Tesla Reports Stronger Q1 2015 Earnings Than Expected, Model 3 Coming Late 2017

MAY 6 2015 BY JAY COLE 202

Tesla Motors Q1 2015 Report

Tesla Motors Q1 2015 Report

After the market closed on Wednesday, Tesla Motors reported first quarter earnings.  So lets get right down to the numbers.

With the street expecting revenue of about $1.04 billion, Tesla came in at $1.1 billion ($940 million GAAP) – up 55% from Q1 2014.  Earnings estimates were for an adjusted loss of 50 cents per share, when in fact earnings losses were 36 cents per share/$45 million..   (GAAP $154.2 million loss, or $1.22 a share)

Margins in the automotive business increased to 28.2% (27.7% GAAP), despite “the significant negative impact of a strong dollar.”

Automotive revenue continues to include significant regulatory credit revenue despite the company’s suggestion it will trickle off last year.  In Q1 Tesla netted $66 million of reg revenue, $51 million of which were from the continued sale of ZEV credits.

Tesla Model S Gets Assembled In Fremont, CA

Tesla Model S Gets Assembled In Fremont, CA

Tesla Model S Deliveries

Unlike previous quarters, this number was not much of a surprise, as Tesla took the uncommon step in April of pre-announcing their estimate (10,030) for Model S deliveries during the 3 month period, as soon as the quarter ended.

Still, they noted at the time that, “There may be small changes to this delivery count (usually well under 1%)…”  It turned out that the exact number of Model S completed sales in Q1 was 10,045 – so almost bang on the money.

Of those 10,045 cars – 592 were leased, worth $63 million.

Tesla Forecasts Less Sales Of The Model S In Q2, But Re-Confirms Full Year Guidance

Tesla Forecasts Less Sales Of The Model S In Q2, But Re-Confirms Full Year Guidance

Outlook for Sales In 2015

Earlier, at the end of 2014, Tesla CEO Elon Musk guided total 2015 sales to 55,000 (Model S and Model X) – a number that has seen some waffling during this first quarter.

Of that 55,000 unit figure, the company had said it expected to sell 40% in the first half and 9,500 in Q1.  Given that 10,045 cars were actually sold in Q1, that should leave a further 12,000 to be moved in Q2.

So, did the outlook estimates hold up to previous reports?  Not really. 

The company held onto the 55,000 full year delivery estimate, but ratcheted down Q2 total deliveries by as much as 17%

“In Q2, we expect to produce about 12,500 vehicles, representing a 12% sequential increase. We plan to deliver 10,000 to 11,000 vehicles in Q2, and we are still on track to deliver approximately 55,000 Model S and X cars in 2015.”

This would leave 33,000-35,000 cars to be sold in the second half.  Realistically to us, considering the Model X production will also have to come online during this period as well, it seems highly improbable this goal will be met.

The company says it will produce a further 12,500 Model S units in Q2, a 12% sequential increase.  More importantly, in Q1 the company overachieved production estimates:

“In Q1, we manufactured 11,160 vehicles, 10% better than guidance, as we averaged more than 1,000 cars per production week.”

Tesla notes margins and the average transaction pricing on the Model S will take a hit in Q2.  The company says that “the dollar has strengthened by about 4% against the euro from the time we last adjusted Model S pricing.”  In most countries in Europe, Tesla has already increased EV pricing by up to 5%

Tesla Model X Out Testing In California

Tesla Model X Out Testing In California

Tesla Model X

Despite only weeks away from the most recent promise date for the Model X, Tesla disclosed it really isn’t all that close to delivery SUVs yet, by pushing the much-delayed electric X’s release to the back end of estimates.

“In 2015, we have already expanded our product portfolio with exciting new products and features while continuing to execute on our long-term plans. We ramped the manufacturing and availability of All-Wheel Drive Model S 85D, introduced 70D, and are building release candidate prototypes of Model X.”

So if you have an early reservation deposit on an X, it is starting to looking more like a Christmas present for yourself, over a summer splurge.

More specifically Tesla states this when it comes to Model X deliveries:

“We are now building and testing release candidate Model X prototypes with increasing design maturity, and are pleased with the progress of this program. These developments, along with our maturing production capabilities, boost our confidence in the launch and production ramp of Model X, which is on track for start of deliveries in late Q3.”

Previous quarter verbage for the SUV (that was originally scheduled for “late 2013”) was that it would simply arrive in Q3.  Today, “late Q3” sounds more like a target of September at best – making the vehicle a clean 2 years late.

From the earnings call after the report:  Elon Musk says that depending on how Model X ramp goes, the volume essentially doubles in Q4.  Expect to see significant ramp up in fourth quarter for the X, as much as 2x other quarters. Demand is no issue – “huge” advance orders for the Model X.

Musk: Development of the Model X took longer than expected.  The CEO also notes that he drove latest prototype today, and is “by far the best SUV.”   Model X configurator will be online probably in July.

Tesla Energy Powerwall To Get Battery Packs From Gigafactory Later In 2016

Tesla Energy Powerwall To Get Battery Packs From Gigafactory Later In 2016

Gigafactory Update/Tesla Energy Powerwall Pack Production

“In addition, steady construction progress continues at the Gigafactory, and together with Panasonic, we now expect to start complete battery manufacturing, from cells to modules to battery packs, in 2016.”

Tesla also says both its vehicle and new Tesla Energy program will “benefit” from the project with initial quantities of battery packs this year. (details on new battery storage solution, including 7 kWh packs from $3,000 can be found here)

From conference call:  Musk – “We could easily have the entire Gigafactory do just storage.”  However CEO notes that if he had to make a choice he would pick cars for batteries over the stationary storage.

Tesla Energy Powerwall

Tesla Energy Powerwall

The company also gave some more specifics on the Tesla Energy program:

“In Q1, we made substantial progress on our 2n generation Tesla Energy grid battery products.  This lead to our April 30th launch of the $250/kWh industrial Powerpack and the $350/kWh residential Powerwall, and these attractive prices include controls, cooling and DC/DC power electronics.

The customer response to these products and the Tesla Energy vision broadly has been extremely positive.We are now preparing our supply chain and production teams to start volume builds on these new products in Q3. Production will begin at the Tesla Factory in Fremont, and in Q1 2016 will expand into the Gigafactory and accelerate significantly.

The total addressable market size for Tesla Energy products is enormous and much easier to scale globally than vehicle sales. We are pursuing product certification in multiple markets simultaneously and plan to ramp deliveries in the US, EU and Australia in Q4. When combined with low cost renewable energy, Tesla Energy batteries provide an achievable pathway to a 100% zero carbon energy system.”

From conference call after report on Tesla Energy: Musk – Tesla has 38,000 reservations for Powerwall and 2,500 for Powerpack already (Powerpack is 10 Powerwalls) so they are so not worried about Solar City not picking up the 7 kWh Powerwall product (just the 10 kWh backup unit).  Powerwall is sold out through the middle of next year.

Margins will reach 20% once production comes from Gigafactory in Nevada.

Cycle data on 10 kWh backup and 7 kWh daily Powerwalls: Back up power chemistry (10 kWh unit) akin to Model S, while daily (7kWh unit) chemistry is nickel manganese cobalt.  So, 60-70 cycles expected for 10 kWh back-up unit per year, while the 7 kWh daily battery would obviously be 365. The company expects 7 kWh daily unit to have lifespan of 15 years or 5,000 cycles.

Tesla Model 3 Debut

From conference call:  Musk – Tesla is hoping to show off Model 3 in March of next year, but “don’t super hold me to that month.” Production of the Model 3 closer to the late 2017 time frame

Shares traded up about 2%-3% in early trading Wednesday night after the report was released, and mostly flat to up 2% on Thursday.  Check for a real-time quote here.

