Q2 2020 Update • Hacker News Board

Re: Q2 2020 Update

#101

Post by marvin » Wed, Jul 22, 2020, 9:26 PM UTC

jennyyang wrote: post #42

danhak wrote: post #24

Earlier quoted context omitted.

You realize their factory was shut down for much of this period, right? Comparing YOY quarterly figures here is very disingenuous.

Their stock price rose 8x. There's nothing in these numbers that justifies this type of meteoric rise exception pure, unadulterated speculation. They wouldn't have even been profitable if they couldn't sell their regulatory credits. How is that justifiable for an 8x YoY increase?

Before that 8X rise, though, stock price was basically unchanged since 2014. While revenue in that period has grown 10X.

So you could make a reasonable argument that the huge stock price appreciation in the last 12 months was in fact a re-pricing to reflect that the stock market now believes Tesla has a decent shot at becoming one of the world's leading tech companies.

It doesn't reflect that something magical has happened in the last two years; something good has happened in the last 6 years and the stock market at large has only recently realized this.

Re: Q2 2020 Update

#102

Post by realtalk_sp » Wed, Jul 22, 2020, 9:26 PM UTC

unixhero wrote: post #54

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.

They don't have any significant monopolistic advantage and they're operating in a highly price-sensitive, competitive market.

My personal theory is that Musk knows this and his real objective is to provoke car manufacturers into competing on electric. From Musk's point of view, the win is likely not Tesla making any significant amount of money for shareholders but instead it driving the whole market towards electric, thereby achieving the "real" objective of lowering emissions.

Many of his behaviors over the years suggest this could be the case: publishing a 'master plan', releasing Tesla's patents, noting the stock price was "too high", and sinking all of his PayPal money into SpaceX, Tesla, and Solar City (and then borrowing to pay his rent).

Re: Q2 2020 Update

#103

Post by guardiangod » Wed, Jul 22, 2020, 9:26 PM UTC

itsoktocry wrote: post #73

marc__1 wrote: post #28

Earlier quoted context omitted.

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

> Tesla posted positive free cash flow (CFO - capex) for 4 of the last 5 quarters Can you explain how their capex is decreasing as they build out more factories and invest in new technology? Seems odd, doesn't it? Yet is sure makes that cash flow number look good. These are the kinda things that analysts consider red flags. > it the only company with increase in # of deliveries among the 10 largest autos globally Do…

>capex is decreasing

Could you give more detail on that? The last big capex increase was due to Model Y rollout. Now that most of the lines are completed, it's just replicating what Fermont's Y production line has in Shanghai's.

I do, however, agree that Tesla's definition of 'delivery' is suspect.

Re: Q2 2020 Update

#104

Post by slg » Wed, Jul 22, 2020, 9:27 PM UTC

xoxoy wrote: post #96

slg wrote: post #83

Earlier quoted context omitted.

Well yes, that is the point. Tesla's deliveries have been limited by their production capability for a while now. If the problem was a lack of demand, you would expect inventory to grow or production to slow, but neither of those have happened (beyond a slight decrease in production due to COVID related closures).

well there are rumors they are shutting down parts of Fremont for “upgrades” soon. likely because their inventory is higher than they want.

Are you admitting that your opinion on Tesla's inventory is based entirely on rumors? I am basing my opinion on the linked document which show excessive inventory isn't an issue. Maybe the rumors are right and the document is wrong, but that would constitute fraud and would mean there are bigger problems at Tesla than their inventory levels.

EDIT: This was comment was downvoted multiple times so I rephrased it to be less aggressive than how it was originally written.

Re: Q2 2020 Update

#105

Post by toomuchtodo » Wed, Jul 22, 2020, 9:27 PM UTC

itsoktocry wrote: post #87

toomuchtodo wrote: post #51

Earlier quoted context omitted.

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.

> My Tesla stock with a $17/share cost basis says otherwise. Tesla's IPO price was $17. So you got in right on the lowest price the stock has ever been and never bought another share since? Amazing.

Mostly correct. I performed swing trading along the way up, but still hold all of the initial IPO investment (yolo’d my Roth IRA). Was sold after my first Roadster test drive.

