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Tesla Q2 2016 earnings in a nutshell

Discussion in 'TSLA Investor Discussions' started by Marvin Mcluhan, Aug 3, 2016.

  1. Marvin Mcluhan

    Marvin Mcluhan New Member

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    The electric car giant Tesla ($TSLA) posted wider 2Q16 loss on higher cost and expenses. $TSLA said net loss for the quarter was $293.19MM or $2.09 loss per share compared to net loss of $184.23MM or $1.45 loss per share a year ago. Revenue for the quarter rose 32.9% to $1.3Bil. Excluding items, $TSLA posted a loss per share of $1.06 per share.
     

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  2. rdalcanto

    rdalcanto Member

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    Of course. That is what happens when you move the time table up 2 years on the Gigafactory, and accelerate Model 3 ramp, and build one new store EVERY 4 Days! AWESOME! This is what any smart investor wants. At 1,000,000 Model 3 cars per year, you are talking about 10 Billion in PROFITS PER YEAR from the Model 3 production line alone. What idiot whould not want to spend an extra 2 Billion once now to make 10 Billion every year after that? If you actually read the shareholder letter and listen to the conference call, you see that everything is great with Tesla. 67% increase in orders compared to one year ago. No other car company can say that. In fact, Tesla competitor cars from BMW, Audi, Mercedes, and Porsche sales continue to plummet. The headlines about losses are for fools who don't do any research, and fools and their money are soon parted!
     
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  3. Todd Burch

    Todd Burch Electron Pilot

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    You joined the forum just for that?

    Wonder how many people you scared into selling. Probably not many. Yawn...
     
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  4. neroden

    neroden Happy Model S Owner

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    Be fair. More conservative projections of 500,000 cars per year at 20% gross margins mean that it's only 3.5 billion per year. :)

    ...or even 3.5 billion every year? They measure solar installs in "payback time", following which you're gushing cash. This is 1 year payback. Anyone would love it.
     
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  5. rdalcanto

    rdalcanto Member

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    500,000 Model 3 is the 2018 run rate. It will be higher after that. I'll bet you anything they are making 1,000,000/year by end of 2020. But we are on the same page. Capital up front for huge profits later makes sense to all but the dumbest posters in the Wall Street Journal comments section, and those shorting TSLA long term....
     
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  6. TMSE

    TMSE Member

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    In the conf call Elon mentioned that Model 3 has anywhere from 500K to 1M /year demand, and Model Y (semi truck) about the same. So, the 500K is at the low end. If you take the median for both, by 2021 or 2022, they could be selling over 1.5M cars per year, with about 1M cars by 2020. At ASP of $45K for all cars combined, and 20% GM, and 12% net margin, we are looking at earnings of over $5 billion in 2020 by the auto business alone. Tesla Energy could contribute similar amount.
     
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  7. ZachShahan

    ZachShahan Member

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    Math hard. Trolling is easy.
     
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  8. Yuri_G

    Yuri_G Member

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    Model Y is the compact SUV, for clarification...
     
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  9. gaswalla

    gaswalla P4201/85/airsusp/pano/19i

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    Desperation has set in the for shorts.
     
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  10. ecarfan

    ecarfan Well-Known Member

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    Marvin, thank you for that summary. As a TSLA investor I was quite pleased by the quarterly report and by the comments from Elon and Jason during the conference call. It is obvious that Tesla is doing well and is on track for Model 3 production to begin later next year. Quarterly losses now are necessary to prepare for massive Model 3 production in the future and for steadily increasing Model S/X production.
    As others have noted, the Model Y is the SUV/CUV vehicle that will be built on the Model 3 chassis.

    The "Tesla Semi" is a commercial semi truck that Tesla plans to produce sometime in the next ten years according to Elons' new Secret Master Plan Part Deux.

    Tesla also plans to build a "new kind of truck" that will be some kind of a pickup truck, but it has not yet been formally named or described. I'm pretty sure that will be the next vehicle after the Model Y.

    The other new vehicle coming in the future is the Tesla "mini-bus" for urban mass transport. Elon said Tesla has not yet given a formal name to that vehicle.
     
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  11. Cal1

    Cal1 Member

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    With net losses for each quarter how can they continue to operate? From a lay person's perspective this seems impossible. I can't run my business losing $ every quarter/year. And if they are losing so much, were does the cash flow come from to pay employees, suppliers, lights etc? Are they borrowing more and more to meet these needs? I don't remember anyone claiming Tesla's debt to be way out of wack or increasing by millions/quarter.

    Not trying to bait or seem especially dense but from someone with a non accounting background this has always seemed impossible to sustain for any length of time. Tesla has been losing $ for years and (according to everyone including Tesla) will continue for a few more before they actually make a profit.

    Thanks in advance.
     
