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This comment not aimed at you ckessel. Just quoted you, because you brought up GAAP numbers.
I have said this many times before and I will say it again:
Nobody cares about GAAP profits!
Wall St. does not look at GAAP profits.
Wall St. has its own ways of valuing companies and they use non-GAAP methods if it makes sense.
And there is an infinite amount of ways to do non-GAAP. So one person's non-GAAP is not necessarily the same as the others. Companies do their own version of non-GAAP and analysts usually just use those numbers.
I know that many people disagreed with my about the importance of GAAP numbers. But if there is still somebody out there who disagrees with me then I have one question for you:
How come TSLA is at $250 if GAAP numbers are relevant at all?
Someone here was forecasting a huge GAAP beat (.25 GAAP profit). Not that GAAP is important, just that some expectations were crazy high. I could have hunted down the non-GAAP forecast by the same person, but it wasn't readily in my head.
If you were just using my post as a segue to talk about GAAP's value (or lack thereof), no problem.
Your target price of $280 is a 10.7% rise from today's closing price of $253. So, with seventeen trading days remaining to your terminus, and with a recent share price history as volatile as Tesla's has been, an affirmative answer to your question is as likely as it is...I otherwise respectfully will say...quite inane.
Jonathan Hewitt
Active Member
While I completely agree with your assessment it would be nice for Tesla to reach GAAP profitability if simple to eliminate the short FUD that Tesla is "Losing Money on every car" headline.
This is the exact reason why clearance isn't "priced in". As long as anyone is saying, 'wait if it isn't all clear that will hurt the stock', the clearance isn't priced in. Full stop. The uncertainty has cost. So it's a faith issue. If you think it will be cleared then you should be long and should reasonably expect the stock to go up.
I voted yes simply because I think we have a technical bull flag forming. This sideways trading show there is instant price support for (the neighborhood of) the recent ATH. That means nervous shorts and sideline money will slowly learn they have no advantage in waiting to get in. Any break up will be reinforced by covering and sideline money chasing the momentum. (a break down will have similarly bad reinforcing effect unfortunately).
But that's exactly what gross margin tells us: Tesla is making a lot of money on each car. It's not worth arguing with journalists who don't understand basic accounting principles. Frankly, it's odd that such people end up on the business beat.
according to the IB Probability Lab which gets its measurements from current option prices it says that there is about a 15% chance right now (with TSLA trading at 247) that TSLA will end up above 280 by the end of trading on Friday March 28th.
Probability Lab
Yes, I understand this and so does everybody here but the general public doesn't. I have talked to numerous people about Tesla as a car an as an investment and one response I often get is "Yeah, but they are losing money on every car." I then go into the explanation of GAAP vs. NON-GAAP, gross margins, etc. and their eyes just glaze over. It would be nice to get the monkey off of Tesla back from strictly a PR point of view.
Raffy.Roma
Rome (Italy)
I have only a technical background so I cannot make comments that are suitable for this thread but my opininion of a not expert on this subject is: yes $280 by the end of March.
FredTMC
Model S VIN #4925
As another person with only technical background I voted yes because I believe that market did not grasp the enormity of impact that the giga factory could have on the future of automobile and utilities industries. Even thoughtful team from Morgan Stanley, which seems to understand Tesla's Motors story much better than others, were taken by surprise with additional details released during the Giga-Factory announcements, enough so to issue a second report on TSLA in a course of a week. I think that it will take couple of weeks for this to sink in.
Quoting the March 5 Morgan Stanley report:
Quoting the March 5 Morgan Stanley report:
Is Tesla Motors an energy company?
Not exactly. But the success of the Gigafactory holds the key for the development of an entirely new industry. If Tesla can achieve battery cost per kWH below $150 and defend the IP, there is significant potential for revenue streams not captured in our $320 price target. What have we learned from Tesla’s recent Giga announcements?
- Tesla’s 2020 vehicle production target of 500k is 35% higher than our 371k unit forecast
- Tesla’s projected 50 GWh of annual battery production (pack level) from its Gigafactory by 2020 is more than double our forecasts.
- Tesla’s target for >30% reduction in cost per kWh appears vs. a base of around $200/KWh planned by first Gen 3 production in 2017, implying costs <$150/KWh once ramped up.
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i agree with the MS report...but I don't think this realization will happen to the markets by end of March...perhaps as more details come out (ie. State/location picked, official partners, breaking ground at the location, etc)
i would love love to be wrong, but we've just had a nice run up from 120s-250 in 2-3 month period so I think the stock is due for sme exhale and resting before the next run-up...hopefully within a few months as the details come out to catalyze it
The Blue Owl
Endangerous Herbivore
I like this poll. A prediction market about the market. It's made me revisit and fine-tune my assumptions, in light of the very balanced vote and the various points of view stated here. I think we should do more of these in the future.
Mario Kadastik
Active Member
I think the default bear argument is that you can hide some of the cost of the car if you want to do dirty accounting. The easiest places to hide are R&D budget and possibly in some other line items. So if you play the books and lie you can make the company look heavily profitable on gross margin, but you cannot on operating margin. Of course noone here believes this **** as operating cash flow is positive and Tesla is pretty clear what they account to where and how, but as long as the FUD spewers have any levers they'll keep spewing. Once Tesla is GAAP positive the last arguments are weakened.
Btw I've not done the math recently, but isn't car sales gross profit already higher than R&D costs as otherwise we'd not be seeing non-GAAP positive EPS with positive cash flow. In any case, the arguments are weak and FUD, but it's best to just utterly destroy those arguments
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