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Why Tesla will be out of business in 10-20 years

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Let me try again since you morons don't read 10Ks or know any financial accounting or how to analyze a business (let alone going to the investor relations website). There’s two aspects of Tesla we need to consider to understand why it’s a company that will definitely go bankrupt in the long term: earnings, cash flow/cash burn, and a shitty GAAP accounting technique that bumps up their gross margins.

First, their earnings, while rising about 400 basis points quarterly may be impressive, earnings don’t actually affect Tesla shareholders. While gross profit margins were $667 million in Q2 2017, and they have increasingly higher revenues, these figures don’t affect investors. The main reason being of an accounting technique – typically, R&D is included in your COGS (cost of goods sold), but Tesla counts that as part of SG&A. Once you shift R&D back to COGs, Tesla actually has the fourth highest costs in the automotive industry, only stacking behind automotive car giants (BMW, Mazda, Honda). Even if you were to consider SG&A with R&D again, their SG&A is so high that it annihilates earnings. This is why even though Tesla has been selling more cars, it doesn’t matter, because their EPS is so damn low (-2.7$ a share)

Tesla does not currently generate any cash flow. Their operating cash flow in 2017 is around $-297 million, with free cash flows -$1.7 billion. They have around $3 billion in capex with a cash deficit of around $2 billion. They have only a few hundred million left in any existing credit facilities and they needed to spend 2-3 billion and their cash flow is imploding. It went from 200 million in FCF to -1.2 billion in less than a year. That means the 1 billion they raised in issuing new stock and raising convertible debt was completely wasted. Since inception, they've spent $6 billion. How can a company spend $6 BILLION USD and burn through so much cash that not only they're at NEGATIVE 1.2. BILLION USD cash flow, along with very negative FCF normalized projections. The worst part is this - while their competitors (Toyota, Nissan, Ford) build cars that have higher MPG and miles per charge, they are waiting for industry standards to completely change to the point where they will just ramp up production and obliterate the electric car market. Maybe 10 years isn't right, but Tesla will be bankrupt soon. No company that burns through so much cash flow with NO money going to shareholders is going to last.
 
Consider me now informed ... how do you make money from that?
When you short a company, you want as many people as possible to think the company is a turd so there is a selloff. So, you start spreading any information you can to get people to send the stock in a tumble. It's also useful if you want to drive a stock down to buy it at a lower price so when another story tells the exact opposite you can profit on the stock's rise... or both.

At least, that's what seems to make sense to me.

Fake news. Real news. Doesn't matter anymore. Stuff is posted to get a result, not to inform. Even real news isn't posted in any unbiased way. It's twisted in with half truths or speculation on a result. "Musk smokes a joint. Shows company is in disarray." Sounds reasonable. One part is true. One part is pure speculation and only posted to get a result.

Chris
 
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oneday

Active Member
Nov 29, 2014
1,140
4,986
Bay Area
Let me try again since you morons don't read 10Ks or know any financial accounting or how to analyze a business (let alone going to the investor relations website).
tgxg8cn.jpg
 

neroden

Model S Owner and Frustrated Tesla Fan
Apr 25, 2011
14,676
63,888
Ithaca, NY, USA
Ah, he's a short-seller talking his book, who also doesn't understand the basics of business (surprisingly common on Wall Street). Reported, we don't need them here.

The concept of "economies of scale" and the difference between "fixed costs" and "variable costs" might be new to Mr. pend1971, but be assured that we understand them and so does Tesla management.
 

defc0n

Active Member
Sep 30, 2016
1,318
4,062
Indiana
Let me try again since you morons don't read 10Ks or know any financial accounting or how to analyze a business (let alone going to the investor relations website). There’s two aspects of Tesla we need to consider to understand why it’s a company that will definitely go bankrupt in the long term: earnings, cash flow/cash burn, and a shitty GAAP accounting technique that bumps up their gross margins.

First, their earnings, while rising about 400 basis points quarterly may be impressive, earnings don’t actually affect Tesla shareholders. While gross profit margins were $667 million in Q2 2017, and they have increasingly higher revenues, these figures don’t affect investors. The main reason being of an accounting technique – typically, R&D is included in your COGS (cost of goods sold), but Tesla counts that as part of SG&A. Once you shift R&D back to COGs, Tesla actually has the fourth highest costs in the automotive industry, only stacking behind automotive car giants (BMW, Mazda, Honda). Even if you were to consider SG&A with R&D again, their SG&A is so high that it annihilates earnings. This is why even though Tesla has been selling more cars, it doesn’t matter, because their EPS is so damn low (-2.7$ a share)

