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.
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.