Categories: Tesla

Tags: , , ,

Leave a Reply

202 Comments on "Tesla Reports Stronger Q1 2015 Earnings Than Expected, Model 3 Coming Late 2017"

newest oldest most voted
Anon

They really need to get X out the door…

Doug B

Or the door out of the X

Robster

+100

Speculawyer

LOL! Well played, good sir!

Just as an aside, why are the non GAAP numbers the numbers of interest? It would seem that the ones to rely on are the ones governed by generally accepted accounting principles… At least that’s what the SEC requires, and for a reason.

Omar Sultan

True, but sometimes GAAP does not accurately reflect what’s going on with the business, so companies will offer both views.

For one example, vehicles purchased with the buy-back guarantee follow lease accounting rules and Tesla can only incrementally recognize the revenue from that sale over the buy-back term, so it skews the revenue Tesla shows for vehicles “sold”. A typical car company does not have this issue as their vehicles are immediately sold to the dealer or the their financing arm and they get to immediately recognize all the revenue from the sale of the car.

I don’t mind companies doing this as long as they explain the differences between the GAAP and non-GAAP numbers and the reasoning makes sense.

ClarksonCote

Thanks for the explanation!

Nix

Just to be clear, companies that report non-GAAP numbers are ALWAYS required to report in detail what the non-GAAP adjustments are, and where the numbers come from. This is SEC regulations.

Tesla (rightly, IMO) uses these non-GAAP numbers for their internal use for guidance. Therefore, they make them available to the public as well. They also do a better job painting the picture of whats really going on with the company.

sven

“They also do a better job painting the picture of whats really going on with the company.”

Really? I must have missed that picture Tesla painted in 2013 informing investors that the company was days away from bankruptcy.

Robb Stark

Tesla was never days away from bankruptcy in 2013 nor was the factory idled for lack of demand.

Despite published bovine feces articles.

Lensman

Poor Tesla bashers. They’ve repeated their own lies so often they actually believe them! 😉

ClarksonCote

GM bashers also often suffer from this same effect of crowd think.

Steven

+1

CP

The financial types will look at both GAAP and cash flow. The bet is that Tesla will either a) become profitable eventually, or b) that some greater fool (Google, Apple) will bail out the whole thing in a stock-for-stock transaction.

I can say this much: No actual car company would buy Tesla. And I’ve got no doubt that Mercedes sold their stake because they looked at the valuation and decided it was time to take the money ‘n run.

Lensman

Tesla prefers to analyze their own performance on a non-GAAP basis, claiming that GAAP accounting isn’t appropriate for a growth company like Tesla.

I won’t pretend to understand the ramifications here; financial matters are not my cup of tea.

I will say this: The group of those criticizing Tesla for using non-GAAP accounting seems to have a great overlap with the group making ridiculous conspiracy theory claims about Tesla and regularly post FUD bashing posts attacking the company. Sadly, you can see a couple in that group commenting on this very page.

Bottom line: Tesla has greatly exceeded (perhaps wildly exceeded) the consensus of financial analysts’ predictions, and appears to be improving its business outlook every year. (That’s not to say that its stock is a good investment. Despite some recent “correction”, it’s significantly overpriced.)

ClarksonCote

Thanks for elaborating. One thing I don’t understand is whether analysts estimates are estimating the non GAAP or the GAAP numbers. I would assume the latter, but then that means Tesla technically missed estimates, I need to look into it more for my own curiosity relating to financial reporting.

pjwood1
Good question. Fact Set shows 20 analysts averaging $-.54, against the non-GAAP actual, of $-.36. So, the answer is non-GAAP. I knew TSLA is generally discussed in non-GAAP terms, but for the data to be published this way is kind of interesting. Omar explained why. Owners of buy-back guarantee cars took title. They didn’t lease. It was the contingency that put hair on the transaction. Lease co’s deal with residuals. Tesla has a small liability for these cars trading below ~$35k, at month 39. Buying them back, and the risk of loss on what would effectively be a miss-calculated residual, is where GAAP treatment is forced. I think this was the major driver to non-GAAP. Using GAAP is akin to a bet that used 2013/14 Teslas will trade in the 20’s, in 2016/17. Don’t think so. It is interesting, because how they handle their CPO program, on the sale side, will affect values as we go along. Would they slow sales, bank cars, etc. to slow a trigger of the buy-back? If they influence the market, as I think they intend, some of the cars will trade just north of the guarantee, but none below. The price sensitivity of the… Read more »
Nix

The correct way to think about GAAP vs. Non-GAAP numbers is to think of them like MPG Highway vs. MPG City.

Cars get rated two ways. Companies do too.

Having two sets of numbers doesn’t make Non-GAAP numbers lies/wrong any more than City MPG proves Highway MPG numbers are lies/wrong.

GAAP and Non-GAAP are simply two different ways to measure earnings based upon two different sets of criteria. Both are correct/right for the criteria they measure. Together both of these sets of numbers provide MORE information about the company’s earnings than if just one set of numbers is released.

If car makers released just MPG Combined (the only official MPG number that the gov’t uses for calculating CAFE requirements), would you feel that only the MPG Combined number is correct/true because it is the only number the gov’t uses for CAFE? That would be the same as saying that the GAAP numbers are the only valid numbers because that is what the gov’t uses for SEC requirements.

Releasing both sets of numbers isn’t unusual. Ford, Walmart, etc all release both GAAP and non-GAAP numbers.

jkw

GAAP vs non-GAAP is nothing like city vs highway MPG. There are specific rules covering GAAP numbers. Non-GAAP numbers are unofficial and can include any modifications companies feel like putting into them. It’s more like EPA EV range vs the manufacturer’s optimistic marketing range. Relying on non-GAAP numbers is like believing that the Leaf is a 100-mile electric car. The numbers aren’t an outright lie, but they also shouldn’t be taken very seriously.

Many companies release non-GAAP earnings. But you can’t compare them to each other, because non-GAAP has no standards. Ford’s non-GAAP earnings include and exclude different things from GM’s, and they are both different from Tesla’s. Companies normally make reasonable modifications to produce their non-GAAP numbers, but nothing requires them to do so. So anyone investing based on non-GAAP numbers had better make sure they understand what exactly the company decided to change from the standardized earnings numbers.

Tech01x

It matters as to why the non-GAAP numbers differ from the GAAP numbers. In Tesla’s case, the #1 reason is lease accounting. In order to compare Tesla’s numbers against a company that doesn’t self finance the leases requires the adjustment. The other big reason is the resale value guarantee. That’s why both the non-GAAP and the GAAP numbers are useful to better understand the business.

Lensman

jkw:

Thanks for your explanation. I learned something today!

Nix
jkw — Yes, anybody making stock trading decisions based upon both GAAP and non-GAAP numbers DEFINITELY need to be able to understand exactly what and why the non-GAAP adjustments are made — because there is no single standard. But the same goes for investing based upon GAAP. If you look at just GAAP, and fail to understand non-GAAP adjustments in valuating the stock, you are going to come up with a poor valuation also. Buying index funds is likely a much better investment decision for anybody who can’t understand GAAP vs. non-GAAP, and understand that they are both completely valid numbers. Investors need to fully understand BOTH sets of numbers before making investment decisions. For the record, the Leaf absolutely can do 100 miles in range — under the conditions that Nissan originally tested it, long before the EPA changed from the old EPA test cycle to the current EPA test cycle. Many Leaf drivers who drive in a way that matches the 100 mile number have confirmed this. Those test results are not lies or incorrect, they are just test results under different conditions. BOTH the 100 mile number and the official EPA number on the EPA test cycle… Read more »
GeorgeS

What I want to know is when they think they are going to post a profit (non Gaap or Gaap I don’t care).

How long can you run a company in the red like this?

I’d like to see predictions of future profit loss after the giga factory comes on line.

Is the giga factory the savior? There must be some shining light down line.

Lensman

So long as Tesla remains a growth company, that is, so long as it continues to reinvest its profits in expanding the company, investors will continue to describe it as “profitless”.

