Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[EVNow]

Debt repayments don't affect profitability.

Yes, that comment was about cash flows i.e. they hope to be cash flow positive except in quarters with large debt repayments.

 

[Fact Checking]

That would seem to be the stupidest possible get-rich-quick scheme in the history of the world.

Yeah, if Elon wanted to get rich quick he'd have started yet another Internet company, laughing all the way to the bank and sailing into the sunset on a private yacht:

You are clueless about human nature, nobody is that selfless and altruistic.

He wants to save humanity , for the glory of it. A saving angel.

He is amazing , but keep it real .

I believe you are misunderstanding Elon's motivations: Elon doesn't want to save humanity for the "glory of it". His real motivation is to create a better, safer future through futuristic technologies he is interested in, a future in which he'd feel better and safer living in. Saving humanity both from itself and from extinction is a "side effect". Elon is an engineer-scientist-businessman who cannot stop thinking about large scale problems and about futuristic technologies to solve them.

The "glory" part of saving humanity is a distinct drawback to Elon, which is probably one of the reasons why AFAIK 90%+ of Elon's philanthropy is anonymous.

If you want to see what kind of future Elon envisions, the Culture series from Iain M. Banks is a pretty good snapshot I believe. And yes, it's still "selfish" if you insist, but it's a different kind of selfish desire that Elon is driven by, and it's definitely not money he is after, but he wants the ability to influence the future.

So if we want to label it, Elon wants to "save humanity", through a better future, despite the glory of it.

 

[RobStark]

I dont want Tesla to look just like GM. The world is changing fast.

There is a somewhere in between "just like GM" and "startup Tesla" that would work best for a mature Tesla selling in high volume.

Selling and servicing to early majority buyers will not be the same as selling and servicing to early adopters.

 

[ggr]

Now that we have established that aggressive divesting schedules and directors leaving are correlated, what does that say about JB’s selling over the last few months?

We had this discussion a few weeks ago. JB's selling has been essentially constant for at least the last 5 months.

 

[sundaymorning]

We had this discussion a few weeks ago. JB's selling has been essentially constant for at least the last 5 months.

Deepak sells constantly as well, ever since the stock was $25-30 he has been selling. Even financial planners need cash to support their way of life.

 

[anthonyj]

TSLAQ extremists are seriously deranged and give me confidence in my position. There are a few reasonable bears that I can respect, like Flufferbot01 on Reddit or Doggydogworld (is he a bear?)

 

[ggr]

Deepak sells constantly as well, ever since the stock was $25-30 he has been selling. Even financial planners need cash to support their way of life.

I don't know about Deepak, but I've heard that most of the money JB raises goes straight to various charities.

 

[mongo]

I don't know about Deepak, but I've heard that most of the money JB raises goes straight to various charities.

Yah, recent filing had 15k shares optioned and cashed out, versus 20k shares to charity.

 

[SOULPEDL]

Now why doesn't that surprise me?

I'm planning and trading based on a q1 loss. There is a part of me that hopes for + as part of a plan to burn, with all of this leading up to a crushing short blow.
Elons tweet regarding the crazy guy yesterday casting some doubt on Tesa success, part of it I wonder? But I'm also agreeing with several here that a rumor like this sets them up for a harder fall if I'm wrong. Secretly crossing fingers...

 

[X Fan]

With how much this news has gotten out there, I have trouble believing they're not going to say a word for months - even if the first customer deliveries won't be for months. If I had to wager, I'd expect an announcement in the "relatively near" future, including stats and pricing - the former being awesome, but the latter being well higher than the current product line's pricing, so as to avoid killing off demand for current products (and potentially stimulate it from the people who've been putting off a purchase to see what the refresh is like).

Margins on the new variants will be monstrously high. If initial pricing is what I'm expecting (and what I think they need, to avoid killing demand for the current line), then initial margins on them may be in the 40-50% range. And they'll still collect a flood of deposits, because when you look at the benefits that just a drive unit change alone would provide, the new variants are going to be hugely desirable.

The question is, what to do with the freed-up Fremont space...

I’m hoping that new X/drive train will eliminate “shudder” problem of previous version.

 

[AudubonB]

How about hurling insults at pedestrians?

Get out of the way you stupid fat cow!

In French? À l'écart, espèce de grosse vache stupide!

As usual, Tesla has been anticipating the same. Remember, all Teslas already can fart in their general direction.

 

[azaz]

This Etron commercial is actually pretty good.

Addresses all the negative talking points about EV, bet it drives some Tesla sales too.

 

[SOULPEDL]

Elon just likes to solve problems. Call me naive...

OT,
I know this motivation very well. Same problem for me, likely for EM as well.

 

[Fred42]

I’m hoping that new X/drive train will eliminate “shudder” problem of previous version.

That's caused by premature half-shaft wear related to the different angle of the half-shafts vs. the S drive-train and suspension they leveraged. If they had a viable fix that didn't cost too much, I would hope they'd have implemented it before now. But who knows, maybe they were holding off to make multiple changes at once.

 

[madodel]

Tesla Is Laughing At Audi Right Now

Bankwuptcy for Audi.

