Q2 2020 Update • Hacker News Board

Re: Q2 2020 Update

#161

Post by itsoktocry » Wed, Jul 22, 2020, 10:10 PM UTC

guardiangod wrote: post #103

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…

>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.

>Could you give more detail on that? The last big capex increase was due to Model Y rollout

     Capex:

     2017 - $4 Billion
     2018 - $2.5 Billion
     2019 - $1.5 Billion
     2020 to date - ~$1 Billion

Where was the big increase in capital expenditure?

Re: Q2 2020 Update

#162

Post by henrikschroder » Wed, Jul 22, 2020, 10:11 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…

> You can now spend 100k to get a car that never emits a single toxic chemical while being used.

Yes, but if the EV part is most important to me, why would I spend $100k on a Model S, when I can spend way less on a Model 3?

And if the luxury is most important to me, why would I spend $100k on a Model S, when I can spend the same amount of money on a Porsche Taycan, get a similarly performing EV, but with a luxury interior that blows Tesla completely out of the water?

The Model S has very little going for it right now, which is why the price has dropped considerably in the last year. It finally has competition, and it's simply not holding up very well.

Re: Q2 2020 Update

#163

Post by jupp0r » Wed, Jul 22, 2020, 10:12 PM UTC

mamon wrote: post #88

guardiangod wrote: post #57

Earlier quoted context omitted.

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.

If Tesla cars were really in high demand, and supply was the problem then I would expect them to raise prices, thus increasing revenue. They haven't done that, which means Tesla's are probably not as sexy cars as they try to paint them.

They are betting on market growth driven by climate change as well as technology advancements that will drive battery prices down. Both are coming, imho.

Re: Q2 2020 Update

#164

Post by easde » Wed, Jul 22, 2020, 10:12 PM UTC

knrz wrote: post #100

jfengel wrote: post #69

Earlier quoted context omitted.

If they are added to S&P 500, does that mean that a bunch of index tracking funds buying it all at once? I would assume that's already been priced in, if so.

It does, but the rebalancing occurs in September I think.

The quarterly rebalancing of the S&P 500 is only relevant when companies already in the index change their free float (usually by issuing / buying back shares). New companies can be added at any time (with a few days advance notice).

Re: Q2 2020 Update

#165

Post by michalxnet » Wed, Jul 22, 2020, 10:16 PM UTC

lubujackson wrote: post #121

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 tec…

They can go on energy market where you can create local decentralized energy hubs running as franchise where they rent the infrastructure and you can throw internet package to the offer.

Re: Q2 2020 Update

#166

Post by zaroth » Wed, Jul 22, 2020, 10:16 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…

> Can you explain how their capex is decreasing

Capital efficiency. It should not be surprising that a greenfield factory built in China based on a spec you iterated on in Fremont, CA results in a much higher $/Cars/Day, a.k.a capital efficiency. Iterating on a live line in Fremont, CA is significantly more costly. It's like $/sq ft. for renovating your house versus buying new.

Also, look at the flow diagrams they've published on the floor layout and the path through a factory a car takes to go from start to finish in Fremont vs. GF3. This is also why they're moving to Austin.

> By the way, what's a "delivery"? I don't think I've ever seen them define it.

Of course they define it. In their Annual Report, under a section titled "Critical Accounting Policies and Estimates", under a sub-section titled "Automotive Segment - Automotive Sales Revenue";

We recognize revenue on automotive sales upon delivery to the customer, which is when the control of a vehicle transfers. Payments are typically received at the point control transfers or in accordance with payment terms customary to the business.

> and yet they build inventory. Very opaque.

I'm not sure what you're asking here.

Re: Q2 2020 Update

#167

Post by bradly » Wed, Jul 22, 2020, 10:16 PM UTC

thecopy wrote: post #129

qeternity wrote: post #116

Earlier quoted context omitted.

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

Every house/business with solar roof and battery wall, with the elimination of energy utility monopoly across most of the world. Same thing spacex is doing for broadband and their are other companies pushing for self-contained residential water systems as well (although this one is harder for the public to swallow than the others).

Re: Q2 2020 Update

#168

Post by JoeSmithson » Wed, Jul 22, 2020, 10:17 PM UTC

sacred_numbers wrote: post #84

jennyyang wrote: post #42

Earlier quoted context omitted.

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?

The potential upside for Tesla is huge. If they can become the Apple of electric cars and if electric cars become standard, they could be worth trillions. The reason their valuation was not in the trillions is because there is a risk that they will go bankrupt, that other companies will take the lead in EVs, or that EVs will not be where the market is headed in the foreseeable future. The reason for the jump in valua…

> "they could be worth trillions"

Trillions? 50x the size of Ford? Bigger than, essentially, the current combined value of every car company in the world at the moment?

How?

Re: Q2 2020 Update

#169

Post by bryanlarsen » Wed, Jul 22, 2020, 10:18 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.…

VW has over $200 Billion in debt, and are spending $100B on the transition to electric. Buying VW at this point is crazy risky.

There are currently ~10 major automakers outside of China and India. In a decade, there will be less than 10. The only one I am confident that will be sticking around is Tesla. The others have a difficult transition to electric ahead of them and possibly a difficult transition to self-driving and will possibly have to deal with strong Chinese competition. Not everyone will successfully transition. Perhaps spending heavy on the electric transition like VW is the right approach. Perhaps letting everybody else take all the risks and swooping in late like Toyota is the right approach. I don't know.

The only manufacturer that I'm confident of being around in 10 years is Tesla. Some of them will transition well and will likely sell more cars than Tesla and have an enterprise value larger than Tesla in 10 years. And some of them will go bankrupt or be swallowed cheap like FCA-PSA.

That being said, I significantly reduced my holdings in Tesla this year. I'm pro-Tesla, but not at current prices.

Re: Q2 2020 Update

#170

Post by yoavm » Wed, Jul 22, 2020, 10:20 PM UTC

sacred_numbers wrote: post #84

jennyyang wrote: post #42

Earlier quoted context omitted.

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?

The potential upside for Tesla is huge. If they can become the Apple of electric cars and if electric cars become standard, they could be worth trillions. The reason their valuation was not in the trillions is because there is a risk that they will go bankrupt, that other companies will take the lead in EVs, or that EVs will not be where the market is headed in the foreseeable future. The reason for the jump in valua…

But why would they become the Apple of electric cars? Why do you think they have better chances than anyone else? The market, to me, seems to show that most people still buy non-electric cars. Once that flips, any other much bigger car manufacturer could start producing more electric cars. There doesn't seem to be any rocket science to it.

Back in the 90s I bought a Rio PMP300. Before anyone knew what MP3s were, it was the first mp3 player out there. That didn't help them when people did care about mp3 players - bigger players just came and ate the cake. I'm not sure what makes Tesla a different story. Seems like it was supposed to be "Autopilot", but we all know how good that's going.