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

[AudubonB]

When Moody's did their credit rating increase in January (conveniently the day before Q4 results), they used up to Q3 2021 results. For the financial factors they listed to further upgrade, two of the interesting ones were these:

- sustained EBITA (Earnings Before Interest, Tax, and Amortization) of 7% or higher (excluding reg credits)
- considerable commitment available under revolving credit facility

I recalculated EBIT (Earnings Before Interest and Tax) using the quarterly slide decks instead of EBITA. Depreciation and amortization are lumped together so it was difficult to get an accurate amortization figure. Plus, EBIT makes the calculation more conservative than using EBITA.

End of Q3 2021 ($millions)	Q4 2020	Q1 2021	Q2 2021	Q3 2021	Trailing 12-Months
Revenue excl. credits	9,942	9,871	11,604	13,748	44,895
EBIT (excl. credits)	198	88	978	1,688	2,952
EBIT % (excl. credits)	1.99%	0.89%	8.43%	12.52%	6.58%
End of Q1 2022 ($millions)	Q2 2021	Q3 2021	Q4 2021	Q1 2022	Trailing 12-Months
Revenue excl. credits	11,604	13,748	17,405	18,077	60,564
EBIT (excl. credits)	978	1,688	2,370	3,046	8,082
EBIT % (excl. credits)	8.43%	12.52%	13.62%	16.85%	13.34%

When Moody's did their calculation, Q4 2020 and Q1 2021 were both narrowly profitable, and below their 7% threshold, so their hesitancy is understandable. However, since Q2 2021, the EBIT margins have been growing strongly and are well above the 7% threshold they laid out in their report. As Tesla has had very strong EBIT for four straight quarters, seasonality no longer has a significant impact on their financial performance.

On the revolving credit facility, they previously had drawn $1.9B of the $2.1B revolving credit facility in Q3 2021. However, they have essentially paid off all of their recourse debt as of the end of Q1 2022, so this credit facility should now be fully available.

Based on both of these factors, from a financial perspective, Moody's has no reason not to upgrade Tesla shortly after the 10-Q comes out. They might keep waiting until the supply chain issues and factory ramps are looking better before upgrading though, but there's no doubt now that the financials are good enough for investment grade.

My recollection is they also punished Tesla for lack of product diversity. Do I misremember?

 

[TheTalkingMule]

Just got a couple shares at $1021. Sale going on apparently.

These clowns can short ups down to $930 tomorrow if they like. I'll literally sell my house and buy LEAPs. Best of luck MM's!

 

[Cosmacelf]

Never ceases to amaze me how many dudes there are in charge of billion dollar funds who can't competently work a speakerphone.

One of my pet peeves is people calling on bad speakerphones. It's disrespectful to people listening. How hard is it to hold a friggin phone in your hand or invest in a $50 headset? And it isn't as if Ferrigue doesn't have a massive thick accent to make it even worse. I swear people who use speakerphones when they are the only person in the room talking are massive egotistical assholes.

There, I feel better now.

 

[TheTalkingMule]

I know I'm the slowest accountant on the forum, but Lora is reporting the beat as $3.22 vs $2.26 expected. I had assumed $2.26 was the GAAP expectation and $3.22 is non-GAAP?

 

[wipster]

Nope.

Damn. I have to believe an effective 10 to 1 split will be a huge SP (and wealth enhancement) driver. I know a lot of folks that find it difficult to spend over $1,000 to buy a share of Tesla, but would love to invest $500 for 4 or 5 shares. I think that might be the quickest way for the value of our investments to double.

Was really hoping that would be revealed today... oh well, something else to look forward to!

 

[StarFoxisDown!]

I know I'm the slowest accountant on the forum, but Lora is reporting the beat as $3.22 vs $2.26 expected. I had assumed $2.26 was the GAAP expectation and $3.22 is non-GAAP?

No, expectations were $2.26 Non GAAP.

Yes, Wall St is really that clueless

 

[M|S|M MYP]

Not a peep about the share split, right?

That's the next bullet in the chamber....

 

[M|S|M MYP]

Damn. I have to believe an effective 10 to 1 split will be a huge SP (and wealth enhancement) driver. I know a lot of folks that find it difficult to spend over $1,000 to buy a share of Tesla, but would love to invest $500 for 4 or 5 shares. I think that might be the quickest way for the value of our investments to double.

Was really hoping that would be revealed today... oh well, something else to look forward to!

Announcement in 2 weeks probably.....

 

[Cal1]

I saw the record results on numerous online reporting outstanding results, beating the WS estimates by a huge margin. The wife asked "So why the sp was down $50 today". No other company is doing anything close to this and still the price goes down? She's tired of my claiming how great the company is doing and then the sp plummets. I know the market closed before the earnings call and it will probably come back a little tomorrow but then fall again Fri or Monday.

All this crap about Twitter! Just fix these market manipulating, short selling SOB's once and for all!

