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Tesla Reports Third-Quarter Profit That Beats Market Expectations (cnbc.com)
Rei writes: When Tesla announced late last year that it was targeting sustained profitability in the second half of 2018, reaffirming this target throughout the year, the markets reacted with skepticism. Indeed, despite repeated insistence that the company had no need for a capital round, news analysts have treated the concept of Tesla dilution to raise more capital as inevitable and urgent to pay off convertible bonds next spring, even suggesting insidious theories that the reason it hadn't was that it "couldn't."
Well, today Tesla put the doubts to rest with a blockbuster Q3 report -- not simply eking out a profit and small free cash flow growth, but $2.92 per-share profit and $881 million free cash flow -- almost raising the entire value of their convertible bond debt in a single quarter. While many were skeptical about Tesla's claims that it would go from near zero profit margin on Model 3s to their claimed target of 15%, Tesla instead hit a 20% margin on the Model 3 (now the highest-revenue car in the U.S.), with a 25.8% overall automotive gross margin. This was all achieved with only $52 million worth of zero-emission vehicle credits claimed this quarter. While Tesla bears will likely claim that this quarter was a one-off that won't be repeated, Tesla reiterates guidance for sustained profitability from herein, barring a force majeure event.
Well, today Tesla put the doubts to rest with a blockbuster Q3 report -- not simply eking out a profit and small free cash flow growth, but $2.92 per-share profit and $881 million free cash flow -- almost raising the entire value of their convertible bond debt in a single quarter. While many were skeptical about Tesla's claims that it would go from near zero profit margin on Model 3s to their claimed target of 15%, Tesla instead hit a 20% margin on the Model 3 (now the highest-revenue car in the U.S.), with a 25.8% overall automotive gross margin. This was all achieved with only $52 million worth of zero-emission vehicle credits claimed this quarter. While Tesla bears will likely claim that this quarter was a one-off that won't be repeated, Tesla reiterates guidance for sustained profitability from herein, barring a force majeure event.
I'm waiting to hear how Tesla is losing money on each car it sells, such as some people have been saying around here (FALSELY) for months. If they lose money on each car they sell, how did they wildly beat all the analysts by selling more of them?
When everyone is telling you that you are wrong, sometimes it's a good idea to gain a little objectivity and at least examine the possibility that you actually are wrong.
Slashdot still doesnâ(TM)t support Unicode after it was added to the HTML standard in 1997.
...is gonna suck my dick?
To all the shorts, I say suck a fat dick.
they make it up on volume.
Some drink at the fountain of knowledge. Others just gargle.
I am a big Tesla fan. But we should acknowledge that there are still some problems. Mainly that the spare-parts supply chain hasn't caught up with manufacturing, leaving cars inoperable for months while Tesla's own shops wait for parts. If you want right-to-repair, Tesla hasn't caught up to that by making diagnostic tools available or parts available to non-partner shops and end-users.
Bruce Perens.
By our Tesla shill Rei
Should be illegal
I actually pay attention to all the Tesla/Musk/Tesla/Musk critics out there and follow their arguments about how the company is going to crash and burn and Musk is delusional and the technology won't work and the production can't work and the quality is crap gasoline is actually greener and cheaper and and the major automakers are going to bury them and the workers have reverted to savagery and yadda yadda.
I have been following all that for, what, five years now? How many portentous pronouncements of Tesla and/or Musk's demise has there been? I have lost count.
A few days ago my e-trade board delivered this little news nugget:
Citron Research, which has previously advocated short positions on Tesla, says it has changed course, and that the electric car maker is "destroying the competition, as Citron makes the case for why it's taking a long-term view.
So apparently there are short sellers out there will actually fold up the tent for another from-scratch assessment. Granted, they were wrong before so they could be wrong again. Tesla could still crash and burn or at least hit a major bump in the road. But if it does it will have nothing to do with what the chronic naysayers that post here say.
"today Tesla put the doubts to rest ..."
evidently not. by claiming that falsehood, among others, this report shows its bias, and unfounded optimism for tesla.
"$881 million free cash flow -- almost raising the entire value of their convertible bond debt in a single quarter."
Telsa have $1.15B due by the end of the next quarter, which includes the Christmas slowdown. At the same time they're trying for a profit while also needing to make considerable capital expenditure to set up their China factory thanks to the Trump trade war tarrifs. It's going to be very tight.
Also this now makes 3 profitable quarters out of 31 since becoming a public company, let's see if they can make a sustainable profit. Bit early to be jubilant.
Well, shit. Looks like LynwoodRooster is going to have to come up with a whole new series of anti-Tesla rants to copy & paste into Slashdot Tesla stories.
Slashdot: providing anti-social weirdos a soapbox, since 1997.