I guess they have a different definition of “profit” than I do. 😉 Seriously, I see a lot of people equating “profit” with dividends given to stockholders. Tesla has addressed this very directly, and said they do not plan to give dividends for the foreseeable future.

When will Tesla cease being a growth company? Well, certainly not until after 2020. After that, who knows? Elon Musk indicated he might leave the company after production on the Model ≡ has been ramped up and stabilized. If Tesla remains true to its original corporate vision, it will continue to try to push down the cost of compelling EVs until it reaches an “everyman” selling price, which it won’t with the Model ≡.

Bizarrely, I continue to see comments from so-called “analysts” who predict that in a year or two, we’ll see stock dividends from Tesla! Or perhaps it’s not a case of analysts bizarrely ignoring what Tesla has so plainly said; perhaps they really are that ignorant about the company they’re pretending to analyze.

Nix
George asked “How long can you run a company in the red like this?” If you are looking at how long a company can exist without booking profits, you have to look to the “Consolidated Balance Sheet Data” in their 10Q reports. This shows the assets, debts, and working capital for a company. For Tesla, Working capital is $1.1 Billion, up more than 700% from their 2010 Working capital of $150 Million. As long as their Working capital keeps growing, they will have plenty of money to keep the doors open regardless of GAAP numbers. The other thing to look at in that table is Total Assets vs Obligations. Assets have gone up by $5.5 Billion, while Obligations have only gone up by $2.7 Billion at the same time. So Tesla is building Assets faster than it is taking Obligations by a 2:1 ratio. It isn’t exactly the same, but imagine you started with $15,000 in your checking account, and 5 years later you have $110,000 dollars. Over the same 5 years you go from having a $37K condo with $9K in mortgage, to having a $585K house with a $277K mortgage. How long can you keep going like that?… Read more »

I’m quite surprised Tesla is still dead on about the Gigafactory opening in 2016. They seem really confident about it. I guess that’s good news for Nevada. Tesla is going to have to spend all of 2016 and the beginning of 2017 to work on the Model 3 if they want that done by end of 2017. Alpha model in Q1 2016, Beta in Q2 2017, final in late 2017.

Lensman

I’m surprised I haven’t seen more skepticism about the Gigafactory and what it will or won’t achieve. It appears to be a huge gamble to me. Yet as the project progresses, most commentators (other than outright Tesla bashers) seem to be accepting it as a “done deal”. I certainly hope so! Tesla has really “bet the farm” on the Gigafactory being a success.

But we haven’t seen anyone other than Panasonic agreeing to make an investment in the Gigafactory. It looks like Tesla is going to have to invest significantly more than the approx. $2 billion which it wanted to, if the project is to be completed. Where will that money come from? Will Tesla have to dilute its stock by issuing more to finance the Gigafactory? Or will it have to borrow huge amounts of money, putting a damper on future profits? (That is, actual profits, not merely “profit” from the investor’s perspective.) Either way, this is troubling from the perspective of someone like me, someone who wants very much to see Tesla continue to succeed as spectacularly as it has so far.

Speculawyer

Well, they are just build a big boring warehouse-like building out in the desert. That’s not exactly rocket-science. So as long as they have all the labor & materials they need (which they should) then they can build it pretty fast.

And I presume that Panasonic is simultaneously ordering all the battery manufacturing equipment that they will need while the factory is being built.

It seems like a low-risk project since they are just basically building a really big factory for something they already do (in Japan at Panasonic for cells and in Fremont for packs). The issue is whether they will really be able to push down costs significantly by consolidating it all under one roof and getting really big low cost contracts from raw material suppliers.

alain

1 billion every quarter in sales ,not bad baby!

Turboro

Still good and increasing sales figures for a car that was launched 2012, most cars experience the opposite:
2013: 20’000
2014: 33’000
2015: 40’000 + 15’000 Model X

by end of this year there will be 100’000 Tesla’s on the road (including the Roadster).

I think those numbers are a bit optimistic. That said, I think its entirely possible for them to get to 55,000 cars this year – but it’ll be closer to 5,000 X and 50,000 S units.

ModernMarvelFan

Not bad. But Model X delay starts to concern me…

CP

Inside EVs, I know you love electric cars and love Tesla, but the company lost money (again) on both a GAAP and cash flow basis. Their “earnings” were not “stronger than as expected.” Their losses were a little lower than forecast.

Lensman

CP, if you’re gonna play grammar Nazi, it helps if you actually understand what words mean. You’re confusing “earnings” with “profit”. Just because a company showed a loss on paper doesn’t mean it didn’t have any earnings! Do yourself a favor, and buy a dictionary.

Furthermore, if Tesla wasn’t spending money hand-over-fist to build the Gigafactory quickly, then it wouldn’t be posting quarterly “losses”. Accountants may say that if your expenditures exceed your income, it’s an overall “loss”. Technically that may be true. But those of us more concerned about the actual outlook for the company prefer to call paying to build the Gigafactory “investing in the future” rather than “losses”.

CP

You don’t know what you’re talking about, period. Tesla booked operating losses too. Their spending for the gigafactory doesn’t show up in the operating accounts.

Nix

CP

Either you are right, and the Wall Street Journal, Market Watch, International Business Times, and many others were all wrong when they used “earnings” in their story titles over the last 24 hours:

“Wed., May 6: Watch Tesla Stock on Earnings”

http://www.wsj.com/video/wed-may-6-watch-tesla-stock-on-earnings/3298424D-5F23-4B94-8E5B-BDE644002B9D.html

“Tesla Motors Inc (TSLA) Q1 Earnings”

http://www.ibtimes.com/tesla-motors-inc-tsla-q1-earnings-model-x-deliveries-track-cash-flow-something-watch-1911320

“What to look for in Tesla earnings”

http://www.marketwatch.com/story/what-to-look-for-in-tesla-earnings-2015-05-05

…or you are wrong, and everybody using “earnings” in their titles for their stories are right, including insideev’s.

Sometimes when you are wrong, it is OK to simply admit you were wrong. It makes a bigger man of you vs. showing yourself the fool.

Clif J

Nix: Do you think CP is wrong about what is in Tesla’s Letter to Shareholders?

Is he wrong in saying that even after Tesla’s stepdown from a GAAP number of ($154M), in which they forgive themselves for stock compensation, lease accounting, and non-interest expense, that the resulting ($45M) is NOT a loss?

Are you saying that the line “cash flow provided by (used in) operations” that reads ($132M) does not indicate that the Operation is burning cash?

I know you have learned a meme while reading the internets that anyone who questions TSLA’s financial future is a “short”, and I also know you should learn what that means. But how exactly is CP wrong about the financial results? You should use actual numbers to refute him.

CP

All of this will be resolved. I’m hoping sooner rather than later, so rational people don’t have to deal with innumerate speculators.

koz

Perhaps you should re-read the comment stream so you know what is being discussed. NIX was only and accurately commenting on the semantics.

Mint

CP is dead wrong in thinking no 10-Q can be called “earnings” if it’s in the red. Period.

If you’re supporting him for that, then you’re just as useless as him.

As for TSLA, it’s valuation has nothing to do with nitpicking present profit like you and CP do. It’s based around a ~5x growth in estimated long term revenue.

Nix

Cliff — you are continuing CP’s original error of falsely conflating “earnings” with “profits”. As I’ve explained, the term “earnings” does not imply either profit nor loss.

Earnings are reported in (brackets) if the earnings are negative — also known as losses. But they are still categorized as earnings. All companies report what is called “earnings”, whether that earnings number is positive or (negative).

Anybody still arguing about this at this point are just (trolling).

CP

Meanwhile, Tesla’s battery ain’t exactly making waves. Even their solar “partner” says it doesn’t make economic sense, and therefore isn’t bothering to offer it. Oops.

http://tinyurl.com/tslbatt

Ambulator

This is the first time I’ve seen the price for an industrial power pack. Just 100kWh of that is the way to go off grid in style!