  12. mkjayakumar

    mkjayakumar Active Member

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    Elon can project all he want. Those numbers are his aspiration. For example he said, Germany is a market that can take 10k units per year. China's market would be bigger than Europe (or some such claim). What happened to all that? Is anyone holding him accountable to all those highly exaggerated forecasts he made?
     
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  13. schonelucht

    schonelucht Active Member

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    So, Tesla didn't specify the build mix between S and X for this quarter as far as I know. Total production is 18,345. Given that they delivered 9,745 Model S and 4,625 Model X, do you think a reasonable build split is 11,500 S versus 6,845 X?
     
  14. ItsNotAboutTheMoney

    ItsNotAboutTheMoney Active Member

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    #14 ItsNotAboutTheMoney, Aug 4, 2016
    Last edited: Aug 4, 2016
    It's fundamentally about Model 3. Until Model 3 is here, it's OK for Tesla to be unprofitable since it's attempting a large, time-sensitive expansion and expansion is always in advance of sales.

    The key questions are about cash flow, cost of borrowing, whether the losses are truly related to growth, , whether Tesla can actually deliver on Model 3 in whatever the competitive environment will be.

    I'm still leaning towards a multi-billion-dollar failure, but it's me v other peoples' belief in Tesla and my only "investment" is my $1k Model 3 reservation and the hope that I'm wrong.
     
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  15. lklundin

    lklundin Member

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    Because their investors believe in Tesla's business model and have had their own analysts tell them that, yes, Tesla will become profitable, and all the invested money will give them ownership in a valuable company.

    As long as the sales are growing more or less according to projections and as long as the money Tesla spends on creating value (SC stalls, stores and service centers, Gigafactory 1, etc) is deemed to be valuable, then the investors will continue to provide financing now, for a share of the expectedly large cake later.
     
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  16. rdalcanto

    rdalcanto Member

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    They sold 1.7 Billion in new shares. This is not a difficult concept to understand. If you wanted to start a new business manufacturing product X, and you don't even have a warehouse, you are going to have to spend money to eventually make the product and make money. You have to get the warehouse/factory. You have to pay for the manufacturing equipment to make your widget, you have to pay for supplies, etc. In the case of Tesla, they have to build a new production line, they have to build a new 5 billion dollar factory, they have to build 100's of retail stores and service centers, they have to build superchargers, etc. They have to lose money for a few more years investing in capital. THEY ARE NOT BURNING CASH, they are investing. The cars each make a healthy profit, and demand is up 67% from last year. Next year they will grow another 100+ percent. There is no credible competition on the horizon. This, to me, is the most obvious money making investment of my lifetime. I can't believe the number of people that can't see it. This is different then when GM went bankrupt because they couldn't sell their product with adequate margins, no significant increase in demand to look forward to, and out of control costs despite little to no innovation and infrastructure investment.
     
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  17. Drax7

    Drax7 Active Member

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    Model y is the compact SUV.

    Take the model X and apply regular doors and windshield and done.
    Just a High school project .
     
  18. 30seconds

    30seconds Active Member

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    Lots of companies run net losses for years and years but are supported by the market because of the long term upside. Basically any biotech company you can think of burned through at least $1B in cash (most like $2 to $3B) before seeing a net profit. But at that point they can become massively profitable, or usually bought out for billions by big pharma. Go take a look at Medivation for a current example.

    I bring this up because there are plenty of investors who have the appetite to fund short term losses for long term upside. In terms of Tesla it looks like they will be generating tons of free cash by mid-2018, however it will all go back into expansion. I doubt that they will need any more capital raises after ramp of Model 3. At this point the revenue side of the business is at an annualized $10B rate with ~25% gross margins ($2.5B) for the rest of the business + investment. By mid to late 2018 the revenue will be somewhere in the $30B range so the same gross margin will be kicking off $7.5B for the rest of the business + investment. Will be pretty hard not to make a profit at that point even if funding additional growth expansion.
     
  19. Drivin

    Drivin Member

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    See what?
    They have missed almost all of their production forecasts on the last 2 years and grew 67 percent from last year, same quarter sales grew less than that, and growth from last quarter grew less and you are surprised that there are people who don't believe in the 100 percent growth???

    LOL
     
  20. lklundin

    lklundin Member

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    Well, I think many investors are intimidated by the fearsome odds facing Tesla. It is an enormous amount of money that have to be invested up front, and something could go wrong along the way - and the route to profitability is a long one. I guess that's part of the reason why the stock is so volatile. (The volatility is hugely amplified by the short sellers, and their attempts to instill uncertainty among the investors).

    Further instilling fear, uncertainty and doubt among investors are the traditional auto manufacturers, the oil industry and the U.S. dealerships.

    Not an obvious investment for everyone.
     
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