The estimated cost of warranty repairs is subtracted from the revenue and recognized over the period of the warranty, right? The bottom line improves if repairs under warranty cost less than the estimated amount.
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Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable
- Thread starter AudubonB
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The estimated cost of warranty repairs is subtracted from the revenue and recognized over the period of the warranty, right? The bottom line improves if repairs under warranty cost less than the estimated amount.
Artful Dodger
"Neko no me"
No good due to the mess. On second thought Transylvania borders Hungary and was once part of it, so maybe there's room for creativity. .
X Fan
Active Member
Granted, i haven’t followed their operating statements close enough (I firmly believe in the mission, the product and positive impact to planet Earth).
However, wouldn’t items such as free supercharging, warranty work, etc. be taken as COGS with an internal offset provided as revenue to service? And, if warranty expense comes in lower than what’s been recorded in previous quarters, in theory service p&l would be very positively impacted (until the CFO changes the model).
I think there is a decent chance that Q2 results will satisfy the financial metrics required for S&P inclusion, HOWEVER, that does not mean that TSLA would be included, forthwith. The fact that there is a committee that ultimately has discretion as to inclusion is a big problem, IMO. Think about it-----do you think that there might be a person or two on that committee that might have friends, relationships with people at Goldman Sachs and/or Morgan Stanley? The sudden inclusion of TSLA would put a major hurt on these two, and other firms that have lent massive amounts of shares to their shorting clients. If the numbers are good enough, I believe actual inclusion will be delayed. I'd love to be proven wrong.I was thinking 5 days from now. I'll give it a 10% chance, a can't lose prediction.
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That would be my worry and hesitation about S&P inclusion. We've all seen how shady things can be from wall st to Moody's credit ratings. Not just talking about Tesla specifically.
The Dutch Assembly of Ministers is sometimes called ‘het kabinet’ or ‘the cabinet’. They put forward a plan to phase out EV preferential tax treatments, starting with cars purchases from januari 2019 1st onwards. Basically the personal income tax to be paid on company EV cars made available to emoloyees will more than double for cars purchased next year compared with those purchased still this year. (The year of purchase determines the applicable tax regime for the following five years, a fairly typical lease term)
Heaven forbid... are you implying that S&P would stoop to favoritism? If there were a substantial delay, it must be for good, honorable, and just reasons. Their website says:
"The intelligence you need, when you need it."
Seconds later (I am not making this up), this popped up:
Irony aside, it would be pathetic if they really did this. A lot of people are watching Tesla.
You're expecting a $250 million profit for Q2 while pretty much everyone else is predicting a loss for Q2?
Most people in this thread who have done any level of analysis are also predicting a loss.
Technically, I don't know what Anton knows, but I know what he should know. Any auto analyst should know that people buy Teslas for way more reasons than just their external beauty. So yes, Anton's claim that "Tesla's valuation rests largely on its ability to make the best-looking cars [and its truck plan]" is likely a lie, and certainly false.
But the claim is so obviously false that I don't see how anyone except ignorant morons could believe it. Maybe Anton thinks his audience will believe anything. Or else he is pandering to his patrons while winking at everyone else. Either way, I hope he bets the farm on his short position... if he actually has one.
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I am not expecting anything of the sort. There are enough unknowns wrt to Q2 numbers that there could be a surprise, but that's irrelevant. My thesis stays the same for whenever they do satisfy financial metrics, if the short position persists. BTW, I've been at this investing game for over 50 years. You would be wrong to presume my level of analysis.
I was thinking 5 days from now. I'll give it a 10% chance, a can't lose prediction.
How would that work? Even if q2 was profitable q1 wasn't and they have to have 4 consecutive quarters of profit don't they?
Four consecutive quarters that are profitable, in toto.
The math doesn't add up for a profit for Q2 let alone S&P inclusion.
There isn't any "decent chance".
No, 4 consecutive positive quarters is not a requirement. What is required is a profit over the sum of the last 4 quarters. And the last one has to be profitable.
So 3 quarters with losses which are compensated by a large profit in the fourth quarter would be enough to qualify.
Doggydogworld
Active Member
Warranty work does not affect Service revenue, COGS or margins. Automotive sales COGS include an estimate of warranty costs. They add this amount to a warranty reserve account. When they perform warranty work on a car they charge the expense against that reserve. It does not show up as an expense during the quarter they do the work.
If the amount of warranty work trends higher or lower than the estimates over time they will change the estimate they accrue at the time of sale. This will affect Cost of Automotive Sales. It doesn't affect Service revenue or Service COGS.
The vast majority of Tesla's Service Revenue and COGS are used car sales. They have negative margins because they aren't very good at selling used cars. They may also lose money on non-warranty work, including "goodwill" repairs. Some bears believe they improperly charge work that should go against warranty reserves to general Services COGS in an effort to keep warranty accruals low and boost Auto Sales gross margins. I've seen no evidence of this. The size of the losses is a concern, though.
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