Lensman

Let’s see: Tesla’s revenue for the quarter was $1.1 billion (by non-GAAP accounting), of which $66 million was regulatory revenue (including $51 million from sale of ZEV credits).

So, that means 6% of Tesla’s income for the quarter was “regulatory revenue”, as compared to the 28.2% gross profit margin on its automobile sales.

The next time you see someone claim that Tesla couldn’t make money if it wasn’t for selling carbon credits… just blow them a raspberry! 🙂

CP

Tesla didn’t have any “income” for the quarter. Please don’t try to tell us about financial statements. I made a living reading them. I don’t want to be too harsh, because while financial statement analysis is not rocket science it does require a bit of training that you haven’t had.

Anyone can do it if they really want to. If you’d rather know what you’re talking about than spew easily identifiable b.s., then try “Essentials of Accounting” by Robert Anthony, and “Analysis for Financial Management” by Robert Higgins. You’ll thank me later for having saved you much of the cost of an M.B.A.

Londo Bell

When you are fans, you skip ove the bad news, make some tales,and everything is all good.

I am lucky to be in the industry, and to have the education and knowledge to understand.

It’s tough, CP. They just don’t want to listen and keep living in that fancy world.

CP

I was in the finance business during the Internet bubble. Saw plenty of companies go from valuations as high as Tesla’s to “out of business.” Also knew some genuinely honest billionaires. My beef with Tesla and “Elon” isn’t with high tech or with rich people, or with electric cars.

Nix

How are your TSLA shorts doing? How long have you been shorting TSLA?

CP

Not involved in TSLA on either side of the trade. I expect that Musk is well enough connected that he’ll be able to palm it off on Apple or Google if things don’t work out. One way or the other, it’s pretty clear that the Model 3 is going to be their come to Jesus moment.

Nix

So you’ve already lost too much money shorting TSLA already, and you’ve stopped for now? Got it.

CP

If you want to think so, I can’t stop you. But it’s not true. Shorting is a tricky business even in the right market environment — which this one is most definitely not.

Clif J

So you’re mad that you don’t know anything about financial statements and you have to resort to your short meme? Got it.

CP

Clif, I decided to give up. In Tesloid-land, losses are earnings and revenues are income. And you and I arrived from that business school on Neptune in an electric spaceship. There’s no convincing a Kool-Aid drinker, not even about basic financial statement terminology.

Nix
“Kool-Aid drinker”? Sounds pretty funny coming from a bvtt-hurt troller like yourself (if you want to go there). How is your windmill-battle against the Wall Street Journal and their use of “Earnings” in their story Tesla’s earnings report going? Have you gotten them to retract their story, and agree that they, The Wall Street Journal, was wrong, and you are right? Has Murdoch bent his knee to your superior knowledge? It doesn’t look like it. The story still stands, just like dozens of others who also used “Earnings” in their title for their Tesla stories. Yea, you must have given up with all of them too? Must all be because they are “Kool-Aid drinkers”, and not because you are wrong. Let me try one final attempt using a Venn Diagram to get it through to you before I leave you to your mindless trolling. Not all Earnings Reports are Profits. Not all Earnings Reports are Losses. But all Profits and Loses are all reported as Earnings. Draw the Venn Diagram out, redraw it, draw it again until you understand. And if you are going to start dishing the “Kool-Aid drinker” BS to everybody on this board, be prepared to take… Read more »
ffbj

The internet bubbles hardly relates in almost any capacity, except if you think Tesla’s stock price is too high, and it probably is.
But in essence you have a prejudicial view, just counter to what a number of Tesla lovers profess: their love for Tesla.

Quibble about their numbers if you will, like a good bean-counter, and don’t get me wrong, we need bean-counters, but in this case normal metrics do not carry the same weight as drilled into you at school.
So take a broader view, that’s my advice to you.

CP

Ah yes, “the rules are different this time.” If I had $100 for every time I heard that one in its various disguises, I’d be Warren Buffett. But thanks for the chuckle anyhow.

ffbj

As long as we are spouting platitudes, how about about: you can’t teach an old dog a new trick.

wavelet

ffbj, I don’t share CP’s view of Tesla (I’ve never seen him summarize it, but IMHO he thinks they’re borderline scam);
however, this
“in this case normal metrics do not carry the same weight as drilled into you at school”
is silly. Economics, like everything else in the universe, is applied physics at higer levels of abstraction.
Tesla will live or die by how they do in the market, like any other company. The normal metrics certainly apply.

I used to work in the Venture Capital industry in the Gold Rush period of 1998-2000, where learned economist spouted bullshit about the “new economy”, where only “eyeballs” mattered (the number of people using an online product/service), not revenue.

The simple truth is that in new markets, where the potential for profit seems to be large (hence “gold rush”), investors are willing to wait longer for profits to be realized. But eventually bills have to be paid, and a company cannot live off continual investment rounds.

Happily, Tesla isn’t there. While it’s still a risky venture, they certainly taking long-term action (gigafactory, supercharger network).

ClarksonCote

CP, I’m not sure what your background is, but any receiving of money is income. Their net income may be negative, but I assure you, Tesla had a whole bunch of income,

And trust me, I’m not a Tesla fan boy. I call everything as I see it, and am probably hated by most because of it since I’m always upsetting somebody. 😉

CP

Revenue is not income!

CP
So you know, “income” is what’s left over after you deduct expenses from revenue. Now, there are plenty of differences between GAAP income and cash flow. Believe it or not, they write books about that. You can drive a truck — no, a fleet of trucks — through GAAP. Best class I ever took was an advanced accounting class that did nothing for a whole semester but teach us how to tear about GAAP financials. But revenue is not, not, not income. Period, end of paragraph, end of story. You might call ’em like to see ’em, but in this case you need some specs because your vision’s clouded. I can think of a bunch of ways in which the Tesla story will turn out to be real. Story stocks sometimes turn into some real winners. Think cellular telephone companies, which went for a long time without income, while the cash flows looked just great, especially at the operating level. I can also think of a bunch of ways in which the Tesla story will crash and burn. I am truly scratching my head about the house batteries. In fact, that makes so little sense to me that I don’t… Read more »
Clif J
CP, all earnings expressions are basically “interpretations”. Tesla is actually pretty conservative in their GAAP revenue reporting, and there isn’t anything about the stepdown from GAAP to their version of non-GAAP that is opaque.(Now: why the internet echo chamber has bought into ONLY the Tesla version of earnings is a puzzlement to me, but clearly a victory by Musk and Ahuja.) Now, cash is another story altogether. It is very, very hard to misconstrue cash events and the actual measure of cash and cash equivalents. And Tesla is doing really, really poorly. Remember that Musk and pumpers of this issue were talking about this mountain of $2.7B cash on hand only a year ago. The main purpose of the second round of two Convertible Bond issuances was the construction of the Gigafactory. Otherwise Tesla would turn “cash flow positive”, a term that actually has meaning but has been abused by Musk, and self-fund the rest of the business. Now, $1.2B later, * the total expenditures on the GF to date are about $125M with only a total of $300M planned in 2015 (from the 10k: “In 2014, we used cash of $62.2 million towards the construction of the first stage… Read more »
Nix
Oy, the ignorance never ends. Stop simply regurgitating the worst anti-Tesla talking points you can find anywhere on the internet. Let’s look at this dumb internet meme first: No, Tesla isn’t “waddling around with $1B in inventory”. This is primarily a measure of vehicles in route for Tesla. Tesla doesn’t book sales until the financing clears. That doesn’t mean when the customer drives off the lot, it means when the bank finally physically transfers the funds into Tesla’s hands. That doesn’t magically happen the instant you sign the paperwork. That happens after underwriting. With more overseas sales, this is slower, meaning more vehicles technically “in inventory”, even though the ownership has already changed hands. This also includes the number of Tesla’s being “re-manufactured” in their European factory for delivery across Europe (again, jump in foreign deliveries this quarter is to blame). Also, Tesla is consolidating their car delivery logistics in North America in order to push down logistics costs. This is also keeping more cars in their hands just a little bit longer, making them “in inventory”, even though they are committed special orders on their way to their owners. Finally, Tesla now has an inventory of Pre-Owned vehicles that… Read more »
ClarksonCote

You’re right that there are specific financial accounting terms that mean certain things, but in the general sense, all revenue is income. Don’t confuse that statement with what a businesses gross income or net income. I agree those mean specific things.

