Musk Skips Bonehead Analyst Question, Answers To YouTuber

MAY 3 2018 BY EVANNEX 98

This Tesla earnings recap will be different. It has to be. Let me explain.

The star of this quarter’s earnings call was a 25-year old YouTuber, Galileo Russell. 99.9 percent of the financial world and the same percentage of the Tesla community had never heard of Galileo before last night. However, I know Galileo because he’s a regular contributor to our blog, writing about financial news (e.g. here, and here) associated with Tesla.

See Russell Here – Hyperchange TV Presents InsideEVs Sales In Nifty Video Form

A few weeks ago, Galileo called to ask me if I thought he’d be able to ask questions on Tesla’s earnings conference call. I said, “no way,” and went on to ramble about the murky dynamics between Wall Street analysts and the relationship between their “analysis” and the fees their bank bosses collect as a result of company capital raises. This, I argued, is why analysts are so fanatical in their quest to push Tesla to raise capital.

*This article comes to us courtesy of EVANNEX (which also makes aftermarket Tesla accessories). Authored by Matt Pressman.

I told Galileo that a small-time retail investor would never get in the middle of this bizarre dance that occurs on earnings calls. Bank analysts ask heavy-handed questions alluding to the need for capital raises — a strong-arm tactic that always remains front-and-center on these calls. Analysts say Tesla needs to raise capital, Tesla (later) raises capital, and banks collect fees.

Musk bucked this trend recently on Twitter when he refuted a story in The Economist and wrote, “Tesla will be profitable & cash flow+ in Q3 & Q4, so obv no need to raise money.” He did this leading up to the earnings conference call. Don’t get me wrong, Tesla has needed to raise capital in the past. Is it possible things are changing?

Sure enough, after Musk’s tweet, analysts (and the financial press) went into a frenzy about Tesla’s dire need to raise capital. After all, they argued, the company was on the verge of bankruptcy and Tesla’s absolute demise was imminent. Which makes me wonder… is the financial press rooting for Tesla or rooting for the banks? Who knows.

In any event, I told Galileo that these earnings calls are a grandstanding exercise — not a place where good questions are asked. Galileo insisted that he’d try to get on the call.

Sure enough, he did. On Twitter, Musk agreed to let Galileo on the call. On the earnings call, Musk reaffirmed no need for a capital raise. Then, in a defiant move, Musk pushed aside the analysts to give Galileo “the floor” to ask a lot of questions. A lot of questions.

Sure, Galileo is a small-time investor. But he must’ve sparked something in Musk to allow him on the call. Galileo stood up for retail investors instead of the bigwigs on Wall Street. Pretty disruptive. So I think it’s best to let Galileo recap the earnings call for you.

Source: Hyperchange TV

Elon Musk just tweeted, “You’re most welcome” to Galileo and linked his video recap on youtube.

Galileo, I stand corrected. You got on the call! You should tell our readers more about it.

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98 Comments on "Musk Skips Bonehead Analyst Question, Answers To YouTuber"

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Well done Galileo Russell, those were indeed good questions.

Make sure that you will be allowed to ask questions on every next Tesla conference call.

Yes, here is a difference between the myopic, short-term thinking that really only benefits and drives Wall Street who makes money on financial churn and the proper long-term thinking that drives a successful business strategy that steadily leads to progress and prosperity for humanity at large.

Tesla is in the woods right now, and investors want to understand the roadmap to get out of the woods… The questions were totally legit, Musk was just moody, and tired of being questioned, he wants to move the conversation back to the dream… Everybody seems to love the dream, but investors want to see the roadmap and make sure Tesla management has a solid plan to get them to the future for that dream. I have listened to many tense earnings calls, none more so then when BA had the dreamliners grounded, but the executives there were always professional and polite. Just give the answers, and move on. Overall I think the Gali stunt was a complete failure and Musk’s attitude led to a 6% fall in share price today, hurting investors, many of Gali’s own followers were wiped out on margin calls this morning. Somebody sent me a link to Hyperchange not too long ago, I watched one video, and thought people actually listen to a fast talking (misinformed) kid in a dorm room for investment advice? The world really has changed… ;)~

The problem of big business is that they have long lost the dream and they are all there to make a quick buck. You’ll not transform the world this way and stick with comfortable, easy, safe paradigms which will allow you to fade in to obsolescence. Remember, Zuckerburg, Jobs, Gates… they were all kids in dorm rooms. Bravo to Galileo. Wall Steet needs to be slapped more often.

