Tesla

[SJ_GTI]

I wonder if that short seller has some inside info?

https://www.cnbc.com/2018/10/24/tesla-earnings-q3-2018.html

Tesla shares soared by more than 11 percent in after-hours trading after the company reported a surprise profit for the third quarter as CEO Elon Musk made good on his promise to start turning regular profits in the last half of the year.

...

Here's how the company did compared with what Wall Street expected, based on average estimates of analysts polled by Refinitiv:

Adjusted earnings: $2.90 a share vs. an expected loss of 19 cents per share
Revenue: $6.82 billion vs. an expected $6.33 billion
The company earned an adjusted $516 million during the quarter, which was an otherwise a tumultuous one for the electric car maker. It was Tesla's third profitable quarter and compares with an adjusted loss of $520 million during the same quarter last year.

The company's cash position improved by $731 million during the quarter, despite repaying $82.5 million in bonds, the company said. It said it had $881 million in free cash flow and $1.4 billion in operating cash flow. It said it expects flat or positive free cash flow next quarter as well, even with greater debt coming due.

Edited to add: Aftermarket trading has Tesla shares back up to ~320 per share. It was in the ~250's per share a couple days ago. Still way below the "420" per share from his infamous tweet though.

[MrH]

Pretty shocked by the numbers, top line and bottom line.  Whether that's sustainable or not is another debate though.

Accounts Payable up to $3.6B and cash on hand minus customer reservations is $2.0B.  I think they're still going to need to raise.

[MrH]

This conference call is insane.  This is the guy who literally tweets at short sellers on Twitter, he posts massive numbers, and they have the CFO on here talking about safety features?   They're not going to talk about how they dropped the COGs dramatically?

https://youtu.be/tSwNwf2VHnw

[MexicoCityM3]

Surprised. The sales growth is extremely impressive IMO.

[Laconian]

I'm not surprised, Model 3s are popping up like mushrooms here. People that would be driving 3 series or C classes have Model 3s instead.

[12,000 RPM]

Which is even more impressive when you consider Tesla doesn't lease (at least from what I've heard)

[MexicoCityM3]

Which is even more impressive when you consider Tesla doesn't lease (at least from what I've heard)

Really? My friend who got a Model S sure leases his.

[Submariner]

Which is even more impressive when you consider Tesla doesn't lease (at least from what I've heard)

I just went on their website and the car builder has a lease option.

[12,000 RPM]

Hey man, that's just what I heard

[CaminoRacer]

WELL YOU'RE WRONG AND YOU SHOULD FEEL BAD

[r0tor]

So I guess they make money selling cars... Amazing

[MrH]

The more people dig into the numbers, the weirder they get:

- Sales and production nearly doubled
     - No substantial increase in SG&A
     - No substantial increase in depreciation (however, all tooling is depreciated on a per unit basis )
     - OpEx actually went down quarter over quarter?

- Gross margins went from terrible to industry leading despite there still being tons of operational chaos
- AP and AR looks very strange.  Huge AR spike that they're attributing to the end of the quarter falling on a Sunday?  But they recently sold all of their loaner fleet to Enterprise to manage.  Did they book that in AR without making the corresponding entry?
- No accrual for service losses associated with a 16% first time quality on the Model 3 and nearly every Model S being recalled?  In fact, they're saying service losses will decrease?
- Company generates vastly more cash than expected, but yet interest expense came in above guidance?
- They went through 2 Chief Acccounting Officers, a treasurer, a VP of finance, a VP of capital markets, multiple regional heads, global sales and service heads, and multiple product division heads...leading up to their best quarter ever?
- No accrual for Full Self Driving refunds, the feature the SEC likely made them take off their order form.


This whole thing is bizarre.  Then Deepak gets up there and talks safety the whole time.  Elon has zero idea what the demand or average sales price would be in Europe.  He has no idea where they're going to make it, but walks back the Fremont Model 3 goal of 10k/week to 7k/week.  He was up there talking in hypotheticals like the thought never crossed his mind before.