CP

You’re right that there are specific financial accounting terms that mean certain things, but in the general sense, all revenue is income.

NO! You are wrong, wrong, WRONG! And might I add that the earth is round and the sun does not rise in the southwest?

Nope, sorry to disappoint you, but it is you who is incorrect. Saying I am wrong repeatedly will not change that.

http://dictionary.reference.com/browse/income

income – noun:

1. the monetary payment received for goods or services, or from other sources, as rents or investments.

2. something that comes in as an addition or increase, especially by chance.

Trace

Actually the sun does rise everywhere there’s a southwest, or more accurately, the earth’s rotation every 24hrs is exposed to sunshine in the southwest regions of every continent.

Londo Bell

Now this is getting WAY WAY WAY off topic, but still, illustrates the point on actual fact vs our perception.

1. The sun NEVER rises. Since Earth orbits the Sun, it is our relative point of view that the Sun moves, hence “rises,” but in fact, it is the rotation of our Earth and its orbit around the sun that allows us to “MEET” the sun’s rays.

2. By southwest, that’s direction, not region. Again, because of the direction of the Earth’s rotation, coupled with the tilt of Earth axis and the elliptical shape of Earth’s orbit around the Sun, from our geocentric (which is wrong) point of view, the sun RISES from the EAST.

Although there are numerous scientific publication and education on such phenomenon, many of us keep using the wrong, geocentric point of view to look and explain things, because it looks “correct” to us.

That’s analogus to how Tesla’s financials have always been, imho.

Remember, numbers don’t lie; our viewpoint does.

Trace

Pedantic are fun. Its not entirely true that the sun never rises, since it also rotates on its axis as it orbits the center of the Milky Way. It just doesn’t rise on Earth. 😛

Trace

BTW: CP didn’t specify direction when he said “southwest”. I immediately thought Arizona when I read his words.

Lensman
CP said: “NO! You are wrong, wrong, WRONG!” It’s amusing when someone argues with the dictionary in writing. It’s downright hilarious when they think they can magically change what’s printed in the dictionary if they yell loudly enough! 😀 CP, in everyday use — and as noted in other comments, that includes use in the Wall Street Journal as well as InsideEVs — “income” is synonymous with “revenue”. Language has value only when everyone uses words to mean the same thing. Insisting on a technical or overly precise definition for a word in common uses merely confuses most people. An honest, non-snarky suggestion: You should read Alice in Wonderland. If you only read it as a child, you’ll be amazed at what you missed. CP said: “So you know, ‘income’ is what’s left over after you deduct expenses from revenue.” Instead of you continuing to pointlessly argue with everyone else, CP, let’s clear up this point: ~~~~~~~~~~~~~~~~~~~~~~~ Income is sometimes used instead of the word revenue: some people refer to the rent they receive as rent income. Generally, accountants use the word income to mean “net of revenues and expenses.” For example, a retailer’s income from operations is sales minus… Read more »
CP

Tesloids and their speculation!

QCO

Too much bickering over financial basics.

Clearly Tesla currently is not a viable entity based on conventional measurements, as CP correctly points out. But Tesla, like many technology companies, is a speculative venture valued based on a belief by its investors that it will become viable or be sold at some future point in time.

Tesla will end up taking one of the following paths:
– Eventually becomes a viable entity based on conventional measurements
– Gets sold by owners based on a speculated future value
– Collapses and is liquidated at market value

The discussion should be on the speculative future, not questioning conventional financial measurements. The results (losses) were better than expected, which is promising for the future, but that doesn’t change the fact it is not currently a viable self sustaining company.

You’re right QCO, sorry for doing my part feeding the trolls. I shouldn’t bother when someone doesn’t recognize the difference between income in the general sense (receiving money for goods/services) and specific accounting terms involving income.

I’ll stop feeding time now. 😉

crix

Maybe power companies will eventually start buying the batteries and start offering them to their residential and commercial customers for free. This could be a way to run their power plants more constantly, avoid peaking, avoid idle, and overall supply more power through fewer, cleaner power plants. So, might make sense to the power companies who need to meet carbon restrictions.

Lensman

CP said:

“Tesla didn’t have any ‘income’ for the quarter.”

CP, first you argue over the definition of “earnings” and insist on getting that wrong, and now you make it clear you don’t even understand the meaning of “income”?

CP, there is no point to you continuing to post on a subject about which you lack even the most basic understanding.

CP

Tesloids and their speculation!

Lensman

CP said:

“Please don’t try to tell us about financial statements. I made a living reading them. I don’t want to be too harsh, because while financial statement analysis is not rocket science it does require a bit of training that you haven’t had.”

Reminds me of a letter sent to Ann Landers many years ago, about a married couple, both of whom had college degrees in child psychology, whose own child “acted out” in public and was out of control. Ann Landers replied “They appear to have been educated beyond their intelligence.”

I learned just enough about finances and accounting to do double-entry bookkeeping for our club. That was a lot more than I wanted to know, CP, but it very clearly was more than you.

Case in point, CP, was where you stated:

“Tesla didn’t have any ‘income’ for the quarter.”

There doesn’t seem to be any point in arguing further with a case of invincible ignorance.

“Never argue with a fool; onlookers may not be able to tell the difference.” — Mark Twain

Lensman

Sorry for the duplicate post; I thought the first one disappeared.

Clif J

Lensman (and to be fair to you all the others who believe regulatory credits are a pittance):

I really, really get tired of the whole regulatory credit mythology from Teslacolytes. Here it is from TESLA OWN FILINGS, fer chrissakes:
(all values $M)

………..ZEV GHG/CAFE
1Q13……67.9 17.1
2Q13……51.5 17.9
3Q13……10 14.8
4Q13…….0 14.8
1Q14…….0 11.8
2Q14……10 15.8
3Q14……76 17
4Q14……66 19.7
1Q15……51 15

Total from regulatory credits over this period was $476.3M.

What was the total non-GAAP “net income” over this period (13 through 14 plus Q1 15)? $78.4M

So, yes, without the income from regulatory credits, the net loss using Tesla’s version of “earnings/(loss)” would be almost $400M, and a couple of hundred $M worse using the Generally Accepted Accounting Principles. Tesla has never, ever “made money” without regulatory credits, and that is the case by a HUGE margin.

Clif J

Oh, and BTW, when somebody tells me that Tesla is “making money” AND could be doing so without regulatory credits, I blow them a raspberry sound, too, but it smells pretty bad.

Mint

3Q13: $46M non-gaap net income, $14.8M from credits

So much for “never, ever… by a HUGE margin”

You also completely misread the post. It’s laughable for anyone to claim Tesla “couldn’t” be profitable without credits. He didn’t say Tesla was always profitable in the past w/o credits.

DonC

I don’t see why selling ZEV credits shouldn’t be considered a standard part of Tesla’s business or why the income from these sales shouldn’t be treated as regular income. With the ZEV requirements increasing, it’s not as if the opportunity to sell these credits is going away.

Londo Bell

A lot of excellent (and educated) comments today.

I love the GPA explanation by Clif J. I was going to use something similar to explain to the mass here, but you beat me to it (and better too!).

@ DonC,

I would say, look at it this way. Tesla’s line of business is NOT about selling ZEV credits. It’s selling automobiles. So, if you focus on the actual business, and look at the numbers, then you will start to see the picture.

