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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.
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.
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.
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
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
False. Tesla has $157M due in December, and another $920M due in March.
Meanwhile, production keeps rising. If you're betting on a "Christmas slowdown" to save you, keep dreaming.
This is only just starting. Fremont scales to at least 7k without new lines (confirmed not just by Tesla, but also analysts who've toured Fremont). Model 3 is designed for 25% margin at its full range of variants. I mean, what exactly did you all think would happen to margin over time? Shorts kept complaining about high scrap rates and excess labour requirements - did you think it would remain that way forever? It takes a long time to get those things down (Tesla is still slowly reducing production costs on the Model S), and reducing them equals margin. With the introduction of the MR, margin improvements will get eaten up by a lower ASP in Q4, but in Q1 you not only get further margin improvements, but also a higher ASP due to the start of high-end sales in Europe.
Seriously, what exactly did you all expect was going to happen?
"What is the difference between a Ponzi Scheme and an Investment Bank?" -- Jon Stewart
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
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.