That's sort of a big miss though, factoring in Forex. You can come up with excuses for every quarter, which
I've done in a previous post.
Bottom line, gigantic miss. If Wall Street was off by that much we'd all be ridiculing them for how dumb/corrupt they are, so need to hold it both ways. While it may not be you explicitly who bashes traditional analyst estimates (too lazy to go through individual post history like some vindicitive wackos here), I see a lot of unfair slander thrown at a lot of these analysts. It's a shame the slander that
@Troy went through as well. Hasn't he been more right than wrong the past year? Felt like it.
At the end of the day we're all trying to make projections (short or long) to the best of our abilities, and the biases that we may have does not necessarily mean that one person's word is superior to another.
So I hope, moving forward, some respect is shown to everyone (except JPM and Gordon Johnson), about their thoughts. This should be a humbling experience for you, Rob, The Accountant, James Stephenson, etc. who had ridiculously divergent price targets.
The exact end number is the sum of many variables, some of which have significant variance and no known prediction method. If EPS had gone exactly as my $1.28 estimate predicted, for this reason that hypothetical perfect result in itself wouldn't actually mean much because a substantial portion would've been due to luck. Getting an end number in one quarterly estimate is mostly for fun. Let's dig into the details.
First, personally I didn't attempt to factor in forex because being able to guess that on a quarterly basis has zero bearing on my long-term profitability projections. Forex variation is pretty much random and all balances out in the long run. I deliberately left that as an unaccounted-for variable because I have higher priorities on improving the model I'm using and also I have no idea how to estimate how any hedging and supply chain quirks may affect the outcome. $250M forex impact was $0.065/share and if the forex impact mainly hit the revenue side (due to fulfilling orders at prices locked in months ago) then that's $0.7k difference in revenue per car as a rough guess.
ZEV credits are also pretty random. As a matter of fact, I am not aware of literally anyone in the entire TSLA investment world with a model than can reliably predict quarterly variation in Tesla's ZEV credit revenue, but if someone has one I'd like to know about it so I can learn their secret. In the absence of any such model, everyone's degree of accuracy is mere luck. So, I projected regression to the mean in the absence of any better information, which is proper statistical estimation practice for unexplained random variation with no discernible time trend. (Granted, the actual mean had been $406M and I bumped it up to $420M for karma, so I did bias the estimate somewhat. No regrets.
) The ZEV credit prediction error translated to $0.035/share difference. Oh well. I will continue to use the mean as my estimate unless and until someone has a better suggestion. The only thing I've updated is adding a fresh $286M data point to the pool. The standard deviation for ZEV credit revenue since Q1 2020 is $110M. The average since then has been $396M. So this was a one-sigma result to the downside, and something at least that extreme to the downside can be expected to happen around 15% of the time. Not a big deal, and this variability will matter less and less to EPS in the coming quarters as ZEV revenue per delivery declines with higher delivery volume, which is why it's not worth trying to find a way to get it precisely correct anyway.
I somewhat arbitrarily estimated +$1k of price increase bonus potentially hitting in Q3 from the hikes in March, but was clear about the fact that this was an unpredictable wild card due to there being no clear visibility of the precise timing of the post-hike orders being fulfilled. It turns out Tesla reported no benefits QoQ from price hikes, which would normally be mentioned in both the report and Zach's opening remarks on the call. That just means the impact is delayed a little more into the future. So the difference of $1k of price increases that will instead hit in Q4 and with $0.7k unexpected forex impact, that explains 74% of the $2.3k error in my estimate of ASP. The residual actual error that I still don't understand is around $0.6k. The $1k of price increases that didn't materialize affected my EPS estimate by around $0.09/share.
So, in total, random stuff negatively affected EPS by $0.035 + $0.065 + $0.09 = $0.19 and without this it would've been $1.24 non-GAAP earnings which is $0.04 off of my estimate. That's about as close as I think I could hope for and gives me higher confidence that rest of model is pretty close.