[Rich]

Got a ride in a model 3 last week. Was pretty awesome. It was a May 2018 buy and the build quality on the interior was good. I was impressed.

[veeman]

A few months old but cool charts:

https://cleantechnica.com/2018/08/06/7-charts-tesla-model-3-vs-the-competition-us-sales/

[giant_mtb]

"Sales."

Sales are when you deliver a product, not give out rain checks.

[Soup DeVille]

Strictly speaking, sales are when money changes hands.

[Morris Minor]

I'm not surprised, Model 3s are popping up like mushrooms here. People that would be driving 3 series or C classes have Model 3s instead.

When I was in California a few months ago (Orange County) it felt like wall-to-wall Teslas: friendly tax climate, wealthy enviro-crunchy population, friendly actual climate and, importantly, locally-built.
Locally-built is important: there was a column about that in C&D recently - lots of domestic-built cars on the roads of MI funnily enough.

(In Georgia it's a bit more prosaic; there's a Kia plant here. So lots of Kias around.)

[r0tor]

The more people dig into the numbers, the weirder they get:

- Sales and production nearly doubled
     - No substantial increase in SG&A
     - No substantial increase in depreciation (however, all tooling is depreciated on a per unit basis )
     - OpEx actually went down quarter over quarter?

- Gross margins went from terrible to industry leading despite there still being tons of operational chaos
- AP and AR looks very strange.  Huge AR spike that they're attributing to the end of the quarter falling on a Sunday?  But they recently sold all of their loaner fleet to Enterprise to manage.  Did they book that in AR without making the corresponding entry?
- No accrual for service losses associated with a 16% first time quality on the Model 3 and nearly every Model S being recalled?  In fact, they're saying service losses will decrease?
- Company generates vastly more cash than expected, but yet interest expense came in above guidance?
- They went through 2 Chief Acccounting Officers, a treasurer, a VP of finance, a VP of capital markets, multiple regional heads, global sales and service heads, and multiple product division heads...leading up to their best quarter ever?
- No accrual for Full Self Driving refunds, the feature the SEC likely made them take off their order form.


This whole thing is bizarre.  Then Deepak gets up there and talks safety the whole time.  Elon has zero idea what the demand or average sales price would be in Europe.  He has no idea where they're going to make it, but walks back the Fremont Model 3 goal of 10k/week to 7k/week.  He was up there talking in hypotheticals like the thought never crossed his mind before.

congrats for finally admitting you don't have a clue on how a quickly expanding company operates

[MrH]

congrats for finally admitting you don't have a clue on how a quickly expanding company operates

[Laconian]

My brother has neighbors with multiple Teslas in the garage.

The combined value of the cars is like half the values of the homes that garage them. It's craaazy!

[giant_mtb]

When I was in California a few months ago (Orange County) it felt like wall-to-wall Teslas: friendly tax climate, wealthy enviro-crunchy population, friendly actual climate and, importantly, locally-built.
Locally-built is important: there was a column about that in C&D recently - lots of domestic-built cars on the roads of MI funnily enough.

(In Georgia it's a bit more prosaic; there's a Kia plant here. So lots of Kias around.)

Yes, tons of domestics in MI, especially in and around Detroit and in areas where they have plants. I mean, you drive by a factory and 95% of the employee vehicles are from the company they work for...they get sick deals. As do their family members.

I don't find it funny or odd at all. It makes perfect sense.

[veeman]

Yes, tons of domestics in MI, especially in and around Detroit and in areas where they have plants. I mean, you drive by a factory and 95% of the employee vehicles are from the company they work for...they get sick deals. As do their family members.

I don't find it funny or odd at all. It makes perfect sense.

