TSLA Market Action: 2018 Investor Roundtable

[Esme Es Mejor]

Net income for 3Q16 was $21.9 MM[...] In the immediately preceding quarter (2Q16), the net loss was $293.2 MM [...] In the immediately following quarter (4Q16), the net loss was $219.5 MM

So, for the last 3 quarters of 2016– the closest thing we can get to what Tesla would look like without the Model 3– the average loss was about $160 million. Of course, there already was some spending in anticipation of the 3 (building out stores and superchargers), and the S/X revenue was still a little lower than it is today. So, without the Model 3 ramp, Tesla would be at least break-even today, and probably profitable. That would be a nice little company, but it wouldn’t do much to transition the world to sustainable energy.

The Model 3 is able to piggy-back on the infrastructure built by the S/X, so while expenses certainly go up, they don’t go up nearly as fast as revenues. Once it’s fully ramped, Tesla will be a very profitable company.

Then they’ll start spending on the Model Y and the Semi, and bears will freak out about expenses all over again.

 

[Hogfighter]

Guys, be careful with margins. Remember how bad economies can crush stock prices of good companies, especially growth companies.

 

[ggr]

So, for the last 3 quarters of 2016– the closest thing we can get to what Tesla would look like without the Model 3– the average loss was about $160 million. Of course, there already was some spending in anticipation of the 3 (building out stores and superchargers), and the S/X revenue was still a little lower than it is today. So, without the Model 3 ramp, Tesla would be at least break-even today, and probably profitable. That would be a nice little company, but it wouldn’t do much to transition the world to sustainable energy.

You seem to be completely forgetting the Gigafactory spending, which was in full tilt at the time.

 

[phil0909]

Yeah that model is fuxed. You will see tomorrow when the real numbers are posted.

It turns out that Bloomberg's model projected Q1 production within about 5%. I'd say they did pretty well, given the limited data available to them. Would you agree?

 

[Waiting4M3]

It turns out that Bloomberg's model projected Q1 production within about 5%. I'd say they did pretty well, given the limited data available to them. Would you agree?

They got lucky on the total # by way overestimating weekly rate in Feb, then way underestimating weekly rate in March. It's like making 3 left turns and getting to the same place as a right turn, and claiming your navigation routing works. The reason why we think their model sucks is it's still predicting 1200/wk even though Tesla has officially announced 2k/wk steady state. So they're sticking to making left turns even after being told that they should make a right. Any good scientist/engineer/statistician would adapt model to fit the data, but Bloomberg guys are just making excuses why the data doesn't fit their model (our model requires some weeks to adjust). Why not start making better models instead of waiting weeks for the bad model to adjust?

 

[UnknownSoldier]

They got lucky on the total # by way overestimating weekly rate in Feb, then way underestimating weekly rate in March. It's like making 3 left turns and getting to the same place as a right turn, and claiming your navigation routing works. The reason why we think their model sucks is it's still predicting 1200/wk even though Tesla has officially announced 2k/wk steady state. So they're sticking to making left turns even after being told that they should make a right. Any good scientist/engineer/statistician would adapt model to fit the data, but Bloomberg guys are just making excuses why the data doesn't fit their model (our model requires some weeks to adjust). Why not start making better models instead of waiting weeks for the bad model to adjust?

Any model based on something like VIN reporting will always be behind by several weeks because of the delay between when cars roll off the assembly line and when they arrive in the service center for the new owner to claim. There's nothing wrong with the model if you understand it's limitations. Tesla was probably at 1200/week a few weeks ago, they are at 2000/week now. The model is accurate, you just need to understand the time frame they are working with and accept that during a rapid production ramp you won't know the weekly rate until a few weeks later when you rely on VIN reporting.

 

[Causalien]

TSLA is roaring back, as expected. Once the report rained on the shorts’ parade and discounted their moronic theories, sense has returned.

Hope everyone bought back there. This has been one of the biggest TSLA gifts for those with granite testicles since that first run I enjoyed back in 2013.

Ya, forced to increase my postition by 50% because the opportunity was too good, there hasn't been many instances where RSI fell below 20 for TSLA. ANNND there goes the fund I set aside to take my model 3 delivery and also roadster 2020

 

[Waiting4M3]

Any model based on something like VIN reporting will always be behind by several weeks because of the delay between when cars roll off the assembly line and when they arrive in the service center for the new owner to claim. There's nothing wrong with the model if you understand it's limitations. Tesla was probably at 1200/week a few weeks ago, they are at 2000/week now. The model is accurate, you just need to understand the time frame they are working with and accept that during a rapid production ramp you won't know the weekly rate until a few weeks later when you rely on VIN reporting.

