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Off of credits though right? Also isn’t Tesla considered a “tech” stock by a lot of investors? A 20% gross margin is not good for a tech stock.
“Regulatory credits” are getting paid for making electric cars other automakers won’t make. Fiat alone must pay Tesla $2B for credits to keep selling internal combustion vehicles in Europe.
Revenues down Year over Year, and yet their stock price is 8x. Profiability increased, but its market cap is larger than Toyota which has over 10x the revenues. This stock is truly one for /r/wallstreetbets.
You realize their factory was shut down for much of this period, right? Comparing YOY quarterly figures here is very disingenuous.
Positive financial results, one surprise to be seen here is a massive reduction in model S builds, more than 60% drop-off QoQ Presumably due to COVID, but maybe not?
When your spending 100k on a car you expect Mercedes type of luxury. Previously, Tesla didn't have to compete on that because the Model S/X were ahead of its time an proof of concept cars, with the release of Model 3/Y there is no reason to have one, unless you need the additional size and want to have an electric vehicle on principle.
So many red flags Profit is all regulatory credits, actual auto sales flat to down, accounts receivable balance is now 1.4B or >20% of revenue, interest income is $8M (down -20%) even though global interest rates were cut to near 0 in Q2, R&D and service spending down despite dozens of projects the company claims to be working on.
On a TTM basis, GAAP OI is $1.23 billion against regulatory credits of $1.05 billion. They are actually barely profitable without the credits (though negative in the current quarter). Edit: re receivables, I don't necessary see a problem there - DSO of about 21 days - especially considering they also have all the residential receivables from their solar business.
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Tesla posted positive free cash flow (CFO - capex) for 4 of the last 5 quarters (page 24) and it the only company with increase in # of deliveries among the 10 largest autos globally (page 7). Gross margins >20% is also best in class in the auto industry The list goes on in terms of growth & profitability
they earn 100% margins on selling $400M in mysterious regulatory credits
What are regulatory credits? I thought the 7500 credit ran out?
Earlier quoted context omitted.
Off of credits though right? Also isn’t Tesla considered a “tech” stock by a lot of investors? A 20% gross margin is not good for a tech stock.
“Regulatory credits” are getting paid for making electric cars other automakers won’t make. Fiat alone must pay Tesla $2B for credits to keep selling internal combustion vehicles in Europe.
This doesn’t seem like a good long term strategy.
Pre Close: - From Bloomberg re Robinhood and TSLA "number of Robinhood accounts holding Tesla shares (in some form) is at an all- time high of 496,890. Tesla is the second-most popular stock on the platform over the last 24 hours, and the 19th-most popular stock over the last 7 days." Looking at: - if profitiable check for amount of regulatory credits that Telsa gets from other automakers, this could be the differenc…
Thanks for the summary. This should have been top comment.
My risk appetite tells me not invest on something I dont understand. And I dont understand Tesla's valuation. But from an outsider perspective, this has been fun to watch.
What are regulatory credits? I thought the 7500 credit ran out?
This is separate from the consumer EV tax credit. Every car manufacturer must produce a certain percentage of electric cars. If their actual EV sales aren’t enough to cover that requirement, they can purchase “EV credits” from companies that exceeded their regulatory requirements to avoid a fine. Essentially this policy gets car companies that aren’t producing EVs to subsidize the ones that are.
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they earn 100% margins on selling $400M in mysterious regulatory credits
There's nothing mysterious about them. Car companies are required to produce clean vehicles, or they can instead buy credits from companies who do. Companies are paying right now rather than producing, and Tesla is there to benefit from it. There's nothing shady or mysterious here.
i cannot find any information from a Ford or Toyota or GM describing the millions of credits they’ve purchased from Tesla shrug