue/profits. Since there no danger of running out of cash for TM anytime soon, GAAP OPEX do represent "real" OPEX from standpoint of investor. On the other hand there is no point to defer revenue and earnings due to lease accounting - those are actually "made", regardless of how GAAP treat them.
Norbert
TSLA will win
I'd see R&D as part of investing in growth. Why would CAPEX be good and R&D not?
I'm not sure there is anything seriously wrong with the shareholder letter, or the info in it. Apparently deliveries could be higher without supply constraints specifically by battery cells. However, if you look at the 1 month chart (with hourly bars), today's $150 can be seen as a continuation of a downward trend which started Oct 21st, or even Oct 15th (slowly). Except for the spike on Nov 4th and Nov 5th, that is.
The Q4 outlook portion is probably what is triggering the exodous. It just isn't as juicy as the analysts painted for the future and also since a few analysts mis-used the Vin # tracking and said 7,000 units would be delivered followed by the final 2-3 days of pumping by not only longs but shorts to get that high pre-ER price - the end result is a pre-Q2 ER pps level today. The work done in Q3 to raise the stock price for many reasons (including Sr. Notes convertibility) seems to be have for naught - except those who stood to profit from it by the manipulation involved. Since Goldman Sachs, JP Morgan and a few others were involved, you have to know there was some interesting things going on. It's sad to see retail investors getting hurt especially those with margin accounts who are under strain right now. But those bankers just don't care about that. They are happy to make large sums on the leverage they can create. Everyone from the talking heads on CNBC to the people behind the scenes created the mess you are seeing with the stock price.
Also, don't forget that Musk has to endure all this. He has said in the past that "profit is not our number one goal. that goal is creation of sustainable transportation." But he's paid a price to work with the NY banks to pay off the DoE loan early and it must be pretty hard to see this happening.
bonnie
I play a nice person on twitter.
Have I missed the discussion about our part here on TMC in the misuse of VINs to determine number of cars produced/delivered?
We know analysts read these forums. And there has been plenty of tracking and discussion of that information.
We know analysts read these forums. And there has been plenty of tracking and discussion of that information.
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