I was much more concerned with 3 estimates:
- Production volume
- Underlying ASP model excluding price hike timing and forex
- Average cost per car
Total Production Volume
Estimated: 376k
Actual: 366k
% Error: 2.7% too high
ASP Model Without Price Hike Timing and ForEx
Estimated: $55.7
Actual: $53.4 + $0.7 + $1 = $55.1
% Error: 1.1% too high
Avg COGS per Delivery
$41.3 (Q2 cost actual)
- .3 (Model S declining mix share)
- 10*10% (Shanghai increasing mix share)
- .27*2 ($100M savings each on logistics and supply costs)
= $39.5k expected global average CoGS per car in Q3.
Actual: $39.2k
% Error: 0.8% too high
I published my reasoning in the Near-Future Quarterly Estimates thread in
#4,950,
#4,955, and
#4,971, which upon review still looks like it was sound reasoning given the information I knew at the time. I also provided these important caveats:
...I still am focused more focused on Q4 and next year because almost all of my call options expire between Jan '23 and Jun '24.
This is a weird quarter with a lot of substantial uncertainties, especially on margins. How much did the 2022 price increases come into play and how much will still be in the backlog? What's the impact of relaxing cost pressure on logistics, chips and raw materials? How much of the extra spike in cost in Q2 over Q1 come from one-time expenses with shutting off Shanghai?...
...I'm not trying to get this quarter precisely right. This quarter I expect a nice beat, but the real party starts when the Mar+Apr price jumps come into full effect in Q4 and Q1 just as the new factories drag down cost once in volume production...
Here is the best information I could find for the latest estimates for both me and
@The Accountant prior to earnings release. As you can see, the ASP and regulatory credits term dominates the difference between actual and estimated. It looks like this quarter's results add to the case that we have a pretty good understanding of the underlying business.
What surprised me the most was:
- Stationary storage deployments grew even faster than I hoped (85% vs 50% expected), but revenue for Energy came in much less than expected
- Shares outstanding somehow increased only by 4M, despite stock-based compensation expenses of $362M
I still have no explanation for either of these errors as of right now.
| Q3 Actual | Q3 Accountant | % Error Acc | Q3 Gigapress | % Error Giga |
| Regulatory Credits | $ 0.29 | $ 0.300 | 4.9% | $ 0.420 | 46.9% |
| Total Auto Revenues | $ 18.7 | $ 19.5 | 4.2% | $ 19.7 | 5.2% |
| Energy Revenue | $ 1.12 | $ 1.01 | -9.4% | $ 1.30 | 16.4% |
| Service & Other Revenue | $ 1.65 | $ 1.53 | -6.7% | $ 1.62 | -1.8% |
| | | | | |
| Avg Rev/Veh excl Reg Credits (K) | $ 53.5 | $ 55.8 | 4.2% | $ 56.0 | 4.6% |
| Avg CoGS/Veh (K) | $ (39.2) | $ (39.4) | 0.6% | $ (39.5) | 0.6% |
| Avg Gross Profit/Veh excl Credits (K) | $ 14.3 | $ 16.3 | 14.0% | $ 16.5 | 15.3% |
| Auto Gross Margin | 27.9% | 30.3% | 8.7% | 31.5% | 13.0% |
| Auto Gross Margin excl. Credits | 26.8% | 29.3% | 9.5% | 29.5% | 10.3% |
| | | | | |
| | | | | |
| Research & Development (M) | $ (733) | $ (707) | -3.5% | $ (700) | -4.5% |
| Sales, General & Administrative (M) | $ (961) | $ (940) | -2.2% | $ (990) | 3.0% |
| Total Operating Expenses (M) | $ (1,694) | $ (1,647) | -2.8% | $ (1,690) | -0.2% |
| | | | | |
| GAAP Net Income (B) | $ 3.29 | $ 3.9 | 18.5% | $ 4.1 | 24.0% |
| Shares Outstanding, Diluted (B) | 3.468 | 3.51 | 1.3% | 3.52 | 1.5% |
| GAAP EPS, Diluted | $ 0.95 | $ 1.11 | 16.9% | $ 1.16 | 22.2% |
closer to 400! Not hertz level but except. The new Prius/ civic hybrid of the 2020’s. Volts have been decent but I hold them as pieces of junk. Not ok for hills at all.
electrek.co