You know how magic is – all those distractions to make your vision to focus on something else instead of what you really should be looking at – that’s the ZEV credits, in a degree.

DonC

I like Clif’s answer — that it’s real money and real income — much better. I don’t see Tesla as being in the business of selling cars as much as being in the business of selling electric cars. Part of being in that business is you get credits which you can sell to other manufacturers. IOW selling ZEV credits is integral to Tesla’s mainline business.

Note that last month GM offered a great lease deal on the Spark EV. Do you think they just did that on a whim? Or do you think they did that because they needed some ZEV credits and selling Spark EVs was cheaper than buying the credits? Obviously the latter.

The point is that there is a ZEV credit market, ZEV credits are valuable, and selling ZEV credits produces real income. I’m just pointing out that each year the manufacturers have to sell more ZEV vehicles, and, given how few ZEV vehicles we’re seeing, the market for ZEV credits doesn’t seem to be going away anytime soon.

Clif J

DonC, I don’t disagree at all. These are the rules, and Tesla is maximizing the benefit. It is absolutely real income and cash, and I would never argue otherwise.

I merely mean that regulatory credits, over the rate production era of the Model S and the execution of the long-term “growth” business plan, Tesla is a hopeless money loser without them and shows no sign of changing.

Lensman

Clif J said:

“…Tesla is a hopeless money loser without… regulatory credits… and shows no sign of changing.”

Doubling down on your assertion, Clif? Well, let’s look at the numbers you reported above:

~~~~~~~~~~~~~~~~~~~~~~
………..ZEV GHG/CAFE
1Q13……67.9 17.1
2Q13……51.5 17.9
3Q13……10 14.8
4Q13…….0 14.8
1Q14…….0 11.8
2Q14……10 15.8
3Q14……76 17
4Q14……66 19.7
1Q15……51 15

Total from regulatory credits over this period was $476.3M.
~~~~~~~~~~~~~~~~~~~~~~~
[end quote]

Now, let’s compare this with the number of Model S’s sold in the same period:

2013: 22,300
2014: 31,655
1Q 2015: 10,030

(see sources of figures below)

Therefore, a total of approx. 63,985 Model S’s were sold in the period. So, Clif J, what you’re claiming is that Tesla would have gone bankrupt if it had to increase the price of each Model S by $7445. This, in a car with an average sale price of about $95,000. That would be a price increase of 7.8%, which isn’t negligible, but neither would it be a deal-killer for most Tesla buyers.

Bottom line: The idea that Tesla couldn’t stay in business if it weren’t for ZEV credits (and other regulatory credits) definitely deserves a raspberry.

:P~~~
_______________________________

sources:

http://www.autonews.com/article/20140114/OEM05/140119794/teslas-global-sales-top-22000-in-2013-stock-rises-16

http://en.wikipedia.org/wiki/Tesla_Model_S#Sales_and_markets

http://www.greencarreports.com/news/1097616_tesla-motors-releases-quarterly-sales-10030-cars-sold-globally-jan-mar

Lensman

Cliff J said:

“Total from regulatory credits over this period was $476.3M.

“What was the total non-GAAP “net income” over this period (13 through 14 plus Q1 15)? $78.4M”

So, you’re comparing revenue from regulatory credits to “net income”, and then commenting as if that was a meaningful comparison.

Do you often find value in comparing apples to oranges?

The point here is that such a comparison doesn’t in any way “prove” that Tesla could not make a profit without income from regulatory credits. It merely means that when such income goes away — as it eventually will — Tesla will have to make certain changes to make up for the loss, the most obvious of which would be to increase the price for its cars.

Quite notably, Tesla raised the price of the Roadster about 10% shortly after it first went on sale, without noticeably slowing demand. Of course, price having little impact on demand is much more likely to happen in the lofty price range of the Roadster than it is in the much more competitive price range of the coming Model ≡.

Tftf

Late 2017?

I will believe it when I see it. 2018 or even 2019 looks more likely for Model3 volume sales at this point imho.

LuStuccc

For no reason?

QCO

Realistically there will be production ramp ups and probably reservations that soak up early production volumes, and that’s not including typical Tesla delays.

All in all it is unlikely most of us will be able to buy one with a reasonable delivery time until well into 2019 at the earliest.

Lensman

Oh, I think there are plenty of good reasons to think the Model ≡ won’t debut in 2017, as Tesla projects. It hasn’t been that long since at least two articles written by InsideEVs editors predicted it would be delayed until 2019. I presume that’s based on Tesla’s track record of two year delays with the Model S and the Model X.

However, since then, Tesla has made multiple statements indicating the Model ≡ is being fast-tracked, including statements that the plan for building the Gigafactory has been accelerated. So perhaps it’s not unrealistic to hope for a 2018 debut. (Just a hope; doesn’t mean I think it’s probable.) But I do think it’s unrealistic to expect any actual production Model ≡ in 2017.

From what I’ve read, there have been cases of a production automobile being fast tracked from concept drawings to production in as little as 18 months. But from a car maker as new as Tesla? And for a car which is in a lower price category than any the company has made before? Unlikely. And that’s not even getting into the issue of delays caused by Elon Musk’s perfectionism.

Anon

M3 is being fast tracked after what happened during MX dev. The current incarnation of M3 won’t be radically different or overly complex as other models where R&D, obsessive revisions and “Elon Level Direction” were burned on. The M3 translation is simply a matter of scaling down the current platform and redesigning for new form factor batteries from the GiFa.

The tech used won’t be the problem, but materials choices have taken some time to sort… That’s the hard part.

Spider-Dan

On what basis do you claim that MIII development is “being fasttracked?” It’s not even in Alpha yet!

Lensman
Lensman

Anon said:

“The M3 translation is simply a matter of scaling down the current platform and redesigning for new form factor batteries from the GiFa.”

Definitely not. Auto makers don’t make a new model by taking a model made for twice the price and trimming a bit here and there. They do it by creating a clean sheet design, based on a budget of what they think they can afford to put into the car at the price.

ffbj

Not including falcon wing doors should take a few years off the roll out of the Model III.

Lensman

I’m fairly sure that nobody at Tesla has ever said they plan to put falcon wing doors on the Model ≡.

During Tesla’s conference call, Elon mentioned looking at expanding Gigafactory 1 by 50% already (25GW additional capacity), and it hasn’t even opened. 75GW of capacity is 750,000 cars at 60kWh and 30GW of stationary storage. Per year.

ModernMarvelFan

“Tesla is hoping to show off Model 3 in March of next year, but “don’t super hold me to that month.” Production of the Model 3 closer to late 2017 time frame”

“don’t super hold me to that month”…

LOL, don’t worry Elon, based on your record, we certainly won’t and we will revise that to middle of the 2018 for you based on your past history. =)

Then in 2018, we can revise it to Christmas 2018 and limited “signature model shipment” just before end of the year.

It is okay, my purchase plan for the Model 3 is late 2018 anyway. Just don’t delay past that okay? I would hope there are still $7,500 tax incentives left when I purchase the Model 3…

tftf

Late 2018 sounds realistic at this point for first Model 3 sales.

CP

I agree with that. Tesla’s Model 3 looks like it’ll be a 2019 model year story, unless they do some sort of deal with Apple or Google before that.

Among those two, I’d put higher odds on Apple, because Google’s self-drive technology looks like it can be bolted onto any vehicle. Apple, on the other hand, has no discernable effort or experience in the EV area.

But they do have a cult-like fan base of people who are accustomed to paying a premium for the brand. I could see them OEM’ing Tesla’s cars because of the brand, and convincing their customers to pay extra for the privilege.

But even there, the cars are going have to make money for Tesla, and that’s still a big question mark.

wavelet

Apple has some kind of automotive-space effort going on.

It’s likely purely exploratory at this point (estimates are around few hundred people, certainly not enough for full-blown car development), but given the people that they are known to be hired, it’s definitely more than developing a car-based ecosystem extension to the iDevices.

