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

[StarFoxisDown!]

How did the company sell 110% more cars compared to Q1 2018, and yet still lose 700M?

Why is the company forecasting a loss in Q2 despite record quarterly deliveries?

These questions are killing the stock.

Higher production doesn't offset large amount of vehicles in transit/inventory for international markets.

 

[JohnDinger]

Higher production doesn't offset large amount of vehicles in transit/inventory for international markets.

Vehicles in transit don't go into GAAP earnings...

You realize the expense/revenue when the car is delivered.

 

[anthonyj]

How did the company sell 110% more cars compared to Q1 2018, and yet still lose 700M?

Why is the company forecasting a loss in Q2 despite record quarterly deliveries?

4 months ago, Tesla was going to be "profitable and cash flow positive for all quarters going forward" - so why is Elon insisting on such dramatic cost cutting?

These questions are killing the stock.

Stop spreading FUD. We all know it's the shorts and the media that are making Q1 and Q2 unprofitable. Elon's great communication skills and guidance will get us out of this mess.

 

[dqd88]

I don't understand what is going on with Tesla in 2019. 2018 Q3 and Q4 were fantastic. Margins were good, cash flow was good, and it looked like Tesla had gotten over the hump. My thought was that the company would stay profitable, or focus on the break even point so as to re-invest as much as possible back into growth while not posting losses. Seems like a very positive point to be.

Then guidance was that there might be a small loss in Q1. That was not a small loss. That was a WTF happened quarter. Current guidance doesn't seem very believable, to me, for Q2 or the entire year.

I keep seeing people post how there is no demand problem. However, I've received multiple emails this year (2019) from sales advisers asking if I'm ready to buy my next Tesla. If demand is greater than supply, why are these emails going out?

Now the tours are being canceled. Is that because good changes are happening at the factory or to reduce visibility into problems going on?

If demand is as strong as it was in Q3 and Q4, why is Tesla struggling to turn a profit now?

Elon's cost-cutting email was terrible. I've been through that at another publicly traded company. I was in middle management back then and the message to squeeze every dollar of cost out, while good-intentioned, lead to a morale drop and uncertainty among staff. I had staff in my office asking me if the company was going under. Were they going to have a job soon? etc. My answer was that the company was doing well (it was) and they wanted to continue to make it more efficient (which was true). But many people figured I was simply giving the company line that a manager was expected to say.

It also hasn't set well with me that suddenly the focus is on Tesla being all about robotaxi. I understand that's part of the shift from Master Plan 1 to Master Plan 2, but it wasn't supposed to be a "bet the company" approach. It was supposed to be the focus after Tesla was established.

So, if someone would care to write a response, explain it to me like I'm five, if you prefer. Because I'd like to emotionally feel better about being in TSLA since early 2016 and realizing I've lost money compared to having just dumped all of that money into an index fund and forgotten about it.

What'd I'd really like to see: Proof that demand is strong. a simple to understand explanation of why Q3 and Q4 were good but Q1 and Q2 are crap despite sales being strong.

So, long rambling post... if anyone cares to respond with some data to clear up some of these questions, I'd appreciate it.

Some of the Q1/2 2019 demand was serviced in late 2018. It will all smooth out over time. Quarterly is a bad and not very meaningful way to look at things, unless you are a short term trader I suppose. But I don't think Elon cares much about quarterly "numbers". He's concerned about the overall health of the company and it's long term viability. He runs it like a private company.
I'm not worried about demand; it may fall a bit short this year, though I doubt it. More importantly, long term it will be good. I think the next few products (Y/semi/Road) will sell well.
"If demand is as strong as it was in Q3 and Q4, why is Tesla struggling to turn a profit now?"
That's a good question. I haven't dug into the fine details of the last ER. I just saw a couple big "one time charges". But I would just reasonably guess that the cost to ship to Europe was probably huge, especially if they are doing it in a hurried way (less time to negotiate good rates). This is partly why I cut back on my holdings a few months back. I just thought that costs would go up a lot due to shipping, which would be a bad comp from Q3/4 where there were a ton of local deliveries.
I think long term they really need a GF in Europe in addition to the China one to have good sustainable margins.
Sorry, I know you wanted hard data; I'm not a data guy, more of a high level guy. I focus on macro trend.

 

[UnknownSoldier]

How did the company sell 110% more cars compared to Q1 2018, and yet still lose 700M?

Why is the company forecasting a loss in Q2 despite record quarterly deliveries?

4 months ago, Tesla was going to be "profitable and cash flow positive for all quarters going forward" - so why is Elon insisting on such dramatic cost cutting?

These questions are killing the stock.

The answer is that S/X sales have cratered and those were the bulk of the profits.

They are manufacturing and delivering more cars than ever but those 3's are not at a high enough margin to break even without the cushy fat margins from the S/X.

Tesla made a critical error by not refreshing the S/X first before launching the 3. What's the point of buying the S now? There isn't any, and it's killing them.

They need to cut costs more than ever because they are not anticipating that S/X sales are going to recover soon, if ever. The take away from this email is basically don't count on S/X to carry the company going forward, so now there is a full blown crisis until Shanghai is producing and Model Y, Semi, Pickup etc. launch.

