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Q2 2020 Update

ir.tesla.com

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Re: Q2 2020 Update

#121

Post by lubujackson »

TSLA in some ways reminds me of Amazon at the beginning. Way overpriced, but kept reinvesting into new things as it went and the stock price kept going up and profits stayed zero forever while the company kept building itself bigger and bigger. So I can see the bull perspective.

However...

Car manufacturing is not the same as slinging books online. Profits are consistently thin and Tesla's only edge is in battery tech and being a status symbol. So it is trying to be the Apple of cars but also grow like Amazon. And their aren't breakeven without credits, so it is kind of like if 2004 Amazon was able to reach breakeven only because Barnes & Noble had to pay Amazon for not having a website.

Also, I am unconvinced that one car brand will be the "Apple of cars" since there is no ecosystem lock-in and at the end of the day it is a fashion/trend symbol - precisely when unemployment is nuts and the economy is in the shitter. It quickly could become more of a overly flashy negative than cool aspirational thing, kind of a rich-is-bad type of reach that Hummer had with gas-is-bad.

Maybe Elon pulls it off, but at this price it is really investing in a future that hasn't been built or even imagined yet.

Re: Q2 2020 Update

#122

Post by MLR »

xoxoy wrote: post #50
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.

they don’t break out who the buyers of these credits are. i cannot find any information from a Ford or Toyota or GM describing the millions of credits they’ve purchased from Tesla shrug

https://www.teslarati.com/tesla-pooling-fca-avoids-co2-fines...

Re: Q2 2020 Update

#123

Post by jpdus »

grecy wrote: post #68
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.

[flagged]

Sure, stock prices are forward looking. However, nothing what you wrote is new information. All this was priced in BEFORE Tesla's stock price quadrupled again.

Re: Q2 2020 Update

#124

Post by itsoktocry »

marc__1 wrote: post #111
itsoktocry wrote: post #73

Earlier quoted context omitted.

> 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…

>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. From 2017 to 2018, they were focused in ramping-up production at the Fremont factory [0]. And compared to Q2 2019 Capex is actually 118% * higher ! * (546m vs 250m), so I can'…

>I'm sure theirs auditors must pay close attention to this number.

I'm sure they do.

https://finance.yahoo.com/news/wirecards-auditors-ey-were-vi...

>And compared to Q2 2019 Capex is actually 118% higher ! (546m vs 250m),

And yet they were building a factory in China then.

Re: Q2 2020 Update

#125

Post by baggachipz »

xoxoy wrote: post #99
baggachipz wrote: post #93

Earlier quoted context omitted.

So this suggests to you that it's somehow shady or below the table? Why would they disclose that information if they don't have to?

yes it is objectively shady because it appears they have full discretion to decide when to recognize these credits, and also unclear who is actually buying them. they also don’t have credits listed as an asset on their balance sheet when you’d otherwise expect these credits to go from asset -> revenue when they decide they should be recognized, instead it is as if these credits just appear out of thin air and sold.

Again, they are not required to report that so there is no reason to. I'm sure they have squirreled away lots of these credits in their war chest to break out at opportune times (like today). They're not fabricating the numbers, they are audited and exist. There's nothing illegal about it. They just don't have to disclose them publicly so they don't, because it would needlessly give information to competitors.

Re: Q2 2020 Update

#126

Post by ckastner »

adventured wrote: post #107
ckastner wrote: post #89

Earlier quoted context omitted.

> "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 ha…

> VW's position is its weakness, it has everything to lose and nothing to gain from the peak they've reached.

I think that’s a very reasonable argument to make. However, Tesla is not even close to this peak VW might have reached, and is valued (roughly speaking) at 4x that.

VW might lose its peak, Tesla never had it in the first place.

Re: Q2 2020 Update

#127

Post by mamon »

elil17 wrote: post #63
michaelmior wrote: post #49

Earlier quoted context omitted.

Interesting! I wasn't aware of this credit. How it's structured is fascinating in that they essentially have to pay their competitors for not meeting the quota. (Of course the markets for EV vs ICE is somewhat different, but not disjoint.)

Yeah it’s an awesome system! Similar ideas exist for controlling carbon emissions (like a cap and trade system, where, to oversimplify it, everyone gets an equal amount of “greenhouse gas points” which you can either spend on polluting or sell to others)

Actually, this system is counterproductive, I think. Starting production of EVs costs you money, but it also takes time, and the penalties for not meeting quotas are something you have to pay right now. So, in the end, the money you spend buying "EV credits" is the money taken away from your R&D budget on EVs.

You might argue that the company receiving money for "EV credits" would invest them in increasing the production, but that's often not the case - since they have already met their quotas and are off the hook, they are free to simply hand this money out to shareholders in form of a dividend.

Re: Q2 2020 Update

#128

Post by DanCarvajal »

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.

They're actually building another tent to make cars in right now. Not sure it's an upgrade but it's something.

Re: Q2 2020 Update

#129

Post by thecopy »

qeternity wrote: post #116
ckastner wrote: post #89

Earlier quoted context omitted.

> "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.…

For bulls, TSLA isn’t a car company. It’s the climate change company. They are the best bet right now to upend the entire power mix. I’m not saying I agree with this. Even if achieved, the amount of future success being priced in today is extraordinary. Combine that with a stock that’s become “cool” to own with retail, and the huge short interest...and well it starts to make sense. TSLA price action at the moment is…

>It’s the climate change company

What does this mean? ELI5 pls

Re: Q2 2020 Update

#130

Post by modeless »

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.

Gross margin on cars is 25% this quarter, 17% after removing regulatory credits. What "financial data" are you using to come to the conclusion that they don't have good margins?
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