Beyond telematics, they’ve hired experts from established carmakers & suppliers on transmissions, suspensions and EV batteries.

Chris C

Typo: adjuuted

Jay, your writing really would benefit from a lot less of the silly, gratuitous italicizing. I’ve said this before, so I’ll be more blunt this time: it’s juvenile, and distracts from otherwise great context.

CDAVIS

…you can’t please all of the people all of the time….

Jay, You write informative articles that often provide alternate and interesting perspective. It so happens that your writing style is also stylistic unique/fresh which I very much view as +1.

Glad to hear that you don’t intend to let the critics sway you to pick up the bland pen.

V. Bowman

+1. Well said. Jay, you provide interesting information to the masses that’s clearly needed/desired or there wouldn’t be any readers. The style or manner in which you present is entirely up to you and your personality. To chain yourself to someone else’s needs/desires would indeed take all the joy out of it. Continue to be yourself and try not to allow the arrows from others to penetrate as they will become greater in number as the site continues to grow in popularity.

Clif J
“Tesla Reports Stronger Q1 2015 Earnings Than Expected…” OK: as someone stated (at least once) above, that title is simply inappropriate. It should say “Tesla Reports Lower Q1 Losses than Expected”, which have been accurate and probably not the least bit disturbing to Musk himself. What you have posted is a gross misstatement. The average EPS expectation used in the business “press” (derived from 17 analysts tracking TSLA) on Feb 5th: Q1 consensus was $0.40. Shortly thereafter Tesla published their 8k, showing an awful Q4 ’14 and greatly softened guidance. The consensus dropped quickly and steadied out to ($0.50). So now Tesla is posting a “better” loss picture of ($0.36) and we should all be marveling at their performance? What you have here is the kid who promised his parents a 3.5 GPA and then lowered their expectations to 2.0. He survives with a 2.2 and everyone is supposed to be impressed at the outcome of his hard work? Seriously, guys, even with 10,000+ cars sold the bottom line hasn’t looked like this since the unsteady quarters of 2012. Here’s the other interesting part: on this very date in 2014, the Full-Year 2015 outlook from virtually those same analysts (or… Read more »
DonC

Yeah, the auto business is really hard and eats capital like no other industry. But if you look at Amazon, it’s clear that a company can lose money for extremely long periods of time and stay in business.

The obvious and most serious issue is not current earnings (or lack thereof) but how can Tesla make money selling a $35K car when it can’t make money selling a $100K car. Hard to see how Tesla gets there from where they’re at.

CP

Amazon has lost money GAAP-wise. The cash flow statements tell a very different story!

koz

Isn’t this talking out of both GAAPS of your mouth?

Lensman
Clif J said: “Today, with the passage of one year and, according to Lensman, Tesla having “greatly exceeded (perhaps wildly exceeded) the consensus of financial analysts’ predictions, and appears to be improving its business outlook every year”, the outlook is $0.49.” Clif, I’m looking at the picture on a longer time scale, and perhaps in a less close-up, granular manner than you are. Let’s remember that Tesla got its start by selling the partially hand-built Roadster in 2008, only seven years ago. Up until Tesla’s IPO in 2010, and in fact for some time after, Tesla was generally described by financial analysts as a long shot company, one which probably couldn’t succeed in competing with Detroit. Today, it looks like the question is no longer whether or not Telsa can make a go at the business of selling EVs (and battery packs, and electric drivetrains to other EV manufacturers), but rather just how fast it’s going to grow. Your comments on exactly what Tesla’s “earnings” will or won’t be in the next quarter seem to be very much along the same line. I think there’s no question that Tesla’s performance (again, I’m talking about the company, not the stock) has… Read more »

Must be making money. They just bought a tool and die company in Michigan.

http://www.freep.com/story/money/cars/2015/05/06/tesla-motors-acquisition-riviera-tool-grand-rapids/70916758/

Clif J

Must be making money because they made an acquisition? Not at all: it simply means they were able to make a deal satisfactory to current owners. Moreover while Tesla is losing money and burning through cash, they still HAVE cash and can afford to buy stuff, and even borrow more money (they talked about it in the CC). But they aren’t making money, by a long shot.

Some advice (and this is not snark — you’ll have some fun): look through YouTube for some tutorials on reading Income Statements and Balance Sheets. Then take a few minutes to read Tesla’s filings. You’ll come to realize how daft some of the Tesla commentary really is.

Meh

QCO

He’s right, the numbers are what they are. Tesla is still a speculative play, and that attracts lots of speculative comments.

It’s important not to confuse today’s factual numbers with speculative comments about tomorrow.

I just thought it was cool they bought a business in Grand Rapids.

Clif J

kdawg, I think it’s cool, too. The Tool and Die business in America really struggles, so I’m happy for both parties in the acquisition.

koz

Pure numbers question for the financial Wile E’s here. How much does it cost to go from manufacturing 0 cars with 0 car platforms with 0 production capacity and 0 car designs? My layman, non-technical guess is a friggin’ LOT. Tesla has not prognosticated nor do they intend to have any meaningful net income anytime soon. Nor does anyone that has an idea of their vision and what it takes to get there expect or care about short term net.

Since their are several highly motivated Tesla financial detractors here, perhaps someone could distill out ALL of the non-S related expenditures, including but not limited to factory line investments that have been made that support both S and X production.

Spider-Dan

Wow, CP and Clif J have been dropping elbows in this thread. If the (rather optimistic) post headline had some spirits soaring high, these two have dropped a lead blanket of financial reality on those hopes.

I consider myself a Tesla supporter (until/unless they get bought by Apple), but are these numbers really as bad as all that? Should anyone be worried about Tesla going under before the Gigafactory is complete, or the Model III is out?

As a layman, it seems to me that unless a meteor falls on the Gigafactory, Tesla has enough financial momentum at this point to get the Model III designed and produced, at which point the reception of that product will determine Tesla’s ultimate fate as a permanent player or a flash in the pan.

CP

I absolutely, positively guarantee you that neither Clif J nor me is one single bit off in what we have written about Tesla’s financial statements. Any reasonably diligent community college student who has taken a one-semester financial statement analysis class would agree.

Please note: in the financial business that I was part of before I retired, the word “guarantee” is almost always illegal to use. But I guarantee you that every single, solitary word of what each of us has written is true.

Commenters, what we’ve been trying to tell you is the Financial Accounting 101 equivalent of 2+2=4. Honest.

Tech01x

Ah, CP, but you missed on the entire interpretation of Tesla’s business. No one expected that they would be cash flow positive. No one expected GAAP or non-GAAP profits at this juncture. Your characterization of Q4 2014 as awful completely misunderstands the business.

Tesla has a narrow gap to fit through, and the right way to do it is to charge ahead. Right now, that means spending the money they’ve raised and they’ve earned from sales of 10,000’s of vehicles into the infrastructure and factories to build 100,000’s of vehicles. For them to be net positive right now is silly – and a sign that they didn’t use their resources properly.

You can do all the accounting correctly and still miss the entrepreneurship, simply because entrepreneurship isn’t accounting.

koz

+many

My only significant financial beef with what Tesla has done was to pay back their Gov loan early. They could of taken advantage of that $ to push development faster which was the intent of the loan program and core to Tesla’s business plan. Perhaps diluting share value instead is better financially. Still scratching my head on this one.

QCO

CP has not missed the point, he is pointing out that entrepreneurship, as you put it, is speculation and not accounting.

There is nothing wrong with entrepreneurship and speculation, that’s how companies are built (and sometimes lost). But there is plenty wrong with confusing a speculative future with factual accounting numbers that strictly are a measure of the recent past.

Every investor or observer has to make up their own mind about the speculative future value, but ignoring the current factual accounting turns them into nothing more than shills and fanboys.

Lensman

When CP writes things like “Tesla didn’t have any ‘income’ for the quarter”, then he loses his audience. Nobody can take seriously anything said by someone unable to communicate ideas with those who don’t share his narrow worldview.

