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Tesla Says Model 3 on Track as Quarterly Loss Beats Estimates

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Re: Tesla Says Model 3 on Track as Quarterly Loss Beats Estimates

#101
post #60

Earlier quoted context omitted.

That doesn't necessarily mean shorting a company just because it uses non-GAAP numbers is a good idea though. As with anything, if you understand what the non-GAAP numbers represent, it's not a problem. If you don't..

That doesn't necessarily mean shorting a company just because it uses non-GAAP numbers is a good idea though. That would be an interesting investing thesis to test. You are correct, non-GAAP numbers don't mean a company is hiding something, but it does make you ask why they felt the need to use non-standard accounting principles (the answer is it makes them look better).

By design, GAAP accounting principles are very conservative, to make it harder for deceptive actors to conceal losses. However, for making management decisions, GAAP accounting principles are so conservative and rigid that they can actually obscure the key drivers of a business. This is why management accounting is historically done differently than financial accounting. Financial accounting is optimized for revealing fraud, not for understanding or running businesses. Therefore, if someone chooses to use non-GAAP accounting, you're right it can mean they are hiding something, but it can just as easily mean they are trying to relay more useful and informative numbers.

In all cases, of course, it's important to understand what the numbers mean.

Re: Tesla Says Model 3 on Track as Quarterly Loss Beats Estimates

#102
post #5

People get upset by the 'superhero' status of Elon Musk. Nerds everywhere worship the guy, buy his cars, watch his SpaceX launches. But honestly, let him have it, I say. He's earning it. He's taking huge risks and succeeding where others weren't willing to try.

Elon Musk's businesses have benefited from billions in federal and state government subsidies and low-interest loan programs over the years. He's taking huge risks because other people are footing the bill.

And the legacy energy companies are still raking billions in subsidies every year, even before you get to things that aren't counted that way. And the industrial farmers are still subsidized to grow various things.

And FedEx has a huge implicit subsidy via road maintenance. And Walmart, via various welfare policies. And insurance companies heavily benefit from various government policies.

I can think of these all day.

Re: Tesla Says Model 3 on Track as Quarterly Loss Beats Estimates

#103
post #35

Earlier quoted context omitted.

It really does not matter as we could build them today with a lot less effort. It would cost something like $5 billion today and would take ~2,000 people ~5 years. Which is relatively speaking a lot less expensive. Put another way, Bill G could build ~17 of them in his lifetime and not be broke.

It would cost something like $5 billion today and would take ~2,000 people ~5 years. Which is relatively speaking a lot less expensive. Put another way, Bill G could build ~17 of them in his lifetime and not be broke. Awesome! What's at one time only the province of the greatest empire on the planet could become just one of many of a billionaire's projects. Let's scale this out from the present day with something of…

There's a certain (supposed) billionaire who wants a big wall. Not quite as inspiring to me personally, but, well, tastes vary, I guess.

Also, he's planning to spend your money on it, not his.

Re: Tesla Says Model 3 on Track as Quarterly Loss Beats Estimates

#104
post #97

People who lose money shorting Tesla are losing their shirts for the same reason as those who shorted Amazon: cash flow + growth matters more than profitability, PE ratios, or EPS. Tesla's car business is cash flow positive but the quarterly losses are due to infrastructure investments. This is how finance can be more subtle than meets the eye. Tesla's car business is very profitable: Tesla also reported an automotiv…

Shorting seems to often be about the short-term prospects of the stock. Long term, Tesla looks like it will be a reasonable company. But will it justify its stock price? Tesla is a $45B company right now. Toyota is $188B (4.1x more valuable), VW is $78B (1.7x), GM is $58B (1.3x), Ford is $51B (1.1x), Nissan is $42B (0.9x), Fiat Chrysler is $17B (0.4x), Honda is $58B (1.3x), BMW is $56B (1.2x), Daimler is $79B (1.8x),…

> Toyota's profits are real. GM's profits are real. BMW's profits are real. Tesla's profits might be great in the future - and that risk means the potential profits are worth less than actual profits.

You have this exactly backwards. For instance, you could have made the exact same argument about Walmart versus Amazon. What you're missing is that the investments that Tesla is making, which hurt short-term profitability, literally create new lines of business that power future revenue streams. The fact that car manufacturers are hoarding profits and failing to invest in the future is precisely why they are overvalued.