Re: Q2 2020 Update

#106

Post by nickik » Wed, Jul 22, 2020, 9:27 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.

The margins on the car are actually very good, this is evident in the official data and confirmed by expert breakdowns.

They don't make money because they are investing lots of money all the time. People seem to miss that they only launched their first large production cars a few years ago.

Its insanely difficult to start a car company and to scale it to the level Tesla is now with a product that basically nobody else can do profitable is a gigantic achievement.

They are currently building 3 huge new factories.

Re: Q2 2020 Update

#107

Post by adventured » Wed, Jul 22, 2020, 9:28 PM UTC

ckastner wrote: post #89

marc__1 wrote: post #28

Earlier quoted context omitted.

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

> "The list goes on in terms of growth & profitability" It better. Tesla has a market cap of 4x that of VW, a car maker with €256bn revenue and ~€17bn profit in 2019. It is beyond me why anyone would buy this stock over VW, let alone pay 4x the price for it. Even if Tesla could put out 900K cars in a quarter instead of the current 90K, they'd still not come even close to the competition is terms of financial success.…

> It is beyond me why anyone would by this stock over VW, let alone pay 4x the price for it.

The better answer is that nobody should buy VW either. Their business has zero potential upside and a huge downside risk in the transition to EVs; along with the inevitable rise of China's domestic automakers, which will eat a very large amount of market and sales away from the old giants. VW's position is its weakness, it has everything to lose and nothing to gain from the peak they've reached.

Which also isn't the same as saying that Tesla should be bought at its present absurd valuation.

Re: Q2 2020 Update

#108

Post by nickik » Wed, Jul 22, 2020, 9:29 PM UTC

wyldfire wrote: post #53

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.

> 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.

That would not wipe Tesla out. The credits are nice bonus, specially in COVID times, but not having them would not get them near bankruptcy. They would maybe had to raise some more money and not invest as much.

Re: Q2 2020 Update

#109

Post by reducesuffering » Wed, Jul 22, 2020, 9:29 PM UTC

grecy wrote: post #82

sbahr001 wrote: post #43

Earlier quoted context omitted.

I would argue that the model S/X should be updated for their respective costs; They pretty much sell a 6 year old interior that was "space age" at the time. Since then their have been minor interior/exterior and looks extremely dated as the competition has "caught" up and the cheaper models surpass it. The only main changes to the car have been better battery and performance, the latter doesn't improve the day to day…

> When your spending 100k on a car you expect Mercedes type of luxury This is the old way of thinking, and it illistrates perfectly why the other auto manufacturers have been caught flat footed re EVs. For many decades what you said held true - more money on a car meant a higher quality interior. Now things have changed dramatically, because what we thought of as a "car" has changed so much. You can now spend 100k to…

All those reasons apply to buying a 38k Model 3 instead. Tesla is agreeing with grandparent as they are planning to next-gen the S and X. As a customer, what compelling reason is there to spend on the S and X over the 3 and Y? Sales and production are strongly reflecting that.

Re: Q2 2020 Update

#110

Post by kelnos » Wed, Jul 22, 2020, 9:29 PM UTC

ckastner wrote: post #89

marc__1 wrote: post #28

Earlier quoted context omitted.

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

> "The list goes on in terms of growth & profitability" It better. Tesla has a market cap of 4x that of VW, a car maker with €256bn revenue and ~€17bn profit in 2019. It is beyond me why anyone would buy this stock over VW, let alone pay 4x the price for it. Even if Tesla could put out 900K cars in a quarter instead of the current 90K, they'd still not come even close to the competition is terms of financial success.…

It's speculation, and irrationality, neither of which is new to the stock market.

People think the stock will go up, because it's a hot company with a lot of press, so they buy it. More people buy it, and it becomes a self-fulfilling prophecy: the stock goes up.

Eventually Tesla will either find their groove and be a breakout success, or the stock price will fall. It's just a matter of time, and depends on when people get tired of waiting.

Remember also that VW is, comparatively, a super boring company.

These are all bad reasons for Tesla's stock price, but they are reasons.