Come on Elon if you can send a space ship into space and LAND it back on earth (something even whole governments couldn't do) I know you can figure out how to do it!

 

[EVNow]

The wife asked "So why the sp was down $50 today".

Did you tell her that was before the earnings report ?

Anyway, I think the limited reaction to ER is because of large one time credits.

 

[StealthP3D]

Is there any other company that could have an earnings call like this?
- Recording breaking results
- Cash generation with all non-recourse debt paid down
- Obstacles are handled with ease (logistics, lockdown, prices)
- Future growth >50%
- a description of the future that is breathtaking (robotaxi 2024, Optimus bigger than auto, etc)

What other company? Thank Lord I got into this stock !!!

So true!

I've never seen anything like it in my investment career. And I'm not talking about increases in share price or potential but unrealized achievements. The first three accomplishments you mention have already happened and these are sufficient to prove the operational superiority of Tesla going forward beyond any reasonable doubt. I also think these breathtaking accomplishments validate the company culture and company structure Elon and team have built and this is extremely exciting both from the perspective of an investor and also as an inhabitant of planet earth.

Rarely do both noble aspirational goals and financial goals happen to coincide in the same investment. I have never seen both of these goal combined in the same company to this degree. Not even close! I think this is going to be another one of those earnings calls that sees a delayed response from the market. If so, that means we have some "freight train" days coming up, this week, next week or next month where the shares are bid relentlessly higher, multiple days in a row. If the stock were not so manipulated we would see huge gaps up but it's business as usual for right now,

 

[StealthP3D]

Did you tell her that was before the earnings report ?

Anyway, I think the limited reaction to ER is because of large one time credits.

The Regulatory Credits amount to only 17% of the $4 billion in free cash flow and the quarter would have beat Street expectations easily without them anyway. And while they are larger than we can expect in future quarters, they will continue to add to the bottom line at virtually no cost to anyone but Tesla's so-called competitors.

 

[EVDRVN]

One of my pet peeves is people calling on bad speakerphones. It's disrespectful to people listening. How hard is it to hold a friggin phone in your hand or invest in a $50 headset? And it isn't as if Ferrigue doesn't have a massive thick accent to make it even worse. I swear people who use speakerphones when they are the only person in the room talking are massive egotistical assholes.

There, I feel better now.

I use one to dictate all my TMC posts.

 

[JRP3]

Did you tell her that was before the earnings report ?

Anyway, I think the limited reaction to ER is because of large one time credits.

First post earnings article I saw on SA: Tesla: Regulatory Credits Drive Big Beats

 

[StealthP3D]

I know I'm the slowest accountant on the forum, but Lora is reporting the beat as $3.22 vs $2.26 expected. I had assumed $2.26 was the GAAP expectation and $3.22 is non-GAAP?

I don't recall a Wall Street analyst ever dealing with GAAP estimates. I'm sure it has happened somewhere but consensus estimates are always based on non-GAAP reporting. That's because GAAP rules are a strange beast that can tend to obscure how good or bad the results are.

 

[mhan00]

Did you tell her that was before the earnings report ?

Anyway, I think the limited reaction to ER is because of large one time credits.

From what I can tell, Tesla smashed the Wall Street consensus even if you subtract out the credits.

 

[H Mak]

I was out at a football match tonight so it's the first time in years I've missed the buzz of the earnings release and the drama of the call. But thanks to all on here for the minute by minute updates, which I've now caught up on. I've now read the report and my 3 top takeaways are: margin, margin and margin

It's getting late here so I'll save watching my favourite Youtubers for tomorrow, but I'll say one thing before going to bed. The competition might as well pack up and go home now.

 

[SageBrush]

For the financial factors they listed to further upgrade, two of the interesting ones were these:

Thanks for the analysis.

I would love to see a histogram of most recent 12 month EBIT of current companies Moody's scores with the credit rating Tesla is striving for

 

[TheTalkingMule]

I saw the record results on numerous online reporting outstanding results, beating the WS estimates by a huge margin. The wife asked "So why the sp was down $50 today". No other company is doing anything close to this and still the price goes down? She's tired of my claiming how great the company is doing and then the sp plummets. I know the market closed before the earnings call and it will probably come back a little tomorrow but then fall again Fri or Monday.

All this crap about Twitter! Just fix these market manipulating, short selling SOB's once and for all!

Come on Elon if you can send a space ship into space and LAND it back on earth (something even whole governments couldn't do) I know you can figure out how to do it!

Tell your wife I said to cool out. The front running hasn't even started yet.

You need to let the numbers filter out into the world, all the official detailed reporting needs to be absorbed, then the big boys will move as they see fit.

Of course TSLA movements are all about the options market, and that market is only open in regular hours. Once the market opens and options can be traded.....look out.

MM's will try to flatten this out as usual, but I expect the momentum to carry right thru to ATH relatively quickly. Like within 2-32 days.

 

[Artful Dodger]

TLSA volume in the After-hrs session was 3,780,784 shares, with the final trade at $1,031.60