Tesla On Track For Profitability This Year

Tesla Model 3

OCT 9 2018 BY MARK KANE 35

Profits, stock gains and a bright future lie ahead.

According to Macquarie Research’s analyst Maynard Um, Tesla is on a path to profitability. First net income is to be achieved during the second half of this year.

This would have an obvious impact on the stock, which is expected to go up some 70%. Macquarie targets $430 (more than the $420 Musk suggested) compared to about $250 recently.

Tesla has a bright future because it’s more a disruptive technology company – engaged in EVs, energy storage and solar – than say a conventional automaker.

Maynard Um said:

“Um’s thesis relies on Tesla having enough cash “to get over the debt maturity hump.” He said Tesla will be able to push through the debt challenges through multiple sources of cash flow. Macquarie estimated Tesla will get $500 million to $600 million in revenue from clean energy government credits in the second half of 2018. He also said cash flow will be boosted by rising Model 3 sales and access to $1.2 billion in unused debt.”

“Musk has said Tesla does not have to raise more capital, but the analyst said it might be a good idea. “We believe a raise through equity would be beneficial in further strengthening its longer-term outlook as well as providing a cushion in case of any unexpected periods of economic softening.””

Source: CNBC

Categories: Tesla

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35 Comments on "Tesla On Track For Profitability This Year"

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REXisKing

True with the statements of VW and BMW about battery production issues and delays…

theflew

How do they know Tesla is on track for profitability? Do they have insider information? I’m not even sure Tesla is 100% sure. This sounds more like an analysts hopefully expectations.

Kbm3

Suggest reading the analysis before commenting.

KumarPlocher

How could anyone be 100% sure, lol!

REXisKing

Sales, Safety record, and Musk has publicly stated the goal is profitability.
And they probably have better access to Musk.

MaartenV NL

They use basic accounting and math. No reading of tealeaves needed.
Here is an example of such an exercise.

https://tinyurl.com/y74ml9a2

Q3-2018 is about break-even, depending on policy they can decide to report a profit or a loss (intention is to report profit.)
Q4-2018 is a clear profit, but not big enough to influence the 2018 annual result much.
2019 growing quarterly profits, costs of bringing semi to production not large enough to turn growth negative.
2020 solid profits while Model Y enters production. clear contribution of energy storage products.

Another Euro point of view

Good, if Tesla is making profits then we can run calculation of its intrinsic value according to P/E ratio. Then we will of course need to see where these profits are coming from. If essentially from car manufacturing then we will need to use a car industry valuation of 18 times its yearly profit. If potential in self driving etc. then we need to have evidence that Tesla is further advanced than competitors, as often with Tesla you need to be a strong believer. That is fine with Elon apparently as he recently repeated in twitter that he only cares for the strong longs (believers) in true guru fashion.

Kbm3

P/E ratios are a terrible metric for high growth companies. No properly educated financial analyst would use something that erroneous.

Get Real

Isn’t it funny how serial Tesla haters like Another Euro BS and the flew constantly whine here at InsideEvs about all things Tesla instead of just being maybe mildly appreciative that Tesla is moving the needle a lot on EVs?

MDEV

Another Euro BS is a Russian troll, so he/she is European.

KumarPlocher

Yes, there are a million measures by which to gauge a company’s success, and with high-growth companies, you need to choose carefully.

Noone

P/E ratios are not identical for fast growing companies and slow growing companies. Would you assign the same P/E value to a company that is growing at 100% a year as one that is growing 1% a year?

REXisKing

Amazon’s PE is 148, so very high, and that would not be an investor happy number if it was a mature no growth company. However, you know, look around in your neighborhood. Those sales malls are turning into doctor offices. Where are those sales going?

Sometimes, the early guy getting in is right.

Karl Leinstein

I guess the ICE companies are in real troubles here in Europe the salesfiguers are going down and #Dieselgate is approaching Europe. They do not meet the the WLTP limits, recently it was mentioned that even the hybrid cars are
not complying. This will cost them enormous amounts of money. Not to mention that they are far behind TESLA…

MaartenV NL

What professionals do is calculating the current value of future cashflows.
They look 3, 5 or 8 years in the future.