What you are missing is there is no dream if the company does not survive, and right now, things are not looking good… The analyst asking about the close rate on Model 3 reservation is totally a realistic metric to determining the value of the backlog. The stock price is the best thing about Tesla, that balance sheet took a hard hit in Q1, it cannot survive too many more of those, and bond holders already waved the white flag, they are not going to put more money in. There are safe investments that have more green credit then Tesla, I just bought some more BYD for my long long term accounts, and will buy NIO when they go public later this year. These are both well financed and well managed companies making EV’s Why do you compare Gali to Zuckerburg? Gates? Jobs? I guess they all were 25 at one time, that is where the similarities end… Gali is a cheerleader, does not know anything about analyzing a companies true potential. Hard questions are necessary to understand where Tesla is heading. If Gali was smart he would have drilled down more on Model Y and Semi production, for more… Read more »

Even more exasperating than Elon ducking “inconvenient” questions from investors, is serial Tesla bashers jumping up and down and claiming a 6% drop in a very volatile stock is a sign that Tesla is in financial trouble.

Just give it up. Your endless FUD isn’t just ridiculous and clueless, it has by now become very tiresome. Just stop whining! We don’t care how much money you’re losing by shorting Tesla stock, dude.

Elon Musk certainly said one thing in this call that was dead on target:

“So really the point is, like, people get too focused on, like, what’s happening in the space of a few weeks or a few months. This is an old maxim of investing, you should not be focused on short-term things, you should be focused on long-term things. We have no interest in satisfying the desires of day traders. I couldn’t care less. Please sell our stock and don’t buy it.

Actually the 1.1B loss/debt added to the balance sheet is where I see the financial problem, but there is one thing you may, or may not know, but read deeper into the SEC filing and you can see Elon has a lot of his personal shares mortgaged, if the stock drops too far, it breaks the covenants on those loans, and bye bye baby… Margin call…

Give it up shorty! No one is listening to your propaganda against Tesla.

If Tesla went under tomorrow, Elon will have made his mark by leading the U.S., and even the World, into the much brighter future of a clean energy planet.

What are you talking about, the BEV bus movement in China is doing more for the planet then the entire Tesla fleet…

“Actually the 1.1B loss/debt added to the balance sheet is where I see the financial problem…”

One of our best-informed forum members, Nix, says that Tesla’s assets are growing faster than its debt. I rather suspect that his understanding of Tesla’s finances is better than yours, and I’m certain it’s far less biased than your FUD.

Take Elon’s advice: Sell your stock and move on. We’re tired of your whining.

He did NOT claim that “a 6% drop in a very volatile stock is a sign that Tesla is in financial trouble.” He linked the short term share price drop to Musk’s performance during the call.

What incompetent company analysis.
You’d better start following Galileo.
This is the third time in Tesla’s history where they’ve spent big and have and big losses. The same thing happened to the ramps for the S and X. Because, the “loss” 95% if it went into CAPEX spending, and then in subsequent quarters Tesla got that return on investment.

Tesla is nowhere near bankruptcy, except in your dreams.

While the world needs more visionaries and dreamers like Musk, at the same time this was an investors’ call. It was entirely proper for investors to try to nail Elon down on financial questions he doesn’t find comfortable. The “inconvenient” questions need to be asked, and answered. It’s truly amazing that Elon can get away with ducking the “inconvenient” questions; amazing that he’s gotten away with this so often that now he simply takes it for granted. Every quarter, Elon predicts that within a quarter or two, Tesla will become reliably net-profitable. And every quarter, it fails to do so. By now, it’s pretty obvious that he has no intention of actually making that the priority, at least not in the near term. It’s no wonder that Elon finds questions related to that to be “inconvenient”! Elon is great at using Twitter and social media to promote Tesla, and he’s great — hell, he’s fantastic — at fund-raising. But I’d like to see Tesla Inc. replace him with a CEO that was better grounded in practical concerns and in making Tesla’s production run smoothly. Tesla would be better off with Elon as just a member of the board, with responsibilities… Read more »

This particular question was about how many reservation holders were dropping out. When in the previous 5 minutes Musk told them they at 450,000 reservation holders.

If you’re not capable of comprehension you shouldn’t be on the call. In other words, it was a short meme, not related to reality. And really Musk shouldn’t have to answer Conspiracy Theory questions from Trolls.