A few weeks ago Bloomberg was still showing <800/wk. At the same time, TMC crowd source started hinting at maybe 1200-1500/wk when around 3/16 weekend, a few people including me picked up on the uptick in March VIN assignment. And later Doug Field's letter confirmed that Tesla was indeed at 1400+/wk by 3/23. On 3/23 LA Times published an article in which Bloomberg guys admitted that their model is slow to respond, but claimed it is "by design". Just because it's "by design" doesn't excuse it for being a crappy model. If TMC can beat them by weeks, clearly there is a better way to model, but Bloomberg just refuses to do a better model.

OTOH many here at TMC would probably thank Bloomberg for the bad model, especially for sticking to the bad model right up to the last minute before the delivery report came out, and after. I imagine quite a few here enjoyed the information asymmetry and robbed many Bloomberg readers blind of their TSLA shares at ~$250.

 

[rameshbende]

Q4 GAAP loss was $675M. Compared with that quarter sales for high margin S/X were down by some 6000, compensated by a rise of about the same number in lower margin 3s. Also, last quarter they sold $180M ZEV credits. Tesla has a schedule where they sell ZEV credits only every other quarter. So I don't understand at all how you get to an improvement in GAAP loss.

Yes I am counting on some ZEV credits being sold in this quarter, (I do not know if there is binding on them to sell these only every other quarter.) better margin compared to Q4 on S/X due to third production shift being not required and higher end car mix (low inventory car sales), increased energy revenue (about 500 million. Australia battery recognized in this quarter, solar roof ,power wall 2) and profit (Q4 margin was just 5% due to one time costs, this quarter I am expecting this to be back up 30%), break even on services business (Q4 also had some one time services costs), -3% model 3 gross margin, no increase in R&D/ S&G expense, No other expense (Even if there are some other expenses they can be delayed deferring some payments).

Not all but at least some of these may be possible . So GAAP loss should be in that range although could be more towards 650 million.

 

[CuriousSunbird]

You seem to be completely forgetting the Gigafactory spending, which was in full tilt at the time.

Why is capital expenditure relevant to losses?

 

[Esme Es Mejor]

Why is capital expenditure relevant to losses?

Because of depreciation expenses. There’s a year lag time before they begin to show up on the income statement. So, Gigafactory CapEx from 2016 wouldn’t show up on the 2016 income statement, but the depreciation expenses from 2015 CapEx would.

 

[schonelucht]

You seem to be completely forgetting the Gigafactory spending, which was in full tilt at the time.

Not relevant for profitability.

 

[dw4ngg]

Not relevant for profitability.

Very relevant depending on whether or not you’re looking at EBIT or EBITDA..

Cash flow from operations is what you should really care about right now.

 

[EarlyAdopter]

Markets down sharply in the premarket. Falling off a cliff on news of China adding tarrifs on more products.

This trade wars bs needs to stop. It's counterproductive and helps no one.

 

[EarlyAdopter]

Markets down sharply in the premarket. Falling off a cliff on news of China adding tarrifs on more products.

This trade wars bs needs to stop. It's counterproductive and helps no one.

Futures are now indicating a 400+ point down opening for the Dow. I've never seen them drop this far this fast. Futures markets have only been open for 25 minutes and it's a complete drop off a cliff.

 

[schonelucht]

Very relevant depending on whether or not you’re looking at EBIT or EBITDA..

No. D&A on the gigafactory shell constructed by Q3 2016 was irrelevant in the context of line items like $180M ZEV credits income. Likely a very small part of the gigafactory was even considered 'placed in service' by then. And for the part that was we are talking about straight line depreciation on 39 years or whatever it is for commercial property?

 

[sundaymorning]

Futures are now indicating a 400+ point down opening for the Dow. I've never seen them drop this far this fast. Futures markets have only been open for 25 minutes and it's a complete drop off a cliff.

Both sides US/China) are issuing measures as a bargaining chip. The purposed Tarrifs will be “implemented at a later date”, which means talks are still going on. This whole thing will eventually pass as they are brought to their senses.

Short term wise it’s a lot of back and forth but implementation won’t be for awhile, doubtful that these measures will stick once everything settles.

 

[CuriousSunbird]

No. D&A on the gigafactory shell constructed by Q3 2016 was irrelevant in the context of line items like $180M ZEV credits income. Likely a very small part of the gigafactory was even considered 'placed in service' by then. And for the part that was we are talking about straight line depreciation on 39 years or whatever it is for commercial property?

Correct, except that you should be looking at accounting depreciation rather than tax - 15 - 30 years for buildings in Tesla's case.

 

[justvisiting]

You seem to be completely forgetting the Gigafactory spending, which was in full tilt at the time.

you seem to be completely forgetting that investments don´t show up in the P/L statements...

 

[MacRocket]

My dog Rocket says buy TSLA it’s cheap. Smart dog.

I’m just wondering where I can scrape up some more money

Is AAPL a sell?