The other GAAP / non-GAAP difference relates to executive stock options and is frankly still kind of useful.
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If I recall, that is a little higher than last quarter, which was a big jump from previous quarters. But as you start making more cars per week, the number in transit at the end of the quarter is going to increase. Not a problem.
I believe Julian Cox explained that the leasing rules for GAAP were changint to make a lot more sense.
The break over the holidays may result in fewer cars in transit at the end of Q4; also seems to be Tesla's concluson, since they are expecting more deliveries in Q4 than Q3 even with fewer production weeks in Q4.
They're selling gasoline cars. In 5 years *nobody will want them*. Where are the horse-drawn buggy manufacturers?
If you're looking long-term, owning GM isn't quite as bad as owning Johns Mansville Asbestos, but you get my point.
GM's introducing its first battery-electric car this year. Great! So value the company by that production level, which is, IIRC 20,000 cars per year.
*Because the rest of GM's production will be a write-off in 10 years*. And if you don't believe electric cars are the future, then yes, you should be short TSLA, but there's also no point talking to you.
MitchJi
Trying to learn kindness, patience & forgiveness
Can they do the math without knowing the overall margins? I believe that the arbitrage is partially due to a drag on TSLA's SP.
The automakers need to catchup in capacity and cost. They are going to have a difficult time catching up on price because they don't even seem to realize how far behind they are. GM bragging about their cell costs of $145 per kWh, while the person in charge of the Volt EV program estimated their pack cost at $210 . That's about $65 per kWh for pack costs excluding cells. By the end of 2018 Tesla's pack costs including cells will be under $90 per kWh.
My concern about the proportion of S vs X is that until now see 50-50 MS-MX I don't believe that they have really nailed the X production issues.
There are some of us who believe that Tesla isn't a high risk investment.
I see it as a production problem.
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CARB is likely to publish its annual report in the next two weeks (but it only pertains to California.)
Except for the tiny little problem that GM will be bankrupt (AGAIN!) before 2030, and might not get bailed out this time...
And thats exactly where the comparison fails. Think Kodak!
Yup, that's what Kodak execs said too. The incumbents have a problem wrapping their brains around disruption.
I would put it a different way. I believe all stocks are high risk investments; and in fact nearly all investments are high-risk investments. If you want a low risk investment, put your money in an insured bank account. Or T-bills. Or perhaps local land.
I believe that so-called "blue chips" are much, much riskier right now than the markets are giving them credit for. Before I went heavily into Tesla stock, I sold out of my oil stocks, and I sold out of most of my financial stocks (kept a few insurance companies), and I sold out of my utility stocks, because IMO all three sectors are *extremely* risky in the next 10 years. Oil and utilties are liable to be smashed by the disruption caused by the switch away from fossil fuels, and the major financial companies are nests of crooks which makes them very very risky. But investors are acting as if they aren't risky. This makes them ultra-dangerous to invest in. Putting money in Bank of America or Exxon is like giving it to a guy you met on a casino riverboat who says he has a great business opportunity for you.
Compared to those, Tesla is less risky.
As long as one ignores non-cash interest expense. The wild card is what kind of accounting treatment will there be for the early conversion of 2/3 rds of the 2018 notes?
Blooey, I hadn't even noticed that GAAP does something squirrely with that. What on Tesla's balance sheet would qualify? Only thing I could think of in normal course of events would be something like a balloon mortgage and Tesla has none of those.
If I remember correctly they're accounted for as if they were two separate securities, a cash security and a stock option. I believe Tesla ends up realizing a profit on both halves but I didn't refigure it recently so I might be wrong.
Zhelko Dimic
Careful bull
I don't disagree with 'potential' that SP doesn't react (I think it will though), but what made you bring GM into comparison? Do you enjoy riling up people for the sake of it?
Taking your comment at face value, I'd like to point that Tesla now makes as many cars as Porsche when it was the most expensive and most profitable car company. This is when they tried to take control over VW, just to see their plans crash in face of liquidity crunch - but that's another story.
And finally, you have about 20 dislikes on 100 ask. If you're so bad in estimating SP, you're in trouble buddy!
Absolute numbers of vehicles sold is irrelevant. Look at the profit per vehicle.
Toyota's per-car profits lap Detroit's Big 3 automakers
Even with their high margin trucks, GM's average profit is $654/vehicle.
Tesla's profit on a fully loaded P100D is over $50,000.
SW2Fiddler
We Are Cognitive Dissidents
Wait... but why?
I mean why Tanner?
Wouldn't it be more symmetrical to pledge to @tander who has 'hair in the game?'
Sort of, they delivered more than they produced in q415' and don't remember q116', but as a % of production they went down this quarter. Will be interesting to see what they do this q4.
I think about it in terms of what happens in the next recession/depression. IMO electric cars are just going to grab even more market share as people stable their Hummer etc., so for that reason I look at Tesla as low risk. Also from the corporate DNA standpoint, Tesla just plain does things differently, they move faster, they break barriers, they are the new kid on the block pushing boundaries where the incumbents are kind of the opposite. Risk aside though, I expect the stock to be volatile for years to come.
Also, @FredTMC, my hat and my hair is off to you. PM me and let me know your fav charity. That's Will Forte btw, not me, but I'm serious about the charity, thanks, I got a real kick out of that! I like bets where pretty much everybody wins!
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Anyone want to join a Google Hangouts tonight to chat TSLA ahead of the trading day tomorrow?
MitchJi
Trying to learn kindness, patience & forgiveness
Yes, but I can't participate live. I can only view them live, unless Google or Apple has a bug fix for my iPad.
Would love to, but have prior commitments. With that, I want to leave these thoughts:
1) Q2 model X gross margins were BEFORE the line was @ full utilization. Can we expect margins to improve on it to match model S?
2) So if gross margins for Q3 is ~25-29%, and the model X price offsetting the model S60 prices, is $100k per vehicle revenue reasonable? Based on that, I'm guessing $2.45 billion revenue, and $500 - 600 million gross profit.
Will that be enough for GAAP profitability?
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