No – that was precisely not what the question was about. The question was out of the people invited to configure, how many do configure the LR-premium interior option and how many do defer. There was no part of the question that asked about them dropping out completely. The question essentially was about future options mix and how fast Tesla will run through the reservation list on the currently available options. “If you’re not capable of comprehension you shouldn’t be on the call. In other words, it was a short meme, not related to reality. And really Musk shouldn’t have to answer Conspiracy Theory questions from Trolls.” Neither reading nor listening comprehensions seems to be your strong suit either. And just in case you doubt me, below the transcript of the call with the exact words of the question: “Joseph Spak – RBC Capital Markets LLC Thank you. The first question is related to the Model 3 reservations, and I was just wondering if you gave us a gauge as maybe some of the impact that the news has had. Like, of the reservations that actually opened and made available to configure, can you let us know, like, what percentage… Read more »

No, it was not about how many reservation holders were cancelling their reservation. It was about how many are converting their reservation to an order when given the opportunity — as opposed to how many are choosing to wait, presumably for more options to become available (but at least some waiting for reports that quality control has improved).

It is an entirely legitimate question to ask what percentage of reservations are being converted immediately to orders, and what percentage are being deferred to a later date.

Wow push, i thpuht you would be ra ra for Elon, they do need a business savy CEO like Cook

90% of the short “stories” are lies.
The SEC needs to investigate, this is stock manipulation thru lies.
I never seen such unprofessionalism in the financial news industry, until Tesla.

The real headline should have been “Bonehead dismisses concerns of investors”

The only investor on the call was: Galileo.

Stocks go up and down. 6% is nothing.

“But he must’ve sparked something in Musk to allow him on the call.”

Seriously? Who would rather take a question from, a fanboy or a critic?

From critics and major investors. Small timers should never have on earner call

My understanding is the questions were crowd sourced from multiple retail investors and Gallileo sent a moon shot to Elon via Twitter asking to be on the call. If it had been one youtuber alone, Elon may not have been interested. Smaller long term investors had a voice here. I say, Good! I liked the questions and answers. Elon seemed to appreciate the long term thinking questions too.

Wow. Who’s PAYING FOR ALL THE TROLLS TONIGHT on Inside EV’s. We’ve never had so many trolls show up before.

I think you’re new here. We have had far worse infestation of trolls in comments to articles on Tesla’s finances. In fact, before InsideEVs started letting us vote up/down on comments, there were times when the trolls absolutely took over the comment threads. 🙁

both. You have to open your mind to multiple perspectives. Surround it with different opinions. That’s the wise option.

True. Tesla’s ending 2.7bn in cash doesn’t get repeated much, though I think the WSJ is calling the amount consumed by lease and debt service (payments Tesla cannot dial down). I see both sides.

RE: “Boneheads”
-Bernstein recently had a short-friendly $285 price target. Shorts don’t get much “access”, or opportunity for these Q&A’s. -Musk knew who he was talking to, and indulged with good cooperative answers (w/CFO)
-Conference call rules were clear: “1 Quetion, 1 Follow up”. Sacconachi pressed for 2
-He asked “specifically”, where specific material information is supposed to be isolated to the letter.

It doesn’t escape the investment community, when your advise is short. The analysts ganging up on Musk are mostly neglecting this. At the same time, we again see Musk frustrated by reconciling unrealistic expectations and reality. Having to do it before people mired in the short-term, is easy to see as something Musk would have no appetite for.

Another Euro point of view

“Bernstein recently had a short-friendly $285 price target”

Go and ask shorts if they think that $285 is a price target that fit their thesis, I do not think they would agree. For them $285 it is a uber bull price target.

The shorts think Tesla is a Ponzi scheme.
It’s the first Ponzi scheme in history to:
-Grow Factory & plant and Equipment to huge valuations with geometric grow.
-To put out a Class Leading Product
-To have Huge Demand for the product, and Rave Reviews.
-With tech that leads the world and Hires Americans.

We need More Ponzi Schemes!

Well, the short-selling Tesla bashers pretend to believe it’s a Ponzi scheme. I suspect most of them are not foolish enough to believe their own FUD and lies.

I am not short the stock, and do not believe Tesla is a Ponzi scheme. I think Elon Musk is Incompetent as the CEO of a publicly traded company, if Tesla was private he would be fine. I also think Elon Musk has build a pretty nice life for himself, tax free, and off the back of the shares he owns. 5 Homes, and a Gulfstream G650 jet are pretty lavish for a CEO that claims to sleep in the factory, and has several companies burning investor cash like crazy.