Being factually correct doesn’t help if you can’t explain what you mean, or if you are so insistent that others “must” see things your way that you start arguing with the dictionary.

Spider-Dan

I think CP has sufficiently explain that when you use the word “income” as a layman, that is not the same thing as “income” in a financial sense.

It’s like talking about the word “theory” with evolution deniers.

Clif J

“No one expected that they would be cash flow positive. No one expected GAAP or non-GAAP profits at this juncture.”

What? The institutional Tesla Longs posted expectations of $3.83/share for Full Year ’15 one year ago today. That projection (based on Tesla guidance) was embraced around the sell-side community and by investors in the stock. Even as a non-GAAP number, $3.83 definitely would be generating real profit and positive cash flow from Operations.

No, Musk successfully reframes the plan on a regular basis and both Longs and the business press are OK with it, and the company is able to raise money on another promise. This is where TSLA Shorts get killed.

Whenever I hear bean counters and stock market ‘experts’ talk about guarantees, all I can think of is Jim Cramer yelling and pushing sound effect buttons.

ffbj

Yes, and Cramer has absolutely never supported Tesla the stock, though he bought one of their cars. He calls it a cult stock since it goes counter to many of his bean-counter ways, though if you had of gone counter to his views on Tesla, you would have made a mint.

I think part of the problem for people who just can’t wrap their heads around how others can be so fooled by the snake oil salesman Musk. Well for one it is not snake oil. Musk is no flim-flam man. He is portrayed by detractors as a charlatan who is just pulling the wool over peoples eyes.
Usually for me archetypes indicate lazy thinking, Musk as either hero or villain, and by extension, Tesla is viewed in the same light.

PVH

I agree with others here that the title of this article is somewhat misleading. Tesla’s net result is a loss, just not as high as some expected. The problem with Tesla is that they have costs of a company selling 100k cars per year while (if all goes well) they sale only about 50k cars per year. This can be seen when comparing Tesla’a revenue per employee. Porsche has $1.3M/employee, Tesla has revenues of only $0.3M/employee. So I agree with CP here that all will depend on Model 3. Their home battery system could also bring some needed cashflow. I would not be too concerned with current huge cash burning as Tesla is a darling to many so I do not doubt a second they will always find new funding unless it really turns ugly financial wise, which is not the case at the moment.

arne-nl

Well the number crunchers are having a field day I see. I remember a Peterson guy that did the same thing over and over again: predict doom and gloom for Tesla solely based on his analysis of SEC filings, earnings reports, balance sheets. That reminds me of the saying “For he who is good with a hammer, every problem looks like a nail”.

Numbers matter, but don’t forget to look away from your computer screen and spreadsheets. Look out of your window into the real world and you’ll see that Tesla is in rapid expansion, has a highly acclaimed product that literally sells itself (nothing spent on advertising so far) and a rock-solid brand.

It is impossible to put a reliable value on that, therefore the wide differences in *opinions* on the valuation of Tesla. So far I have been hearing the “Tesla is overvalued” meme ever since its stock price was below $ 20 (yes, that is the correct number of zero’s). I bought the stock at an extremely overvalued $35 and have laughing my *ss off ever since.

LOL, I considered buying some at $200/share just to make life interesting.

Taser54

Tesla fans should never again challenge a post that states that Tesla is notoriously unreliable regarding production date estimates.

Clif J

Well, as usual the discussion goes something like this:

Innumerate long: Wow, Tesla proves ’em wrong once again by making money when people said they couldn’t.

Financially aware skeptic: Well, if you simply read Tesla’s filings, they DON’T make money, and in fact they lose a lot. Not my idea: read the 8k.

IL: Oh yeah, well that’s not true they make a TON of income (gross margin, whatever).

FAS: No. Don’t take my word for it. Read the document signed by Musk and Ahuja.

IL: Well whatever, they are saving the world and you don’t get it.

FAS: Maybe they are, but your assertion that they make money was simply wrong, and at some point as the cash goes away this gets to be a problem.

IL: I’m right about the things that matter, and you are losing a ton of money shorting (whatever that means)!!

Stay tuned for Q2 announcement and a near-verbatim repeat.

Lensman
That’s a good illustration, altho not at all what you intended to illustrate! What it actually shows is how “IL” and “FAS” keep talking past each other, rather than actually communicating. When IL says things like “make money” and “income”, those terms mean something different to FAS. And when FAS says “loss”, it means something different to everybody else, including IL. And FAS may think he understands the long-term outlook of a growth company better than IL, but he doesn’t realize he’s lost sight of the forest for the trees. For example, if FAS was given the profit-and-loss statements for the first year of Apple’s development and sales of the iPhone, could he have predicted that Apple had a huge marketing triumph on its hands? No, of course not. Contrariwise, if FAS was given the profit-and-loss statement for the two years or so of Ford’s development and investment leading up to sale of the Edsel, could he have predicted that Ford had wasted an enormous amount of money developing and promoting a car which would become a synonym for a very expensive product nobody wants? Again, of course not. FAS needs to understand that the term “loss” when applied to… Read more »
CP

“You can do all the accounting correctly and still miss the entrepreneurship, simply because entrepreneurship isn’t accounting.”

The only way to reply to that is with a link.

https://www.youtube.com/watch?v=TuiNtC4kURk&noredirect=1

Lensman

CP said:

“Tesla booked operating losses too. Their spending for the gigafactory doesn’t show up in the operating accounts.”

Thank you for that textbook example of a straw man argument. Nobody here is confusing capital investments, such as building the Gigafactory, with operating expenses. At least, nobody but you.

CP

***mod edit (system) removed due to duplication – only original comments please***

CP

Hey Inside EV, thanks for censoring the link to Investopedia that explains the difference between revenue and income. I didn’t realize just how far into the Kool-Aid jug you guys are too!

I guess you need to cater to a know-nothing reader base. Oh well!

CP

I really intended to just stop, but I must be a long-lost cousin of Joe Friday. Now, without getting off on a rant about the sad and rather scary (to me, anyway) decline of the New York Times in recent years, it looks like they have not yet laid off whoever there is in charge of writing up quarterly financial reports.

The underlying facts are the same, but the NYT still has someone who can read a 10-Q on their staff. Jay Cole, this is how’s it’s done, so take note.

http://tinyurl.com/teslanytQ1

CP

I’d add that they are called “earnings releases” because — thank God — the vast majority of 10-Qs report GAAP earnings, all the downsides of GAAP notwithstanding. If the commenters here weren’t such a pack of Tesloid speculating know-nothings, I’d even share some of the finer points of the ups and downs of both cash flow and GAAP earnings.

But that’s not something I’ll do here, because the majority here is a Kool-Aid drinking, fact-ignoring, EVangelist crowd whose interest in the company or its fundamental performance is nil. That said, if the NYT report doesn’t do it even for them, then they really are as hopeless as I’ve been suspecting.

I think you should write the SEC and tell them that the “Income Statement” should be renamed, because according to your narrow definition, it can only mean one thing, despite dictionaries and everyone who is not you using the word “income” in other general, acceptable and correct ways.

ClarksonCote

“Hey SEC, you need to change the ‘Income Statement’ title to something else! All the companies that are reporting losses have no income! These need to be called ‘Loss Statements’ in this case! SEC, please! You’re wrong, the dictionaries wrong, everyone is wrong, but I’m right!”

http://www.dumpaday.com/wp-content/uploads/2012/12/willy-wonka-meme-dumpaday-13.jpg

ffbj

A word to wise, (probably ignored) cool your jets.

Speculawyer

LOL! Bitter much? You know if many people disagree with you, including the dictionary, and your posts largely become insult filled rant . . . well, you arguments are probably not very good.

Speculawyer

BTW, what part of that NYT article do you think anyone else here disagrees with? I haven’t seen anyone post anything that really conflicts with that article.