Am eagerly awaiting delivery of my new Model 3 !
Elon also said "I begged the other companies to invest in battery capacity and charging networks" according to some live blogging site. And some thing along the lines of if they make an adapter he will let them use Tesla super chargers. Not sure if he really said that or these guys are putting words in his mouth.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
The bears have to make a hard choice. They were hoping a cash crunch of debt payment in Q4 2018 and Q1 2019 of about 1.5 billion will choke the company. It was already burning through cash at some prodigal rate in Q1 and Q2. They seem to have miscalculated. Last reports from S3 Partners was that there was some 32 million shares outstanding. Wondering how many covered when the price crashed to 250 and got out with some profits. How many are still holding out waiting for Tesla to go bankrupt.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
Tesla deliberately held off shipping (and, by GAAP rules, recognizing revenue) in Q2 in order to make Q3 numbers look good.
I'm pretty sure your post is the part of the Hitler video near the beginning where he's waving hands and saying "This quarter doesn't matter because there's no way they can make next quarter because they deliberately held off shipping" and then the generals correct him, and he clears the room...
"There is more worth loving than we have strength to love." - Brian Jay Stanley
THERE WILL BE CONSEQUENCES FOR YOUR LIES KEN DOLL Filter error: Don't use so many caps. It's like YELLING. Filter error: Don't use so many caps. It's like YELLING. Filter error: Don't use so many caps. It's like YELLING.
TSLA longs lost over 17%
While they may be DOWN by that much (but are not, see aftermarket) by definition "longs" have lost nothing... because if they are long, they are holding not selling.
I bought some shares in the middle of the year but I have "lost" nothing because why on earth would I sell? The end game is way north of $400, by the end I will have made quite a lot on TSLA (and some of it I bought longer ago when it was a lot cheaper).
As a long investor what I do is pick stocks that I think have lots of potential, put money into them, and maybe look a few times a year to see how things are going. That's how you long, not bailing out at the first sign of any dip. If you choose well the dips fade away and you have mostly growth across a portfolio. Maybe someone doing day trading is making more but I'm pretty sure I'm leading a less stressful life.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
TLDR the financial report but if the 25.8% gross margin on M3s is much above car maker standards, does it make M3s overpriced?
Does this profit margin include R&D and other operational overhead is it it just based on BOM and mfg?
4wdloop
Don't think this is happening then look what Ford has done lately. Like what happened with the Apple iPhone and Samsung going with the same trendy design, Ford Motors did the same bullshit with the Tesla model s. If you look carefully at a 2009 Tesla model s and compare it to a 2009 Ford fusion you see that they are different animals altogether and have little in common style wise.
Then suddenly the look and idea of no petrol with a Tesla s got sexy and Ford essentially cloned the look of a Tesla model s in the later designs of their crapola low end Fusion line of sedans.
This is the real problem with the once great American auto corporations, they are no longer leaders they are followers. You can bet that a shit load of the negative crap against Tesla is coming from them. Musk, though he is not helping the situation especially on Wall Street, is being afforded the same treatment as Tucker by the US auto corps and their shills in Washington and on Wall Street. As far as I am concerned I hope the assholes running the petroleum industry who get blow jobs from the key board members at GM and Ford, choke on it as Tesla, Nissan and the like minded up and comers in the Orient eat them for breakfast. While the Ford, GM and Chrysler gas and diesel guzzling behemoths rust on the dealer lots and wind up worth more as scap metal after a few years of service.
You can't cut yourself from the grid by only using Powerwall, you simply won't have enough buffer to ride through cloudy days. You can use Powerwall to shift your consumption into off-peak hours, but that's about it.
I'm really happy about all this, not because Tesla as a company, but about what good electric cars can do. Can't wait to have normal, usable electric cars that don't look ugly as hell to show the finger to the whole middle east. At the minute, because of petrol, the whole world is funding people who are genuinely nasty, barbaric and actually feel comfortable with ISIS and the like.
The sooner they go bankrupt, the better.
No matter what is presented, it will all be claimed by you to be "making my point again" even though it refutes it clearly and explicitly.
You're an asshole, then.
I also saw that Musk announced a Model Y crossover vehicle now. I'm almost surprised to not see that listed as a news story on here. While not being an automotive site, I'd almost expect news on a new model of EV vs just saying an EV company made more money than expected.
I'd thought the Model X was a crossover, but I guess it just looks like one rather than being the size of one. At this point I want to see Tesla make a motorcycle for some reason. Have it look like something from Tron.
I'm waiting to hear how Tesla is losing money on each car it sells, such as some people have been saying around here (FALSELY) for months.