You actually think Elon Musk doesn’t have to pay taxes? Seriously? Just what are you smokin’, dude?

If you’re not a stock shorter, then you’re a “useful idiot” parroting the FUD they churn out. I don’t know which is worse; being a troll or being a useful idiot helping trolls.

All the money he spends on his personal life is borrowed, not income, so no, he is not paying income tax like the rest of us. He has a portion of his Tesla shares mortgaged, thats where he gets money for Homes, Jets, Boring Co, etc… Its right in the SEC filings if you know how to read…

Tesla is not a Ponzi scheme there a growth company, bitcoin is a ponzi scheme

Really? I doubt that anyone – even their harshest critics – think Tesla is a Ponzi scheme.

Go to SA and read some articles…you will see the incredible lengths the shorts go to.

Well, they certainly hit that price today of $284.45 at closing.

The shorts also never mention the ‘lose’ is going into CAPEX.
But, if Galileo can see that 95% of the ‘lose’ is showing up on the balance sheet under ASSETS then someone not biased could also.

In other words, if this is a Ponzi scheme we need ALL American companies to be Ponzi schemes.

Wrong!! The 700M loss is from operations is not CapEX, CapEx is a separate line on the earnings statement. that was 655M and they borrowed 300M

Bull pucky. You’re trying to lump together things which are separate. It’s as ridiculous as claiming an investment is a “loss”.

This can be easily proven as it is black and white on the earnings statement, go read the statement. There is also some obviously deceptive accounting on the auto sales vs lease numbers.

Here’s a non-“Bonehead” question: Are Teslas with AP really 40% safer than non-AP cars?
The NHTSA now says NO!
https://www.cnbc.com/2018/05/02/effectiveness-of-tesla-autopilot-was-not-assessed-nhtsa.html

Can you even read the title of your link? Come on, step it up.

Did you read the article?

bro8008 – The article doesn’t say what you say it says.

NHTSA said they took Tesla at its word, and did not “assess” the validity of the “40%” claim.

Not trying to be short (actually bought more on today’s reaction), but the buck stops with more transparency. Articles have suggested AEB wasn’t controlled out of the data.

Musk is this fantastic, cerebral, individual, with a BS problem. If I could ask a call question, it would be
“Given AI’s delay, will you hedge demand for your future cars by restoring interior ergonomics and controls?”
Pretty sure I would be called “Boring bondehead”, for this. But here’s the bonehead way to ask the same question:
“How much of your 40% better claim comes from drivers having it that much worse, when they attempt to manually drive your cars?” -The data this claim refers to is Model S manual vs. AP driver.

“How much of your 40% better claim comes from drivers having it that much worse, when they attempt to manually drive your cars?”

Simple logic shows the answer would be “None; zero”. Drivers of Tesla cars without AutoSteer aren’t going to become dependent on AutoSteer, as you are suggesting!

Is the inability to form a logical conclusion contagious amongst Tesla bashers? 😉

pjwood — You clearly didn’t read either the article, or the report. Go read both and then come back and correct your mistakes in your post.

I can’t wait for you to come back and ask where you can find the full report….

Bro doesn’t know how to read. He has only been taught to recognize “musk” and “Tesla” and like pavlovs dog when he sees either he makes wild and nonsensical accusations. Along with a good couple I hate Tesla posts.

Are you really this clueless, dude? Or are you just “playing dumb”?

Let me dumb this down for you: The NHTSA said that merely installing Tesla Autopilot+AutoSteer (not just Autopilot alone) in a car was sufficient to reduce the accident rate ~40%. It follows, by simple logic, that with AutoSteer engaged, the accident rate is even lower than that!

What this indicates, to anyone capable of critical thinking (apparently that doesn’t include you), that engaging AutoSteer makes Tesla cars even safer than the ~40% lower accident rate indicates. Duh!

Go Tesla!

A full 1/3rd of the cars in the NHTSA numbers were cars that had AEB already installed, and had AutoSteer enabled OTA. So we even know that AEB alone couldn’t account for the reduction in accidents.n AutoSteer had to play a major role.

Pjwood1 keeps insisting that AEB alone will reduce the accident rate by 40%, and uses that false claim as the basis for saying that Tesla Autopilot+AutoSteer is no better than AEB in other auto makers’ cars.