 

[Drax7]

Yeah, if Elon wanted to get rich quick he'd have started yet another Internet company, laughing all the way to the bank and sailing into the sunset on a private yacht:

I believe you are misunderstanding Elon's motivations: Elon doesn't want to save humanity for the "glory of it". His real motivation is to create a better, safer future through futuristic technologies he is interested in, a future in which he'd feel better and safer living in. Saving humanity both from itself and from extinction is a "side effect". Elon is an engineer-scientist-businessman who cannot stop thinking about large scale problems and about futuristic technologies to solve them.

The "glory" part of saving humanity is a distinct drawback to Elon, which is probably one of the reasons why AFAIK 90%+ of Elon's philanthropy is anonymous.

If you want to see what kind of future Elon envisions, the Culture series from Iain M. Banks is a pretty good snapshot I believe. And yes, it's still "selfish" if you insist, but it's a different kind of selfish desire that Elon is driven by, and it's definitely not money he is after, but he wants the ability to influence the future.

So if we want to label it, Elon wants to "save humanity", through a better future, despite the glory of it.

Beautifully explained, and actually he is not the vainglorious type, he is putting more into it
The he will ever get out of it is my view.

 

[Prunesquallor]

Let’s get this straight: So you’re saying that after he made enough money to live the rest of his years in luxury off PayPal, he poured every last dime of that money(to the point of having to crash on friends couches) into starting company that makes rockets and a company that makes a type of car that had zero emissions but had already been seemingly proven to be doomed by low performance and exorbitant cost... purely to enrich himself?

That would seem to be the stupidest possible get-rich-quick scheme in the history of the world.

LOL. Before SpaceX, the saying was "The only way to become a commercial-space millionaire is to start off a billionaire".

 

[Prunesquallor]

Tesla Is Laughing At Audi Right Now

Man, I re-read the specs. That thing is going to get murdered by a refreshed Model S.

 

[mrdoubleb]

Profitable for all quarters going forward.

So what’s the Q1 force majeure that made Tesla miss that guidance? Also do you think Q2 is going to profitable? So far, I am not seeing a lot of encouraging signs.

Thanks!
So let's recap (emphasis mine):

Q2 2018 ER:
"That said, we still expect to achieve GAAP profitability in Q3 and Q4. Going forward, we believe Tesla can achieve sustained quarterly profits, absent a severe force majeure or economic downturn, while continuing to grow at a rapid pace."
Q2 2018 Call:
"And from an operating plant standpoint, from Q3 onwards, I really want to emphasize our goal is to be profitable and cash-flow positive for every quarter, going forward. Now obviously, if there's a big recession or there's a severe force majeure event that interrupts the supply chain, that's not always possible... there may be occasional quarters, where we pay back a big loan or something, where there may be just because we paid back a big loan. But absent that, it would be cash flow positive."

Q3 2018 ER:
no mention of Q1 2019 or about profitability going forward except for Q4 (which they've delivered on)

Q3 2018 Call:
"We achieved GAAP net income of over $300 million, increased cash and equivalents by $731 million and achieved a greater than 20% gross margin for Model 3. And moreover, we expect to again have positive net income and cash flow in Q4. And I believe our aspirations I think it will be for all quarters going forward. I think we can actually be positive cash flow and profitable for all quarters going forward, leaving aside quarters where we may need to do a significant repayment, for example in Q1 next year. But I think even in Q1, I think we can be approximately flat in cash flow by end of quarter."

January 18 letter to employees / blog spot:
"This quarter, as with Q3, shipment of higher priced Model 3 variants (this time to Europe and Asia) will hopefully allow us, with great difficulty, effort and some luck, to target a tiny profit."

Q4 2018 ER:
"We expect that the restructuring actions taken in Q1 will reduce our costs by about $400 million annually. Our Q1 financials will reflect a one-time restructuring cost. The gap between production and deliveries in Q1 will create a temporary but predictable dip in our revenues and earnings. As a result, our optimistic target is to achieve a very small GAAP net income in Q1, but that will require us to successfully execute on many fronts including handling logistics and delivery challenges in Europe and China. The higher in-transit inventory will also negatively impact operating cash flows in Q1."

Q4 2018 Call:
"I'd say at this point, I'm optimistic about being profitable in Q1. Not by a lot, but I'm optimistic about being profitable in Q1 and for all quarters going forward."

February 28 35k launch event conf call (exactly 1 month after the previous Q4 call):
"Given that there was just a lot happening in Q1, and we're taking a lot of one-time charges and there are a lot of challenges getting cars to China and Europe, we do not expect to be profitable in Q1," Musk reportedly said on a call with reporters. "But we do think that profitability in Q2 is likely."
---
So this is how the guidance on Q1 profitability evolved.

Now, personally I always understood as Q1 being an outlier, touch & go in terms of a small profit or a small loss.

Having said that, although they may be reluctant to admit, I think the drop in S/X sales was quicker and lasted longer (still lasts?) than they've expected and will probably result in accelerating the refresh plans. I would not completely fault them for this as the 3 has been on sale in NA in volume for about a year now with no significant S/X drop. However, I always thought, that S sales are abnormally high in Europe given the cost and size of the vehicle, so I am not surprised at the cannibalization rate here.

 

[SOULPEDL]

Man, I re-read the specs. That thing is going to get murdered by a refreshed Model S.

Seems pretty good to me, maybe range of 200-250 mi is low for tomorrow's SUV. So what am I missing?