Tesla HAS been losing money on each car they sell. That is a factual statement. But it doesn't mean what some people think it means. People here keep confusing gross margin with net margin and haven't a clue what free cash flow is or fixed costs or variable costs.
It's absolutely normal for a new product to lose money on the first units they produce because they haven't produced enough units to amortize the fixed costs over. Here's a oversimplified totally-made-up example. I spend $1,000,000 making an assembly line - one time cost never to be repeated. It also costs $500,000 per year to operate the assembly line no matter how many units I make whether it be 1 or 100,000. So before I make a single unit I have $1.5 million in operating costs. Let's say I'm selling a car for $50,000 and my actual cost of labor and materials in that car is $40,000 so I have a gross profit of $10,000 per vehicle. That means the first 150 vehicles I make are going to be sold at a loss. I also have to sell a minimum of 50 vehicles every year just to cover the fixed costs of operation.
Tesla is in that exact situation, just with much larger numbers. The have the added wrinkle that they also have a lot of debt to service (around $11 billion reportedly) which can be treated as an additional fixed cost.
Q2 Automotive gross margin increased to 20.6% GAAP and 21.0% non-GAAP. Thats their profit margin.
Gross margin is NOT profit margin. Those are different things and you need to understand the difference. Gross margin does not consider sales, administration, interest, taxes, and other overhead like engineering etc. Gross margin is just revenue minus cost of goods sold which is just direct costs of materials and labor. Gross margin is NOT profit and should not be confused with profit. You can easily have a 20% gross margin but a negative profit margin and if that remains the case long enough the company will eventually go bankrupt. Software companies often have gross margins in the 60-80% range because cost of production is very tiny - most of their costs are in engineering, sales and marketing. Manufacturing companies usually have gross margins in the 15-40% range depending on the product being made but that does not mean they are profitable.
Also, FYI, you book revenue when you ship, not produce. So having 13k vehicles in inventory is a drag on their balance sheet, not a boost.
How revenue is booked is unfortunately FAR more complicated and to a significant degree is an arbitrary decision. It's perfectly legitimate to book a sale when you sign a contract but before the product is delivered. Many companies do this. Other companies book the sale when the product is sent to a distributor (like an auto dealer) but not actually sold to the end customer. Other companies only book a sale when the end customer has received the product. You can even book a sale when cash is received for the product. All of these approaches are perfectly valid under GAAP. From what I understand Tesla somewhat conservatively books sales only when the customer takes delivery of the car. This is unusual in the industry. Most of the big auto makers book "sales" when the ship a car to a dealer even if it hasn't actually been sold to an end customer. They are treating the dealer as the customer of the product.
Fuck the cars, high end electric vehicles are a limited market.
All markets are limited markets. That said the market for luxury vehicles is a very big market and Tesla is doing rather well in it sales wise. I don't think you would argue that BMW or Mercedes are tiny companies and Tesla is apparently out selling them. That's nothing to sneeze at.
The big Tesla market, something the hedge fund shorts absolutely do not want to discuss, the home electric power systems, panels, batteries and control gear a far bigger market, probably something like 100 times the size of the vehicle market, each unit worth similar to a low end car and far more profitable, with numbers in the hundreds of millions.
Possibly true but if Tesla doesn't get their car company scaled up they aren't going to have the finances to try to tackle the power generation market. They have to crawl before they run and the energy generation market is likely going to be even trickier than the car market to figure out.
Tesla home power systems, cut your house from the grid, invest in a higher return than bank interest, far higher and fuel your Tesla vehicle from home.
That remains to be seen.
No, but they are long term issues that affect customer loyalty. There are rumblings amongst Tesla owners about service issues. In-warranty service is slow. Out-of-warranty is slow AND super expensive. Like $900 to fix a door handle. Dealerships are known for stiff markups, but $900 to fix a door latch is usury.
https://forums.tesla.com/forum...
My Other Computer Is A Data General Nova III.
Actually, I believe that both GM and Ford will bankrupt. Again (and yes, when you are obtaining massive loans from the gov, then you bankrupted).
The problem is that W/O did all the wrong things. We SHOULD bail them out again, BUT, this time, break these companies up. IOW, rather than having 2 car companies, we should break them up and have 8-10. That way, it will not happen again.
I prefer the "u" in honour as it seems to be missing these days.
Not a lot of landlords are going to be interested in investing tons of money on home storage. However, lots of renters may be interested in an EV. (If they can figure out how to charge it.)
Once there are enough EVs out there it's just a business opportunity for landlords. Provide the charging stations next to where they park and have them pay some sort of markup to use them. Any landlord with a brain in their skull would be stupid not to make EV charging into a profit making opportunity.
And you add home power systems to your home once in a lifetime.