But if you actually look at the citation he has linked to, it only asserts that AEB reduces head-on crashes by 40%. Pjwood1’s source does not assert that AEB reduces the overall crash rate by 40%, as he claims.

I’ve pointed this error out to him more than once, but he keeps repeating his debunked claim. However, perhaps he just hasn’t seen my comments refuting his claim.

Back to the main article guys

I want his t shirt, where can I buy it from?

Pretty Cool! Been watching him for a while. He can get you a deal on a [not a flamethrower] It’s Boring too, which sets up some cognitive dissonance as I thought that was good, but now Boring is bad? I suppose it depends on the context.
i.e. If it’s a machine digging a hole in the ground, it’s cool, if it’s you asking about the financial hole Musk has dug, then it’s not cool.

“Galileo stood up for retail investors instead of the bigwigs on Wall Street.”

The CEO of a company refuses to address the issues that have led his company to a $2.3B working capital deficit, an ever-declining bond rating and can only address those problems by returning to the markets for additional share sales or expensive debt. So how is it that giving the CEO cover is “standing up for retail investors”? Should TSLA share value and the price of their convertibles significantly erode as a result of their fiancial difficulties, the biggest losers WILL BE retail investors.

EVANNEX, as usual, wastes bandwidth on this topic.

Somebody certainly does need to nail Musk’s hide to the wall and force him to answer “inconvenient” questions about Tesla’s financial plans, and confront Elon about his endlessly unrealistic predictions for Tesla’s rate of growth and profitability. Musk’s spoiled-brat behavior on this call was, to say the least, highly unprofessional.

But Tesla’s debt level, taken out of context, isn’t a very meaningful measure of its financial health. According to Nix, who is well-informed on the subject, Tesla’s assets continue to grow faster than its debt. That’s the sign of a healthy company, contrary to what serial Tesla bashers want us to believe!

What is Tesla’s debt level? Do you know how to read a balance sheet? How much cash? Payables? Even if we ignore the massive debt, this is a very sick company. Tesla’s assets are all book value not resale value… Mostly the 2 factories… Remember, nobody wanted Fremont… and Giga, that is more debatable.

I treasure my ignorance on this subject. 😉 Seriously, I have absolutely no desire to be an accountant. (It was bad enough when I had to teach myself double-entry bookkeeping!)

However, I’ve spent enough time reading all the Tesla-related blog posts and comments on Seeking Alpha to be able to recognize Tesla bashing FUD when I see it. Fortunately, that doesn’t require a degree in accounting!

I also know that what Nix posts is almost always reliably correct… very much unlike what Tesla bashers like you post!

Here’s another one who can’t read Tesla’s financial documents and didn’t comprehend the call. Did you pick up two minutes from CNBC?

To me this is all very surprising…. I wish SVEN still frequented these pages as he was BEST we’ve got in his ability to analyze a balance sheet. Now, Me, I don’t fully understand all the ramifications of the questions being asked, but since this was an ‘earnings conference call’ the questions seem to be fair game. I wonder if Musk is taking a very big chance ignoring the questions. Would love to have SVEN’s expert analysis of the entire situation.

If IEVs kicked him off, maybe tempers have cooled a bit and you guys could email him to come back. His expertise in this area is sorely needed.

Another Euro point of view

I remember Sven well, with time we might have to discover that those who had this early/unpopular somewhat skeptical analysis of Tesla were right after all.

Nope. FUD doesn’t magically become true with the passage of time, nor does repeating a lie over and over make it any less of a lie.

“Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passions, they cannot alter the state of facts and evidence.” — John Adams

Sven said the Model 3 wouldn’t reach production until 2019. I wish he were here to eat crow on how badly he got that one wrong.

To be fair, Musk hasn’t had to eat crow for all the times his production predictions have been wrong either.

The former S-loser said the Model 3 wouldn’t reach production until 2019. I wish he were here to eat crow on how badly he got that one wrong.

Yes if anyone wants to challenge SVEN’s expertise, they’d have to put up or shut up. Making generalized predictions about the future is very hard, and Sven has been more right than wrong here.

I’m not saying he would say anything is amiss with Tesla’s analytics. But others have accused them of being a bit loose with the numbers and I’d appreciate his expertise explaining what is and what is not allowable. The loud mouths certainly don’t know, no matter what they claim.

