Tesla did the right thing got my P100D
and
DavidP100DL here on TMC Am I among the first with the P100DL?
Conf/Vin: 8/20/2016 Prod: 8/26/2016 Complete: 8/28/2016 Has not had delivery in LA yet (9/6) - something holding up delivery?
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Tesla did the right thing got my P100D
and
DavidP100DL here on TMC Am I among the first with the P100DL?
Conf/Vin: 8/20/2016 Prod: 8/26/2016 Complete: 8/28/2016 Has not had delivery in LA yet (9/6) - something holding up delivery?
This bears uncanny resemblance to the Q1 2013 indeed. As a reminder, and for those that started following Tesla later, they pre-announced "profitability", and later turned out to be both GAAP *and* non-GAAP profitable, to the complete surprise of bulls and bears alike.
Here is the complete text of Elon's email (with my highlights):
I thought it was important to write you a note directly to let you know how critical this quarter is. The third quarter will be our last chance to show investors that Tesla can be at least slightly positive cash flow and profitable before the Model 3 reaches full production. Once we get to Q4, Model 3 capital expenditures force us into a negative position until Model 3 reaches full production. That won’t be until late next year.
We are on the razor’s edge of achieving a good Q3, but it requires building and delivering every car we possibly can, while simultaneously trimming any cost that isn’t critical, at least for the next 4.5 weeks. Right now, we are tracking to be a few percentage points negative on cash flow and GAAP profitability, but this is a small number, so I’m confident that we can rally hard and push the results into positive territory. It would be awesome to throw a pie in the face of all the naysayers on Wall Street who keep insisting that Tesla will always be a money-loser!
Even more important, we will need to raise additional cash in Q4 to complete the Model 3 vehicle factory and the Gigafactory. The simple reality of it is that we will be in a far better position to convince potential investors to bet on us if the headline is not “Tesla Loses Money Again”, but rather “Tesla Defies All Expectations and Achieves Profitability”. That would be amazing!
Thanks for all your effort. Looking forward to celebrating with you,
Elon
To say that this is huge surprise is an understatement. The effect of the email will play out over next several days - today SP movement is just a prelude IMO.
On top of the implications listed in this post, the additional huge one is that if the tracking Elon mentioned holds, even without additional cost saving requested from the employees, the Q3 non-GAAP profitability seem to be very likely. The few percentage points negative on GAAP basis should conservatively equate to <$30M (multiply $600M by 0.05 for a back of the napkin very conservative, rough estimate).The difference between the GAAP and non-GAAP net, ignoring the deferred revenue and lease accounting, is stock based compensation, which in Q2 totaled $67.3M. Since "few percentage points negative" mentioned by Elon is less than $30M, while non-GAAP net excludes approximately $67.3M of stock-based compensation, Tesla is tracking to be non-GAAP profitable even if additonal improvements requested in Elon's email do not materialize. This is why seemingly risky step of leaking this email is not that risky after all, as non-GAAP profitability, barring any emergency seem to be in the bag.
This is huge. Will take some time to digest. The big institutional SH will be first who get it (most likely with the help from Tesla). My guess is that short sellers, especially ideological, will be last. Denial is a powerful thing...
Here is the complete text of Elon's email (with my highlights):
I thought it was important to write you a note directly to let you know how critical this quarter is. The third quarter will be our last chance to show investors that Tesla can be at least slightly positive cash flow and profitable before the Model 3 reaches full production. Once we get to Q4, Model 3 capital expenditures force us into a negative position until Model 3 reaches full production. That won’t be until late next year.
We are on the razor’s edge of achieving a good Q3, but it requires building and delivering every car we possibly can, while simultaneously trimming any cost that isn’t critical, at least for the next 4.5 weeks. Right now, we are tracking to be a few percentage points negative on cash flow and GAAP profitability, but this is a small number, so I’m confident that we can rally hard and push the results into positive territory. It would be awesome to throw a pie in the face of all the naysayers on Wall Street who keep insisting that Tesla will always be a money-loser!
Even more important, we will need to raise additional cash in Q4 to complete the Model 3 vehicle factory and the Gigafactory. The simple reality of it is that we will be in a far better position to convince potential investors to bet on us if the headline is not “Tesla Loses Money Again”, but rather “Tesla Defies All Expectations and Achieves Profitability”. That would be amazing!
Thanks for all your effort. Looking forward to celebrating with you,
Elon
To say that this is huge surprise is an understatement. The effect of the email will play out over next several days - today SP movement is just a prelude IMO.
On top of the implications listed in this post, the additional huge one is that if the tracking Elon mentioned holds, even without additional cost saving requested from the employees, the Q3 non-GAAP profitability seem to be very likely. The few percentage points negative on GAAP basis should conservatively equate to <$30M (multiply $600M by 0.05 for a back of the napkin very conservative, rough estimate).The difference between the GAAP and non-GAAP net, ignoring the deferred revenue and lease accounting, is stock based compensation, which in Q2 totaled $67.3M. Since "few percentage points negative" mentioned by Elon is less than $30M, while non-GAAP net excludes approximately $67.3M of stock-based compensation, Tesla is tracking to be non-GAAP profitable even if additonal improvements requested in Elon's email do not materialize. This is why seemingly risky step of leaking this email is not that risky after all, as non-GAAP profitability, barring any emergency seem to be in the bag.
