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Tesla Earnings Show Record Revenues With Record Losses (techcrunch.com)
TechCrunch reports of Tesla's recent Q1 2018 earnings: Tesla reported its Q1 2018 earnings today, posting adjusted losses of $3.35 per share with revenues on $3.4 billion. This is technically a beat, as analysts expected Tesla to report a loss of $3.48 a share with revenues of $3.22 billion, up from $2.7 billion a year ago. Tesla also ended Q1 with $2.7 billion in cash, down from $3.4 billion in cash at the beginning of the year. This quarter, Tesla's net losses were a record $784.6 million ($4.19 per share). So, while it's revenue was higher than ever before, it also reported record losses. At market close today, Tesla was trading at $301.15. In after-hours, Tesla is trading around $287. In its letter to investors, Tesla provided some updates to its Model 3 production, noting it hit 2,270 cars produced per week for three straight weeks in April. Tesla said demand for the Model S and Model X is still quite strong as it hit its highest order number in Q1. "Tesla said it produced 24,728 Model S cars and X vehicles, while delivering a total of 21,815 of them," reports TechCrunch. Tesla also went on to say that they expect to be profitable in Q3 once they reach their 5,000 Model 3 cars produced per week goal.
CEO Elon Musk said the automaker will launch production of the Tesla Model Y crossover in 24 months, which Musk claims to be a "manufacturing revolution." Additionally, Musk said Tesla will publish quarterly reports about the safety of its Autopilot driver assistant feature following a high-profile Autopilot crash in March.
CEO Elon Musk said the automaker will launch production of the Tesla Model Y crossover in 24 months, which Musk claims to be a "manufacturing revolution." Additionally, Musk said Tesla will publish quarterly reports about the safety of its Autopilot driver assistant feature following a high-profile Autopilot crash in March.
And they are pushing negative news all over the place. I see it show up in my Yahoo feed.
If Tesla doesn't fail, they will take huge losses.
I'm rooting for Tesla.
She was like chocolate when she drank... semi-sweet at first and then increasingly bitter.
Difference is Amazon was forging into unexplored territory. Nobody had built an Internet-based store of that scale before. Everything was new, so it was imperative for Amazon to burn lots of cash to search the solution space to quickly figure out the optimal way to organize the store, website, warehouses, and delivery before competitors could figure it out and grab market share. If Amazon found a better solution first, it won. If it didn't find a better solution, as long as competitors hadn't found a better solution, it didn't lose ground. It would only be a loss if your new solution isn't better AND competitors find a better solution.
The solution space for building cars is well-explored. Has been for nearly a century. Musk gambled that a high level of automation would yield a better solution, allowing him to produce cars for cheaper than other automakers. He turned out to be wrong. In this case, because of the existence of well-established competitors, if your new solution isn't better than theirs, then you automatically lose.
Until now I've been shrugging off much of the criticism of Tesla "losing" money as it has been recording gross profits on each vehicle sold, but overall "losing" money because it has been spending a lot on capital plant and equipment.
The latest results though show that Tesla is selling each Model 3 at a loss. While the company states that it expects to break-even in Q2 and start making money in 2H, the only version of the Model 3 that it is currently selling is the high-spec one which should be more profitable.
Ramping up production and selling at a loss (negative gross margin) isn't exactly a recipe for corporate longevity....
I previously wrote about Tesla's troubles based on their Q4 results. Looking at Q1, it seems like nothing's changed.
Unfortunately, they're already in a bad spot, so they really need a big change to keep it afloat. Production numbers are still low at 2500 per week. Better than before, but not nearly enough. Their margin is not bad at 19%, but that's all coming from Model S and X. Even if Model 3 could reach that level, selling 5000 per week still only comes out to $344 million in gross profit. They would have to produce and sell triple that number to be in the black.
They didn't have any stock offerings this time, so most of the losses were covered by new debt. The remainder came from their enormous pile of $2 billion in cash.