The “DAVE” who comments here appears to have some information. Dave if you are listening, please ignore the noisemakers, and elaborate on things that you think are both right and wrong. As I say, this site is surely in need of a SVEN-Like business mind.

I nearly jumped up and yelled hallelujah when he did that! The boy DOES have a pair after all. I guess he finally got tired of being bandied about the head, no matter what he says or does.

If he doesn’t want to be bothered by those Wall Street type questions, maybe he should stop asking them for money all the time and simply take Tesla private? Surely his friends from Google could come up with the money necessary for that, no?

He’s not asking for their money. Had you listened to what’s available you’d have known that. Don’t come on this web site with 2 minutes from CNBC.

He has asked for their money repeatedly in the past and while he doesn’t plan on asking for money again in 2018, he is almost certain to ask for more in 2019 as he needs to pay for the 2 additional factories he is planning.

He also has a billion in bonds coming due with the year that he is likely to refinance, and in case anyone forgets, SolarCity has huge business with Wall Street by selling packaged income from the solar panels (not that anyone, cares much about SolarCity anymore; not even Galileo asked a question about that …)

Seriously? This was a quarterly call with investors and financial analysts. It wasn’t supposed to be a call with some random guy from a YouTube survey, giving Elon an opportunity to talk yet again about his visionary plans for the future.

We should all appreciate Musk’s vision and his ability as a futurist! But this wasn’t the time or setting for that. This was a time to talk with the bean-counters about the beans. Musk has plenty of other opportunities to talk about his visions and plans for the future, where he often or even usually doesn’t bother with considering practical limits.

Another Euro point of view

Today, on a site extremely unpopular with Tesla’s following, someone made a long an (to me) very funny comment comparing Galileo Russel with Incitatus, Caligula’s horse, brought by his master to the Roman senate as a new senator. I would have copied it here but fear being thrown out with tar & feathers.

That story about Caligula would be funnier if the Emperor had appointed only half of his horse to the Senate — and not the front half! 😉

Seems to me that any ridicule should be directed toward Musk’s petulant and unprofessional behavior on that call, not the enthusiastic questions from Galileo Russel!

True – in the case of the horse and caligula, I don’t think anyone really blamed the horse for being there.

Congratulations Galileo. Nicely done.

Hate to say it but Elon is acting like Trump. Making wild unsubstantiated claims. Criticizing those who dare question him. He came as close as possible to calling it “fake” news. This isn’t helping his credibility. Now he has NHTSA and NTSB displeased with him. The lack of coverage on some of these topics is interesting.

Man, you nailed it… Elon is acting like a child, just like Trump… For the record thought, I do think Elon is WAY WAY WAY smarter then Trump…

Not so much childish as bombastic and overbearing. Musk and Trump have a lot in common when it comes to style.

I thought the same thing. Not Elon’s finest hour.

If you get to ask questions again, ask about Tesla gap between forecasted outlook of total battery demand of all markets combined compared to their supply. What are their plans or what will it take to close this gap? When could they possible catch up? It seems looking forward the demand is literally runaway considering what the utility storage market will want. thanks. Hopefully that made some sense.

Seems rather odd to direct such questions at Musk. Tesla Inc. and BYD are the only auto makers positioned to grow their EV production as fast as they want to, and it’s because they had the foresight to build out large-scale battery supply for their own needs.

It’s the execs of every other auto maker who need to be asked where they plan to get batteries for the EVs they claim they’re going to be putting into production!

Go Tesla!

BYD is the only one actually growing..

The hard questions which analysts were trying to ask Musk were just about as far away from “bonehead” questions as it’s possible to get. Much as I’m a fan of Tesla Inc., I’m not at all a fan of how Musk uses so much spin and completely unrealistic predictions for Tesla’s production or profitability. Here’s the Truth: Elon Musk usually predicts, almost every quarter, that Tesla will become reliably net-profitable within the next quarter or two, but as anyone following Tesla knows, this hasn’t happened. Tesla has, I think, only managed to show a quarterly net profit twice, and that apparently happened only by “robbing Peter to pay Paul”. Elon needs to be nailed down on his repeating fibbing. He needs to be confronted with his dishonesty, and he needs to admit the truth: That he has no intention of making Tesla Inc. net-profitable until it’s grown to a size somewhat larger than it is now. Just like Amazon.com didn’t become profitable until it had grown to a surprisingly large size. It’s pretty clear that this is Tesla’s business plan, and Elon needs to be upfront about that. Now, please don’t make the mistake of thinking that I agree with… Read more »

Excellent analysis. At times, Musk has hinted in earnings calls that he doesn’t like the quarter to quarter short term focus. I think he should start embracing your ‘honesty’ proposal. Tesla’s investors understand that the stock is a long term play.