This is huge. Will take some time to digest. The big institutional SH will be first who get it (most likely with the help from Tesla). My guess is that short sellers, especially ideological, will be last. Denial is a powerful thing...
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For a late night entertainment, check out Dana Hull's tweeter (@danahull) - reporter who published article with Elon's email excerpts, and then full text of the e-mail. Here is one example of the hater with the suggestive screen name Elon Madoff (@ValuationMattrs) desperately trying to get full text of email from Dana Hull:
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dmckinstry
Model X 2019
I just went all in, which means the stock will likely be down further (always the case whenever I buy stock). Just a warning to all of you
But I believe in the long run, it will be higher
I won't have funds to invest for about two weeks, so I expect it to go up the next two weeks.
dmckinstry
Model X 2019
Before the first of the year I didn't think TSLA would ever drop below $200 again.
Wow, I stand corrected - they did preannounce profitability. Either they got extremely comfortable with the numbers because they were so good or they took a calculated risk.
There's a ton of eyes on Tesla, so if they preannounce profitability this time I expect another tsunami of hurt for shorts. I think they'd only risk using the "P" word if they are quite certain it's there, meaning that the quarter would be a blowout.
As to the noncash interest question, I'd defer to your expertise over mine. My crude understanding is that noncash interest is an accrual for interest not immediately payable because the notes were still outstanding. With the redemption, I'd expect this figure to decrease proportionally with the note redemption. Again, my background isn't accounting so someone else please correct me if I'm wrong.
FredTMC
Model S VIN #4925
Wow. Very positive news! Looks like Q3 will be a great historic moment for tesla.
I'm surprised this full text of the email didn't hit the news cycle earlier today. I agree, it's positive effect should last for days.
The anticipation leading up to end of the quarter will be good as the full understanding of this email gets digested by Wall St.
They just did - via the Elon's email.
FredTMC
Model S VIN #4925
Yeah... This is my fav part of Elons email; the last sentences:
"Thanks all your effort. Looking forward to celebrating with you,
Elon"
Zhelko Dimic
Careful bull
Heh, I'm there with you, exactly the same thought process. Except I did it 18 months ago
On top of that, I was so certain in success that I played with long term options and lost bunch of time value
Anyway, nothing that $400 share price won't cure
Mike Smith
Active Member
In Elon's email to employees he says that model 3 will not just be in production by late 2017, but in FULL production. I believe this is new - previously Tesla was targeting start of production in late 2017, and full production in early 2018 right? That's what I had been assuming anyway.
Tesla forecast 100-200K Model 3s in 2017 which implies full production at some point or something close to it. So I see this as confirming they are on track rather than something new. Still positive though.
Zhelko Dimic
Careful bull
I wouldn't read this as new info, but as Elon being positive. The only way to be certain of schedule that far in advance is by playing it safe, stuffing it with buffer times. For better and worse, Elon doesn't play that game.
I expect Tesla will know what pace of ramp-up to expect only very close to July 1st 2017, which is a deadline for suppliers and internal teams. At that point, they'll have good idea how many points of failure they have, which risks are easy to mitigate, or replace, solve or accept.
Now the naysaying shorters will say Elon released material non public information to "insiders" and he should be hanged.. in 3, 2, 1 ....
Q3 delivery numbers in the first week of October, which is just about 4 weeks away.
Q3 earnings report will be released in the 1st week of November.
These kind of accidents should not move the needle but unfortunately sometimes they do, so heads up. Major dutch newspapers (Dutch) report a one-sided deadly accident with a Tesla. (Part of) the battery detached from the vehicle and caught (censored). Fire crew currently is waiting for Tesla technicians to arrive at the scene to recover the body because they suspect the car itself is exposed to high voltage.
I think that the more suggestive part is "Right now, we are tracking to be a few percentage points negative on cash flow and GAAP profitability"
For those who are willing to follow the bread crumbs left by Elon, it implies that regardless of the success of the company wide effort requested in the email, Tesla tracking to be non-GAAP profitable by significant margin.
In addition to the above, in case company's efforts on improving cash management and production/delivery are successful, Tesla can be cash flow positive and GAAP profitable as well.
Agreed. GAAP profitability will be a major accomplishment. Obviously not having to deal with the resale value guarantee makes it a lot more reasonable but it's still the best sign Tesla can give to Wall Street. If they can pull it off, they deserve a higher stock price. At the same time, stock price does not seem to have much to do with the actual performance of the company lately.
Wrt being nearly cash flow positive, that must mean Tesla is settling (nearly) all of the called convertible notes in shares? If so, it may explain why the stock price is a bit depressed on no particular negative fundamental news.
Wrt being nearly cash flow positive, that must mean Tesla is settling (nearly) all of the called convertible notes in shares? If so, it may explain why the stock price is a bit depressed on no particular negative fundamental news.
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