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Tesla Posts Second Profitable Quarter Ever (bgr.com)
anderzole writes from a report via BGR: Tesla on Wednesday posted its earnings report for the quarter gone by and investors will have a lot to cheer about. While analysts on Wall St. were expecting Tesla to post a loss, Tesla during its September quarter actually posted a profit, and an impressive profit at that. When the dust settled, Tesla posted a quarterly profit of $22 million and EPS of $0.71. Revenue for the quarter checked in at $2.3 billion. Illustrating how impressive Tesla's performance was this past quarter, Wall St. was anticipating Tesla to post a loss amid $1.9 billion in revenue for the quarter. As far as deliveries are concerned, Tesla during the quarter boasted that it achieved record vehicle production, deliveries and revenue. More importantly, Tesla reaffirmed via a shareholder letter that the Model 3 is still on track for a late 2017 release. You can read Tesla's shareholder letter here.
No, not true. As a company, they have lost money, and I guess if you divide how much they lost (in previous quarters) by how many cars they sold, you could come up with $7000 loss per car.
Of course that's false accounting. If they were a mature company, perhaps such calculations would sort of make sense. But Tesla is growing, investing heavily in new factories and expanding current factories.
It helps for working capital, cash flow, and for usage of cash but isn't recognized as revenue. It would be noted as a liability called Deferred Revenue.
Upon partial or full delivery, it is partially or fully converted to Revenue. The cost of said delivery would be netted to obtain Profits.
So if they invested in marketing or gave some sort of paperwork about the contract and those are considered costs for delivery of vehical, then a very small part of that DR can be recognized as Rev. It can be netted against the costs and the minor profit can be recognized.
There is a little bit of wiggle room here on the business deciding how much of the liability was fulfilled. But it's not much, and all you accomplish is shifting pennies between quarters.
Cash flow does not indicate profit. Profit is revenue minus expenses and short term liabilities. Accepting cash for services you are promising in the future will increase your cash flow, it will increase your revenue, but it will also add a new short term liability called "unearned income" (revenue for which you have a future obligation) and your profit will not be impacted by the transaction. Once you start purchasing the materials to satisfy the unearned income, you add expenses (negative cash flow) but remove an equivalent portion of the unearned income until you eventually satisfy the liability and can then report the remainder as profit.