Tesla does not currently generate any cash flow. Their operating cash flow in 2017 is around $-297 million, with free cash flows -$1.7 billion. They have around $3 billion in capex with a cash deficit of around $2 billion. They have only a few hundred million left in any existing credit facilities and they needed to spend 2-3 billion and their cash flow is imploding. It went from 200 million in FCF to -1.2 billion in less than a year. That means the 1 billion they raised in issuing new stock and raising convertible debt was completely wasted. Since inception, they've spent $6 billion. How can a company spend $6 BILLION USD and burn through so much cash that not only they're at NEGATIVE 1.2. BILLION USD cash flow, along with very negative FCF normalized projections. The worst part is this - while their competitors (Toyota, Nissan, Ford) build cars that have higher MPG and miles per charge, they are waiting for industry standards to completely change to the point where they will just ramp up production and obliterate the electric car market. Maybe 10 years isn't right, but Tesla will be bankrupt soon. No company that burns through so much cash flow with NO money going to shareholders is going to last.

You are a terrible human being.
 

9837264723849

Active Member
Aug 24, 2014
1,102
5,236
France
The worst part is this - while their competitors (Toyota, Nissan, Ford) build cars that have higher MPG and miles per charge, they are waiting for industry standards to completely change to the point where they will just ramp up production and obliterate the electric car market. Maybe 10 years isn't right, but Tesla will be bankrupt soon. No company that burns through so much cash flow with NO money going to shareholders is going to last.

Do you really mean it when you say "they are waiting for industry standards to completely change"?

How can waiting help legacy automakers when Tesla is continuously improving its tech and products? How can it help to wait while Tesla aims to deliver between 500K and 1M EVs just in 2020? If they're waiting for suppliers to provide them with better/cheaper tech, why would Tesla just buy from these suppliers and increase their margin on their next millions EVs?

Perhaps you didn't really mean "waiting", and you think they've been investing heavily in EV tech.

Can you please explain the Bolt, then? Is/was this a real product or a fake one they never intended to sell in volume? How does it compare with the Model 3 so far? What kind of margin do they achieve with the Bolt?

Can you point me to any clue that proves they'll come up with something better? Like some big investment into factories or something? Any upcoming product or tech I can check out?

Please understand my skepticism: I've been waiting for the Tesla killers for years, and I keep being dissatisfied. Now that BMW and Mercedes are starting to lose significant market shares to Tesla in the US, I'm sure you can help me.

PS: I'm focusing on the competition part of your comment because you say "it's the worse part". If you can support it with anything plausible evidence, I'm sure you can convince me to consider the rest of your argument.
 
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Uncle Paul

Well-Known Member
Nov 1, 2013
6,299
7,645
Canyon Lake,CA
Tesla laid out it's core plan many years ago.
Make Roadster as proof of concept and use the profits to fund Model S.
Use profits from Model S to develop Model X.
Use profits from S and X to develop Model 3.

This was published long ago, and it has proven to be what they did.

Tesla issued stock and bonds to augment profits to build the infrastructure for efficient mass production of electric vehicles.
They purchased, improved and expanded the failed GM/Toyota plant in Fremont CA.
Took over the valuable test track adjacent.
Are in the process of building the Gigafactory which produces more Lithium batteries than the rest of the world combined.
Purchased Gigafactory 2 and solar technology from Solar City.
Have become the worlds largest producer of Lithium battery back up and time shifting electrical storage systems.

All this has absorbed massive amounts of Capital. The capital is being used to change the world quicker than could be done using profits alone.

In his spare time, Elon has also headed up the worlds first reusable and least expensive system to launch payloads into space. Laid the ground work to send mankind to Mars and set up a colony, Developed boring equipment to transport people quickly and inexpensively underground. Spearheaded the amazing Hyperloop technology, Sold the first consumer oriented not a flame throwers,

Instead of being out of business in 10-20 years, Tesla will most likely become the most valuable company in the world by then.

I have begun to realize that even the failures of Elon stand far above the successes of most Men.
 
That means the 1 billion they raised in issuing new stock and raising convertible debt was completely wasted.
You are not a very smart bear. You do realize that money was SUPPOSED to be spent on things to create the Model 3 right? It wasn't a nest egg Elon was supposed to spend on a vacation. You know things like the Gigafactory, or what you would call Pokemon Village.... or how about the new assembly line for Model 3 at Fremont. You must think those things are free. It's amazing they only spent a little over a billion (according to your math).

Once Tesla turns the corner for this quarter and on you can come back at eat crow. At that point it will show the equity raise was not a waste of money.... but I see why you posted now. It's your last chance before Tesla becomes positive. I will admit that if Tesla is not doing slightly better than breaking even in this quarter I will scale back my position.
 
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