I think Tesla will be fine. Tesla can raise a huge amount of cash by just showing a Model Y prototype and asking for $3K reservation fee and all cash flow problem will be solved…

As long as the demand for Model 3 can sustain at ~200K per year, I think Tesla will survive the cash spending.

What I was surprised about is the reservation count at < 500K numbers.

The 3 reservation count appears to have been relatively stable, some moderate oscillation in numbers, but still just north of 450,000. With a 66% take rate that is still right around 300,000 3 buyers waiting in the wings. That will take Tesla at least a year and a half, maybe 2 years given how slowly they are ramping up. Plus all the reservations they will add when everyone gets to ride in their neighbors 3.
So they may have guaranteed sales of the 3 going forward until the Y is ready for sale. They may not hit their higher production per month goals but if they get past 10,000 3’s a month they will be raking in a decent profit on just the 3’s.
Though it may take them a while to put together a quarter in which they sell 30,000 3’s….

Sustain 200k per year? They haven’t even managed to get anywhere near that production yet. I really think it makes sense to at first hit a target before even thinking about sustaining it. With the trouble Tesla has had ramping up the Model 3 there’s plenty of reason to be concerned whether they can even come close to achieving the number you’re quoting, whether or not the demand is there, which also isn’t certain.

The bear case for Tesla isn’t that the company flat out fails and goes to zero (or low enough for the residual to be bought), it’s that the rosey projections that are constantly thrown out there don’t come to pass. For example Model 3 might only be a 100k per year car.

For anybody actually interested in owning a Tesla car, either now or in the near future, the questions from the internet were WAY more informative than the questions from the analysts.

I mean, who cares what Model 3 sales do for the rest of the luxury sedan sector, as if Elon Musk really had a goal of increasing the size of the ICE + EV car midsize luxury sedan market? Why would you ask Tesla a question essentially about how well he thinks ICE cars will continue to sell in the same sector after the Model 3 dominates it?

Sadly, insidev’s Tesla stories have become infested with posters who aren’t at all interested in owning a Tesla, either now or in the future.

What I mentioned in my last post is quite troubling considering there are over 300,000 current Tesla MS/MX owners, with around another 100K more S/X owners likely this year. Plus over 450,000 current Model 3 reservation holders. That’s getting close to a million people who are so interested in Tesla that they’ve already or will soon open their checkbook to prove it. That’s without even counting folks interested in Tesla who will buy used as soon as it becomes practical (that is typically 4 or 5 times larger than the number of new car owners).

With that size of potential viewership of people actually interested in Tesla, how is it that Insideev’s manages to have their Tesla stories become so heavily lopsided with posters who are so clearly not at all interested in Tesla cars?

I think Steven Loveday (or one of the InsideEVs staff) recently said that the people posting here comprise only about 1/2 of 1% of the InsideEVs readership. Perhaps a significant fraction those of us who self-select to be frequent commenters here don’t represent the average reader. What kind of person would spend a lot of time reading and posting to a single website? (Obviously I’m one of them, but I’d never claim I’m an “average” person llama.) It’s the same question I ask when I see the dozens or sometimes hundreds of Tesla-related comments posted to Seeking Alpha every day, with the same relatively few people making the majority of those often repetitive comments. What kind of person would spend to much time posting FUD about Tesla, over and over and over; and what would motivate them to spend so much time at it? Even if they’re a stock shorter, how can the time spent on that possibly be worth it, given that posts by any one person to a site like SA probably can’t move the stock price by even a single penny? I guess for some of them, it’s just a pastime. If they’re gonna waste time on… Read more »

If Elon doesn’t want to answer questions on these calls, then he can leave it to his CFO. He managed to hit the stock with this. Its unprofessional.

Oh please. You clearly didn’t even bother listening to the call. Elon answered tons of questions. Don’t pretend he didn’t want to answer questions just because he cut off one person who had already gone way past the 1 question + 1 follow up rule of the call, and then decided not to answer a question that was based upon an incorrect premise and went to questions from the web instead.

Elon just wants to save the world without having to defend the company’s profitability strategy four times per year. His patience for justifying everything to financial analysts has reached its limit.

Shareholder