I don't think the business model here is going to be one time installs, especially since the cost of the solar panels and battery will be tens of thousands of dollars. Probably will be some sort of rental or lease arrangement kind of like how people finance their cars.
Actually, I believe that both GM and Ford will bankrupt. Again (and yes, when you are obtaining massive loans from the gov, then you bankrupted).
Ford didn't need the loan. GM did. GM bankrupted, Ford didn't. GM has been spending its time, money and effort over the decades building synergies and then throwing them away. e.g. Detroit Diesel and Allison.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
Ford did not technically bankrupt.
However, they would not have survived without it, while other companies were getting their handouts.
The ONLY company that was not bailed out, but was working in America, was Tesla.
I prefer the "u" in honour as it seems to be missing these days.
Cost to fix a Cadillac Escalade door handle (and latch mechanism) $430:
https://www.cadillacforums.com...
My Other Computer Is A Data General Nova III.
Tesla absolutely was bailed out by the federal government. They were on the verge of bankruptcy in 2009 and only survived due to a fed-backed $465M loan from the Department of Energy. The loan program was not meant to bail out companies, but without it, Tesla most likely would not have survived 2009.
I don't always use unix-like operating systems; but when I do, I prefer FreeBSD.
Where is that fucker anyway? I haven't see one damned post from that shithead in this entire thread. No even a -1 post. Bitches hate being told THEY WERE WRONG!
You are clueless as ever. GM was bankrupt, Ford was not, but if the government is handing out $$$ like Halloween candy, Ford would be stupid not to take some.
How many European and Japanese car companies were bailed out...
Just more US govt handouts to support dying industries to buy votes.
Learn to grammar some more, then your trolls will blend in a bit better.
will bankrupt = not English
FORD will bankrupt who?
you bankrupted = not English
you bankrupted who?
Maybe it's different in Russian?
Nice try, but no. "Tesla is still losing money" might mean what you describe.
I'm among other things a certified accountant and my specialty is corporate cost accounting in manufacturing. There is no "might" qualifier here. I described exactly what is happening with Tesla from a big picture perspective. It's nothing unusual. My company has exactly the same situation of every product we sell albeit on a much smaller scale. The company you work for does too.
But "on each car they sell" is clearly referring to the per-car production cost versus the per-car price.
Per car production costs are not a fixed number and it's a mistake to think they are. You cannot simply take the cost of the labor for the guys on the assembly line and the cost of the materials as the "per-car price" (the gross margin) and call it a day. If it were that easy there would be no need for accountants. Even if we ignore the cost of building the assembly line for the sake of argument (and we shouldn't), there are lots of day to day expenses that directly affect the cost of the product but cannot be easily or tidily allocated directly to the product. Any number you see for per-unit costs is an estimate with an army of assumptions underlying that number. It might be a pretty good and useful estimate but it's an estimate all the same. There is a saying among accountants that it's better to be approximately correct than precisely wrong.
Let's use an example. Running an auto assembly plant requires a lot of water. Equipment needs cooling, people need to drink, toilets need flushing, etc. It's self evident that at least some of the water used is a direct cost of manufacturing but there is a problem. There is no tidy way to assign a fixed and unchanging number for the amount of water used to produce each car. Some of it is clearly used in production and you can allocate it across the number of vehicles produced but it's not a linear function. It is FAR too expensive to try to measure all water usage for every purpose. If you change the number of units produced the amount of water required doesn't change by a matching amount so the costs don't match neatly either. And worse any allocation algorithm you can come up with will almost certainly not accurately allocate the costs for any non-trivial case. And there are countless other costs that are either impractical or impossible to neatly allocate. How much of an engineers salary should be allocated to a given product or component if you aren't tracking their time to a ridiculously expensive degree?
If you have a clean and cost effective solution to this problem please publish it in a peer reviewed journal and collect your Nobel Prize in Economics. Seriously, it's that important and difficult of a problem.
By the way, there is no fact when things are badly defined.
The problem is NOT that things are badly defined. All these terms are very well defined despite a lot of people here on slashdot being uneducated as to their meaning. Seriously a shocking amount of effort goes into defining these terms. I'm not being critical - I didn't used to know their meaning either which is why I'm trying to educate here. No, the problem is that clear definitions of terms does not result in clean solutions to the problems. Go research fixed and variable costs. Learn about direct and indirect costs. Study Activity Based Costing. These are issues that real world accounts have to deal with every day and they are often very difficult and messy problems. The terms are well defined but the solutions are anything but tidy in a lot of cases for two primary reasons:
1) A shocking amount of accounting really comes down to opinion and there is no obvious way to change that. Stuff like defining when a sale occurs can be defined a variety of different ways and the best solution can vary from company to company or