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I love it how we naively suppose the best of people, but when an analyst following Tesla for some time, who`s job is to follow Tesla and also read the ER and asked questions in the CC yesterday writes up something like that, I think we just have to accept they have an agenda. I can`t explain this any other way. He has to know better.That Morgan Stanley comment is eye watering. Adam Jonas' flip-flopping is sort of bizarre. Only 3 quarters of cash at current burn rate? They just spent the majority of cash in Q1 on Fremont readying the Model X line - building is upgraded, robots bought, paint line almost operational - cash burn for Fremont diminishes for a year and a half until they build out for Model 3. They are trying to scale up massively for cars and storage at Gigafactory - or is that just a big party tent in the desert and they plan on moving Burning Man there?
Searching the dark corners of the internet for clues to this shady premarket action, and some of these wackos literally are borrowing on margin to short TSLA because they hate Elon Musk, period, and are convinced that the planned cash outlays for gigafactory construction mean Tesla will go bankrupt ASAP. That seems like a great bear thesis...
I might buy this morning as well.
That Morgan Stanley comment is eye watering. Adam Jonas' flip-flopping is sort of bizarre. Only 3 quarters of cash at current burn rate? They just spent the majority of cash in Q1 on Fremont readying the Model X line - building is upgraded, robots bought, paint line almost operational - cash burn for Fremont diminishes for a year and a half until they build out for Model 3. They are trying to scale up massively for cars and storage at Gigafactory - or is that just a big party tent in the desert and they plan on moving Burning Man there?
That`s what I don`t get either. That 2Bn was raised to be spent on GF, SC expansion, new models, etc. Now that they are spending it on that, they are suddenly "bleeding money". Is this really that hard to understand?He really is an odd-ball, Jonas. I wonder if he felt insulted by something on the call? he was last to be picked for question, pushed on whether late-Q3 implied further Model X delays, and Elon didn't really answer his questions the way he might have wanted. As the guy who most helped Tesla raise the $2bn in cash last time, I wonder what he thought they'd do with it. Bank it? It's supposed to be spent. They're growing one of the world's great businesses of the 21st century. <smack forehead against wall> <repeat>
That`s what I don`t get either. That 2Bn was raised to be spent on GF, SC expansion, new models, etc. Now that they are spending it on that, they are suddenly "bleeding money". Is this really that hard to understand?
As I mentioned in Q1 results thread, cash burn is a concern to me. Tesla has said that they will deploy $1.5B into GF, X lines, SCs and stuff. However, they only have $1.5B in the bank. There are a few other ways they can get loans through leased cars and stuff, but that's a couple hundred M. I think there is a gap. And the way Tesla is going, I would like to have them keep at least $1B on hand anytime to cover unexpected events. I feel that money raise through secondary, cb or simple bond offering in EU is inevitable between now and X launch.
As I mentioned in Q1 results thread, cash burn is a concern to me. Tesla has said that they will deploy $1.5B into GF, X lines, SCs and stuff. However, they only have $1.5B in the bank. There are a few other ways they can get loans through leased cars and stuff, but that's a couple hundred M. I think there is a gap. And the way Tesla is going, I would like to have them keep at least $1B on hand anytime to cover unexpected events. I feel that money raise through secondary, cb or simple bond offering in EU is inevitable between now and X launch.
Their gross profit on revenues was $260 million in Q1. Even if you factor in cost of sales & admin at $195m, they still made $65m. How much they spend on R&D is up to them. It`s not like they can`t pay the bills if they spend all of that 1.5B. They have a 26-28% gross margin on their main product (GAAP vs. non GAAP as I recall) and record sales each quarter.The issue is that they will be walking on fine line if they finish spending $1.5 B this year. No problem with spending as it is required. But you need cash in hand to run the operation. Where is the math?
He really is an odd-ball, Jonas. I wonder if he felt insulted by something on the call? he was last to be picked for question, pushed on whether late-Q3 implied further Model X delays, and Elon didn't really answer his questions the way he might have wanted....
I love it how we naively suppose the best of people, but when an analyst following Tesla for some time, who`s job is to follow Tesla and also read the ER and asked questions in the CC yesterday writes up something like that, I think we just have to accept they have an agenda. I can`t explain this any other way. He has to know better.
Well, they're reiterating Q4 cashflow positive, and the vast majority of the Model X Capex is probably done at this time (they have to be due to time needed for tooling and preparing for a ramp up).
It's also not like they're going to have stationary storage sales or 10k+ cars and an unloading of a built-up CPO inventory and China inventory in the next couple quarters, either!
With the 70D taking a much larger share of overall production than the 60D with even worse gross margin this could be another reason to take a wait and see approach.
Credit Suisse moving their price target: $223.50 -> $290.00
Reiterating outperform.