Some of my Dad's close friends in Ann Arbor and some of their kids worked for Ford a couple decades ago.  If you regularly brought a new car to work that wasn't assembled by a United Auto Worker union factory, it would be keyed/taillight smashed, etc.  This was a long one ago though.

[Laconian]

What is going on in Elon's head? He's devolving into a 4channer.

https://twitter.com/elonmusk/status/1055517521082609664

[Soup DeVille]

Some of my Dad's close friends in Ann Arbor and some of their kids worked for Ford a couple decades ago.  If you regularly brought a new car to work that wasn't assembled by a United Auto Worker union factory, it would be keyed/taillight smashed, etc.  This was a long one ago though.

No, not unless you were actually working at a plant would you have real problems like that. Some sideways glances maybe.

[MX793]

Musk has come out and said the $35K Model 3 is vaporware.  The release date has again been pushed, with no firm date established.  Wonder how many deposit holdouts will just give up on the dream and move on now?

[veeman]

No, not unless you were actually working at a plant would you have real problems like that. Some sideways glances maybe.

Nope.  My Dad's close friends' kids were engineers.  I used to see them a lot in Ann Arbor when I was a kid in the 8Os.  One of them bought a new Honda (prior to being hired as a Ford engineer).  2nd day on the lot he got back and his car was keyed.  He complained to the lot security guards and they indicated to him that he wasn't very bright bringing a non UAW made car to this parking lot.  I don't know the details of the lot or his position in the company but it apparently was a shared parking lot between UAW workers and others at the company.  Or maybe he was on site at the factory.  I don't know.  All I know is my other Dad's friends' kids (who were all in their 20s) were making fun of him for being a dumb ass.

[Soup DeVille]

This is the world I've always lived in. I've worked in automotive, in Detroit, most of my life. My grandfather, uncle, step-grand dad, and cousons are all GM retirees. I've been a member of both the UAW and the Ironworker's union.

When I was a kid, the big fundraiser at the union picnic was paying to take a swing at a jap car with a sledgehammer. The car wasn't bought- it was "found."

UAW plants have segregated parking lots; and yes, if you park a non-compliant vehicle in the wrong lot, it'll usually get towed.

But getting vandalized is rare, and usually dealt with pretty harshly.

[GoCougs]

The more people dig into the numbers, the weirder they get:

- Sales and production nearly doubled
     - No substantial increase in SG&A
     - No substantial increase in depreciation (however, all tooling is depreciated on a per unit basis )
     - OpEx actually went down quarter over quarter?

- Gross margins went from terrible to industry leading despite there still being tons of operational chaos
- AP and AR looks very strange.  Huge AR spike that they're attributing to the end of the quarter falling on a Sunday?  But they recently sold all of their loaner fleet to Enterprise to manage.  Did they book that in AR without making the corresponding entry?
- No accrual for service losses associated with a 16% first time quality on the Model 3 and nearly every Model S being recalled?  In fact, they're saying service losses will decrease?
- Company generates vastly more cash than expected, but yet interest expense came in above guidance?
- They went through 2 Chief Acccounting Officers, a treasurer, a VP of finance, a VP of capital markets, multiple regional heads, global sales and service heads, and multiple product division heads...leading up to their best quarter ever?
- No accrual for Full Self Driving refunds, the feature the SEC likely made them take off their order form.


This whole thing is bizarre.  Then Deepak gets up there and talks safety the whole time.  Elon has zero idea what the demand or average sales price would be in Europe.  He has no idea where they're going to make it, but walks back the Fremont Model 3 goal of 10k/week to 7k/week.  He was up there talking in hypotheticals like the thought never crossed his mind before.

When analysts get it off by so much there's almost always something afoot. Could be as simple as pulling in ARs and/or pushing out APs, or some special windfall or some such.

[CaminoRacer]

Apparently there's a good correlation between the number of shorts and the presence of fraud in a company.

[12,000 RPM]

I just went on their website and the car builder has a lease option.

Ah... not for the Model 3.