Tesla Reports Second-Consecutive Profit; CFO Retires Again

Rei writes: Yesterday, Tesla reported their 4th quarter earnings, representing their second consecutive profit. While earnings per share missed analyst expectations ($1.93 vs. $2.20), revenue beat expectations by around $100 million and free cash flow ($910 million) was more than double the First Call consensus of $395 million. Model 3 margins were maintained at an impressive 20% level despite significant reductions in the average sale price in Q4; labor hours fell by 20% in Q4 and 65% in the second half of 2018 alone. With $3.7 billion in the bank, Tesla is now well positioned to repay its $920 million March convertible bond obligations in cash. Severance costs and an increase in inventory in transit due to shipments to Europe and China are expected to hurt Tesla's profits in Q1, but guidance for Q2 onward in 2019 is strong. Highlights planned for 2019 include introduction of faster V3 Supercharging early in the year, Model Y and pickup unveiling in the middle of the year, base Model 3 unveiling in the middle of the year, and full-vehicle production in the under-construction Shanghai Gigafactory by the end of the year -- the first wholly foreign-owned auto plant in China, which has seen extensive governmental support.

Despite a generally positive earnings report and conference call, the atmosphere was soured by the news that Tesla's 11-year Tesla veteran CFO Deepak Ahuja was re-retiring. Having previously retired in 2015, Deepak returned to Tesla in 2017 to replace outgoing CFO Jason Wheeler. Ahuja will remain with the company for several months as CFO and then become a senior advisor, while his protege Zach Kirkhorn fills his role. The market reacted negatively to the news, with Tesla trading down 4.5% premarket.

Comments

So Rei is our official Tesla investment liason?

[ChesterRafoon]

I always thought that, nice to see it official.

Re-retiring

[bill_mcgonigle]

Thanks for the good summary. I read stories this morning along the lines of "Management Shake-Up at Tesla, CFO Out, Replaced by VP of Finance."

I shall now go mark those news sources as "fake news, shorts colluders."

Re:Re-retiring

[140Mandak262Jamuna]

He is an Indian. Wrote his joint entrance examination in 1979, went to one of the IITs. Last name Ahuja. Very high chance his family had been civil servants to the governments for several generations. Indian civil servants retire at age 58. Might have changed recently but that is the traditional retirement age in India.

A very traditional Indian would start disavowing worldly pleasures and lose the "attachments or bonds" with the material, the mundane, the carnal self and prepare to connect with the spiritual universe, typically starting from age 60.

There is no real evidence he is that traditional, but such world view is very common in India, especially among the Brahmin castes. (Again no evidence that he is a twice born).

Re: So Rei is our official Tesla investment liason

[rtb61]

Checked the REI track definitely an Tesla fan big time but even a broken clock can be right twice a day. The Tesla short was all about buying Tesla on the cheap after financially crushing the company, a nasty plot schemed up by a car company and hedge fund managers, it failed and people should have been prosecuted including at the SEC because what they did to back the shorters against company investors, umm.

Yet still cars will be the smaller part of Tesla revenue versus power systems. Suburban distributed power system, solar and battery, with Tesla buying the sparkage after selling the kit and then onselling that sparkage to major buyers at far better rate than the power grid incumbents who are always pretty shite and way to greedy, well the corruptly privatised ones who are typically very bad.

More Info

[mentil]

Their earnings report says they plan to begin tooling for the Model Y this year, and 70% of its parts will be in common with the Model 3, which should lead to a quicker ramp-up than the Model 3 had. They're also still claiming to be working on the Semi, and are going to seriously ramp up solar roof production this year.

Re: So Rei is our official Tesla investment liason

[AmiMoJo]

If Rei could just be a bit more objective and fair she would be a great source of Tesla info. She clearly spends a lot of time learning everything she can about the inner workings of the company, with some insightful and interesting posts...

But then ruins it by idolizing Musk and their cars to a ridiculous degree. Also their quarterly earnings aren't particularly interesting.

There are some forums where people have really interesting discussions about the current crop of EVs. it's a shame we can't do that there, but it's already polarized into Tesla fans and oil shills.

This is actually very nice

[Terje Mathisen]

Elon Musk have been extremely clear, from the very beginning, that Tesla was a private bet almost sure to fail, but still worthwhile in order to speed up the transition away from ICE cars. The fact that they now seem to be able to actually make this a sustainable business is great!

Full disclosure: I'm a Norwegian electrical engineer who waited close to 25 years before the first 4x4 long range EV, i.e. a Tesla Model S70D was announced, we have used that as our only car for 3 years now.

Tesla is of course one of the best-selling car brands in Norway due to our extreme EV incentives, which include no toll road fees, mostly free parking, very low road tax, all on top of zero import duties or sales tax. With 98%++ of our electricity coming from hydro, this is a very nice situation indeed. Currently well over half of all new cars here are pure EVs (a majority) or plug-in hybrids, with ICE cars making up the remaining third or so.

Terje Mathisen

Re:This is actually very nice

[froggyjojodaddy]

You can have both, it would seem.

SP500 not in 2019 April

[140Mandak262Jamuna]

We were hoping Tesla will be included in SP500 index in April. But it has made 450 mill in Q3+Q4. And lost 700 mill in Q2. So to have positive earnings in the trailing four quarters, it needs to make 250 mill in Q1 of 19. But the conference call guidance was a very small profit. So it is not going to be included in April. But when 2019 Q2 comes in the 700 mill loss will roll off the time frame. So even if it makes a loss it will definitely make it. Results will be announced in July 2019, so certain to be included.

Market will anticipate it, index funds would have buy some 6 billion in TSLA stock. And steady purchase thereafter. But it is not something that trigger any kind of short squeeze of any kind.

Already big smart shorts have closed their positions. 41 million TSLA shares were shorted in Jun 2018. Now the number is around 24 million. Still high, but the trend is down. Two more months it might not be the most heavily shorted stock in the market.

Elon is surprisingly well behaved. If his demeanor is any indication, the company is doing very well.

Re:SP500 not in 2019 April

[MachineShedFred]

As with all things, context matters.

If you have $900M in convertible bonds coming due, and the short float is dragging your stock price under the conversion price, it can matter very much.

That's $900M coming out of cash on hand, rather than issuing stock certificates.

Re:Lots of loose money at the top of the market, b

[DrXym]

Perhaps if Musk actually delivered the $35,000 car he promised in the first place, 2 years ago, they might be able to afford it.

Re: So Rei is our official Tesla investment liason

[Anonymous Coward]

*Tesla turns around and makes profit*

*article reports that Tesla had turned around and made a profit*

REEEEE puff piece REEEEE

Whatever you say, Screechy McAutism.

Re:Lots of loose money at the top of the market, b

[140Mandak262Jamuna]

True. As a plain statement of fact that is precisely true. If he had delivered a 35 K car 2 years ago... yeah, sure.

Also true, he did not.

But what he did deliver, 50K car 1 year ago is still a stunning achievement far beyond anything the traditional car companies managed to do so far.

There are some exciting announcements from them. There are some exciting products from them. Jaguar I-Pace, Hyundai Kona... Whether they beat Tesla, or they coexist with Tesla, or they reduce Tesla to be some boutique vendor of strange electric cars, Auto world has been shaken thoroughly to the core.