Re: Tesla Says Model 3 on Track as Quarterly Loss Beats Estimates

#105
post #97

People who lose money shorting Tesla are losing their shirts for the same reason as those who shorted Amazon: cash flow + growth matters more than profitability, PE ratios, or EPS. Tesla's car business is cash flow positive but the quarterly losses are due to infrastructure investments. This is how finance can be more subtle than meets the eye. Tesla's car business is very profitable: Tesla also reported an automotiv…

Shorting seems to often be about the short-term prospects of the stock. Long term, Tesla looks like it will be a reasonable company. But will it justify its stock price? Tesla is a $45B company right now. Toyota is $188B (4.1x more valuable), VW is $78B (1.7x), GM is $58B (1.3x), Ford is $51B (1.1x), Nissan is $42B (0.9x), Fiat Chrysler is $17B (0.4x), Honda is $58B (1.3x), BMW is $56B (1.2x), Daimler is $79B (1.8x),…

Tesla is a $45B company right now.

Perhaps that sounds like a lot. But consider that Uber is valued at $68B.

Re: Tesla Says Model 3 on Track as Quarterly Loss Beats Estimates

#106
post #83

Earlier quoted context omitted.

I put 100% of my net worth in TSLA when it was trading at $180 a couple months ago http://www.marketwatch.com/story/elon-musk-to-the-guy-who-in... . I'm already up 40%, and I'm holding (though not adding to it as my net worth grows). Such an obvious, incredible company that Wall Street will undervalue until the end of time. (For the record: I don't recommend doing this. I am in a unique situation where I can own the…

then you should leverage, if you are not afraid of losing it. buy/sell options, with some sane strategy you can even limit the down side.

Agreed, if you have high conviction and really want exposure to the name, better idea to buy call options that are a bit out of the money then put your life savings on the line. You can still get asymmetric upside without putting all your capital to work.

Re: Tesla Says Model 3 on Track as Quarterly Loss Beats Estimates

#107
post #97

People who lose money shorting Tesla are losing their shirts for the same reason as those who shorted Amazon: cash flow + growth matters more than profitability, PE ratios, or EPS. Tesla's car business is cash flow positive but the quarterly losses are due to infrastructure investments. This is how finance can be more subtle than meets the eye. Tesla's car business is very profitable: Tesla also reported an automotiv…

Shorting seems to often be about the short-term prospects of the stock. Long term, Tesla looks like it will be a reasonable company. But will it justify its stock price? Tesla is a $45B company right now. Toyota is $188B (4.1x more valuable), VW is $78B (1.7x), GM is $58B (1.3x), Ford is $51B (1.1x), Nissan is $42B (0.9x), Fiat Chrysler is $17B (0.4x), Honda is $58B (1.3x), BMW is $56B (1.2x), Daimler is $79B (1.8x),…

Thanks for taking the time to write this. I was an investor for a while in tesla and had a good ride for sure but sold for many of the reasons you articulated. At this point the hype machine is totally out of control there is no way justify the realitive evaluations of tesla verse the other car companies.

Re: Tesla Says Model 3 on Track as Quarterly Loss Beats Estimates

#108
post #98

Earlier quoted context omitted.

> Investors are not fools I hope you're kidding, because the counter examples to this are endless.

To be more specific - investors often do not do their own homework, and assume that some other hardworking soul has. See e.g. Theranos for a glaring example of this.

I agree with the statement but not the example. Theranos actively deceived its investors and lied about it's business. This is wholly different than a company that is obviously not doing well but you didn't bother to vet.

Re: Tesla Says Model 3 on Track as Quarterly Loss Beats Estimates

#109

Earlier quoted context omitted.

Buy (or short) the rumor, sell (or close) the news. If you look at the past two months it's grown $75 a share, $25 a share in the past 30 days alone. After hours trading is up, but for the grey edge grinders it was time to profit harvest.

Who are the "grey edge grinders?"

Traders who get their 'edge'(alpha) from grey information.

White = information easily available to the public. Say, like SEC filings or press releases.

Grey = information between white and black. For example if you over heard a CEO mention something vague to a colleague at a bar and think you can act on it.

black = clearly material insider information

Re: Tesla Says Model 3 on Track as Quarterly Loss Beats Estimates

#110
post #23

Earlier quoted context omitted.

Not so sure about it. Look at Concorde. Musk actually said that technology does not move forward if there is nobody (or no company or no government) to push it forward.

> Not so sure about it. Look at Concorde. The absence of a business case is not the same as the absence of technology. Technology for supersonic aircraft has moved forward since the Concorde. Economically viable applications for that technology for commercial passenger transport have not, however, appeared. (Or, if they have, they haven't been recognized.)

Even if there is an economic case for supersonic civil aviation, considerable environmental problems must first be overcome.

Given their extreme noise, pollution, and ozone layer disruption it's certainly a good thing there aren't hundreds or thousands of Concorde-equivalents plying the skies today.

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