Nix

3, 5, AND 8 years…..

Calculating on prior quarterly data alone is like driving down the road looking only in the rear view mirror. 😉

JoeInTheUK

I presume you would measure Amazons intrinsic value by comparing it with retailers like Sears ?

Mike

I don’t claim to have really looked at Tesla’s financial position, but it occurs to me that they sell a quarter of a billion dollars worth of Model 3s every week and all the equipment and development costs have already been paid for. The Munro tear down also suggests that 30,000$ is a decent ballpark cost estimate per car. While they could still have problems servicing their debt, they are almost certainly raking in a chunk of change every week and it will only get better as they expand production and start delivering to other countries (financial meltdown or other craziness not withstanding).

Doggydogworld

Tesla forecasts $51k average cost to build Model 3s this quarter and $48-49k in Q4. SR base model will save $3k on batteries and $2k on premium upgrade package, but they’re still a looooong way from a $30k cost point.

David

When does Tesla actually report on their 3rd quarter?

Scott

Normally about one month after close of quarter. So expect around Nov 7th.

John

So, load up on stock shares on November 6th?

Scott

well yesterday I bought more at 249 but yeah. Now till then.

Jeff

Buy on rumor, sell on news.

Dam

Can’t Raise Can’t Leave

Get Real

I guess if you can’t raise the Dam to staunch the rapidly growing numbers of Tesla’s produced and sold then you are going to watch all that cash that Tesla is now making overflow your weak FUD.

TeslaPlease

Can someone explain how Tesla can claim profitability and no need for a capital raise when their:

1) Payables have increased exponentially
2) Q3 2017 & 2018 liens are 3-4 times what they were in prior cycles
3) NV is suing Tesla for not paying it’s employment taxes ‘Tesla Sued by Nevada Over Unpaid Taxes for Workers in the State’

To a lay-person, it appears Tesla is trying to keep liquid by stiffing their vendors and the Nevada government in order to claim having plenty of cash reserves when they file official reports for the quarter.

People with drones noted the Fremont plant is no longer operating 24/7 and the lot almost empty on most weekends.

ffbj

Nope, no one can explain it, to you.

Get Real

Lmfao!

Doggydogworld

Your three items have nothing to do with GAAP profitability.

And the Fremont plant parking lot observer was off by 20-40% in August/September.

Get Real

I guess The serial anti-Tesla Please will just have to troll harder next time!

Pushmi-Pullyu

“Can someone explain…”

Sure, it’s easy to explain why the serial Tesla basher brigade (including you) keeps up their unending stream of FÜD. Because y’all think that you can manipulate Tesla’s stock price by posting fake news and half-truths about the company to social media.

Gasbag
“1) Payables have increased exponentially” My public school covered exponentiation in the fifth grade. Between two data Points any increase or decrease no matter how large or small can be described in terms of an exponent. For a decrease the exponent becomes negative and for smaller deltas the exponent is less than one. Without defining the exponent it is somewhat meaning less to say payables increased exponentially. What you are probably referring to are two short term loans that total a bit over a billion dollars. One of those comes due in November and the other comes due in Q1 2019 so neither is actually due yet. When they do come due Tesla will almost certainly choose to roll the debt over. Interest rates have risen so it will cost more to continue financing this debt however at current production levels that increased cost amounts to needing to sell about three TM3s per day. “2) Q3 2017 & 2018 liens are 3-4 times what they were in prior cycles” Irrelevant to profitability. 3) NV is suing Tesla for not paying it’s employment taxes ‘Tesla Sued by Nevada Over Unpaid Taxes for Workers in the State’” Actually this was paid last… Read more »
Will

Still waiting for Q3 profit

Jeff

“Tesla on track for profitability this year”.

Wait, does that mean a profitable year? Or a profitable quarter? Or a profitable month? Tesla said it would be a profitable Q3.