 

[electrichapp]

I am putting off buying any stock while trade war with China is unresolved.
Thinking many others, and possibly some institutional investors, are in the same situation.

I like it that Robinhood is showing growing ownership of Tesla though.

Robintrack

 

[Krugerrand]

I'm just pissed because I don't have any spare cash to buy more right now...

How many kidneys do you have? You’re welcome.

 

[anthonyj]

Am I the only one extremely bothered by the lack of info on why Tesla purchased the cash-losing business Maxwell? I want a concrete answer from Tesla, not speculation. They diluted our shares and I think we deserve the right to know.

 

[avoigt]

Its always interesting for me to see all the trolls jumping out of their caves when the stock goes down claiming victory and posting their opinions still without any arguments.

Once the SP goes up again they disappear and stay silent. Fun to watch

 

[avoigt]

What a great buy opportunity again. Love it! Feels great.

Over the weekend many who sold in panic today will regret they sold be it Monday a week later or a month ...

Once again a moment where the stock price in relation to the real value was never as disconnected as today.

One of the moments where any investment in Tesla is as safe as never before if you have the time horizon to stay as the true value per share of the company is higher than ever.

 

[Krugerrand]

Hope my day gets better? I'm having a great day, Tesla's SP doesn't really factor into my daily mood at all.

Right. The rant was you being not negatively emotional about how horrible you felt you were treated here. Ok.

 

[Do It]

Absolutely! I also think to allow as many people as possible to get the car before cut off, they started priming the European delivery system too late. The high stress on the production line last December also contributed to the delay of project Raven.

Agree with everything you guys said here... However, out of all these things the one bothered me the most was the leak and mismanagement of the S/X refresh. Without the leak, and with better timing they should have been able to maintain 25k/Q rate in Q1 and Q2 2019.

 

[elasalle]

What a great buy opportunity again. Love it! Feels great.

Over the weekend many who sold in panic today will regret they sold be it Monday a week later or a month ...

Once again a moment where the stock price in relation to the real value was never as disconnected as today.

One of the moments where any investment in Tesla is as safe as never before if you have the time horizon to stay as the true value per share of the company is higher than ever.

any updates on German market/interest in M3?

 

[PatP]

I couldn't agree more with you. Self inflicted. He seeded the Tesla has 10 months of cash left to the shorts. Sigh.

From Elon's full email it is very clear his message was just: We have raised a lot of new money but this doesn't mean we can relax, we still have a lot of work to do and sorry but cost discipline has to remain extreme.

His choice to exaggerate and dramatise the challenge with misleading comparisons between the new $2.4bn raised and the $0.7bn Q1 net loss was just entirely unnecessary though and was 100% guaranteed to get twisted out of context in the media.

Elon can't help that his communications skills are one of his main weaknesses (together with his ego) - nobody is good at everything, but it is most disappointing nobody else at Tesla told him how utterly stupid his choice of wording was before he sent the email. I'm sure as soon as staff got that email 95%+ of people would have thought immediately: - oh no not again, this is going to get twisted in the media and stock will be down 5-10% tomorrow. That's not how to motivate your staff effectively.

 

[PatP]

Well, Its about 4x as cold. Saskatchewan is more comparable to Siberia.

I live in Quebec and love my Tesla when it's -25C.

 

[Navin]

A

I couldn't agree more with you. Self inflicted. He seeded the Tesla has 10 months of cash left to the shorts. Sigh.

agreed. Dumb move

 

[Krugerrand]

If you are an investor in TSLA and not feeling the ugliness in the market than you have a different make up than I.

Yes, I got in the other line. Dude was holding up a sign that said ‘Be like cucumber’ and I thought, ‘That sounds cool’.

 

[ReflexFunds]

Am I the only one extremely bothered by the lack of info on why Tesla purchased the cash-losing business Maxwell? I want a concrete answer from Tesla, not speculation. They diluted our shares and I think we deserve the right to know.

It is 0.5% dilution, why does that even matter?
It's obvious why Tesla bought Maxwell if you read any of Maxwell's materials or scientific papers. But I don't think it is sensible for Tesla to weaken itself by giving competitors and current suppliers a clear view of their future battery technology strategy just to justify rounding error dilution. When Tesla is ready to launch, they will explain their technology, just as they did with the AP3 computer.

 

[ggies07]

Elon can't stop making statements that hurt his investors

Elon's not here to make you or anyone else ****ing money. He's here to move the world to sustainable energy/production so humanity (my daughter and her future children being part of that) can maybe still have a nice place to live.

 

[Krugerrand]

Look at the charts. Dow wasn’t all over the place. It was down hard from October to December and TSLA was up hard thanks o executing on its promise.

TSLA was moving more or less together with macros until Elon announced the early date for q3 earnings. From that point onwards it was a pretty straight march up to 377 in December completely against the market crash.

Reaction to Q4 profit had nothing to do with Wall Street sentiment and everything to do with T Rowe liquidating there position of 1/10 of the entire company and doing it fast.

I did look at the charts and even pulled relevant daily SPs. I even mentioned the DOW being up and down and up and down.

And TSLA did NOT move with the macros except the hard down in Dec and the very recent down this month.

Q4 reaction WAS a WS manufactured outright lie. We have proof. And T Rowe sold right into it the false narrative that got flogged all over the place.