Q2 2020 Update • Hacker News Board

Re: Q2 2020 Update

#51

Post by toomuchtodo » Wed, Jul 22, 2020, 9:02 PM UTC

almost_usual wrote: post #47

toomuchtodo wrote: post #40

Earlier quoted context omitted.

“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.

So Tesla is a good investment because they get paid by other automakers to make cars they don’t want to make right now? This doesn’t seem like a good long term strategy.

My Tesla stock with a $17/share cost basis says otherwise.

Take the the other side of the bet and short it if you doubt the long term value. The world isn’t going to suddenly stop supporting climate change mitigation through policy. It’s only going to ramp up, leaving legacy Orgs in the dust.

Re: Q2 2020 Update

#52

Post by matthewdgreen » Wed, Jul 22, 2020, 9:02 PM UTC

baggachipz wrote: post #45

xoxoy wrote: post #38

Earlier quoted context omitted.

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 think the question is whether it’s sustainable as a business. And whether Tesla’s other businesses are growing quickly enough that they can make up for the loss of those credits when other manufacturers start producing more EVs.

Re: Q2 2020 Update

#53

Post by wyldfire » Wed, Jul 22, 2020, 9:02 PM UTC

nickik wrote: post #19

itsoktocry wrote: post #6

The difference in the narrative versus the financial data is stark: Quarterly revenue has not shown any growth for nearly 2 years, despite introducing more models and expanding global deliveries. Their sales of regulatory credits this year is greater than all of the net income ever earned in their entire history.

When almost ever other car company is burning money, sustaining massive investment in multiple new massive factories, launching new products, and producing cars with pretty good margin and not losing money is an pretty big accomplishment. Its not that long ago people were arguing even a small crisis would wipe out Tesla.

> Its not that long ago people were arguing even a small crisis would wipe out Tesla.

It would be very challenging for them if the political environment changed and regulatory credits disappeared altogether.

Re: Q2 2020 Update

#54

Post by unixhero » Wed, Jul 22, 2020, 9:02 PM UTC

xoxoy wrote: post #30

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.

Maybe it's red flags when you make conservative measurements against a traditional industry proxy measurement - and applying classic investment banking logic.

However you have got to remember that this is not just another company, it's not just another brand. They've already changed the world, it's all there in their track record.

Re: Q2 2020 Update

#55

Post by SEJeff » Wed, Jul 22, 2020, 9:03 PM UTC

itsoktocry wrote: post #39

nickik wrote: post #19

Earlier quoted context omitted.

When almost ever other car company is burning money, sustaining massive investment in multiple new massive factories, launching new products, and producing cars with pretty good margin and not losing money is an pretty big accomplishment. Its not that long ago people were arguing even a small crisis would wipe out Tesla.

> producing cars with pretty good margin and not losing money is an pretty big accomplishment. If you back out the regulatory credits they've lost money on every car they've ever sold, for almost 20 years. Where do you get "good margins" from? This is an example of narrative versus financial data.

Tesla's first car was the Roadster, and it was released in 2008. How do you get "almost 20 years" when the first car they released was 12 years ago? Tesla was founded in 2003, but even that is not 20 years.

Re: Q2 2020 Update

#56

Post by duncanawoods » Wed, Jul 22, 2020, 9:03 PM UTC

danhak wrote: post #24

jennyyang wrote: post #13

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.

They now have two factories...

Re: Q2 2020 Update

#57

Post by guardiangod » Wed, Jul 22, 2020, 9:05 PM UTC

itsoktocry wrote: post #6

The difference in the narrative versus the financial data is stark: Quarterly revenue has not shown any growth for nearly 2 years, despite introducing more models and expanding global deliveries. Their sales of regulatory credits this year is greater than all of the net income ever earned in their entire history.

One would expect a widget-manufacturer that is supply-constrained to have flat revenue until new factories are opened, unless you are talking about raising prices to increase profitability. It doesn't seem Tesla is that concerned with short-term profitability.

Re: Q2 2020 Update

#58

Post by [deleted] » Wed, Jul 22, 2020, 9:05 PM UTC

SEJeff wrote: post #55

itsoktocry wrote: post #39

Earlier quoted context omitted.

> producing cars with pretty good margin and not losing money is an pretty big accomplishment. If you back out the regulatory credits they've lost money on every car they've ever sold, for almost 20 years. Where do you get "good margins" from? This is an example of narrative versus financial data.

Tesla's first car was the Roadster, and it was released in 2008. How do you get "almost 20 years" when the first car they released was 12 years ago? Tesla was founded in 2003, but even that is not 20 years.

[deleted]

Re: Q2 2020 Update

#59

Post by slg » Wed, Jul 22, 2020, 9:05 PM UTC

itsoktocry wrote: post #6

The difference in the narrative versus the financial data is stark: Quarterly revenue has not shown any growth for nearly 2 years, despite introducing more models and expanding global deliveries. Their sales of regulatory credits this year is greater than all of the net income ever earned in their entire history.

>Quarterly revenue has not shown any growth for nearly 2 years, despite introducing more models and expanding global deliveries.

Isn't this pretty easily explained by the total number of deliveries not growing? They might be expanding internationally to new markets or introducing new cars, but total deliveries have been pretty consistently around 90k for the last 2 years also. They still seem to be selling every car they produce and aren't able to produce cars fast enough to increase total deliveries. The real question is what happens when some of those new factories come online and at what point is demand saturated.

Re: Q2 2020 Update

#60

Post by xoxoy » Wed, Jul 22, 2020, 9:05 PM UTC

matthewdgreen wrote: post #52

baggachipz wrote: post #45

Earlier quoted context omitted.

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 think the question is whether it’s sustainable as a business. And whether Tesla’s other businesses are growing quickly enough that they can make up for the loss of those credits when other manufacturers start producing more EVs.

right there’s like a dozen EVs coming to market in 2021/2022. it will disappear very quickly over the next 2 years.