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> Tesla is operated very much like a silicon valley startup. They're growing rapidly in the hope of becoming profitable when they reach scale. But they sure as

by NickM 10y ago

> Tesla is operated very much like a silicon valley startup. They're growing rapidly in the hope of becoming profitable when they reach scale. But they sure as heck aren't profitable right now. They have already reached scale, and are already profitable. They're just pouring their profits back into further growth. Yes, they're spending a lot on R&D, but that's not sending money into a vacuum, that's investing in the future expansion of the company. The article you link even admits this: "Would it be fair to include the billion-plus dollars spent to bring the Model 3 to fruition in a few tens of thousands of Model X and Model S gross margins? Probably not." Incidentally, I would take anything from Seeking Alpha with a huge grain of salt. Anyone can post an article on there, and people often try to use that site to skew investor perceptions in their own favor. In fact, the author of the very article you link openly confesses at the bottom that he "may initiate a short position in TSLA over the next 72 hours." Conflict of interest, anyone? If you want to see how profitable Tesla is, I would recommend the GAAP numbers from their last quarterly report, rather than some Seeking Alpha author's selective reinterpretation of the facts.

forgetsusername 10y ago
>They have already reached scale Compared to the rest of the car industry? They are a fraction of a percent of the market. >and are already profitable. They cashed in all their ZEV credits to achieve one quarter of profitability. How did they do with those backed out? I mean, they could be profitable, but going by last quarter is deceiving. >They're just pouring their profits back into further growth. You assume that the car industry isn't capital intensive, and that the other manufacturers are not also spending heavily on R&D. But they are. >Conflict of interest, anyone? Uh, no. It's an investing site. If you have a negative view of a stock why wouldn't you possibly short it? Or do you believe that these small-time Seeking Alpha authors are moving the market?
- EdHominem 10y ago
  > Or do you believe that these small-time Seeking Alpha authors are moving the market? Attempting to, yes. > It's an investing site. If you have a negative view of a stock why wouldn't you possibly short it? Oh yes, of course. But if you write an article about it first, to try to cause the effect you're warning about, you might just be a scammer.
JumpCrisscross 10y ago
> They're just pouring their profits back into further growth This justifies adding back R&D per unit, but not sales expenses.
gizmo 10y ago
Tesla is neither at scale nor profitable. They're selling barely 15,000 cars per quarter, compared to Toyota's 2.5 million. They're growing by taking on debt, diluting shareholders, subsidies, and other creative tricks (Model 3 preorders). They've been "profitable" for a single quarter by selling Teslas at a steep discount. Last quarter's report has been widely derided for the financial engineering therein. We'll have to wait and see what the sales numbers will be this quarter, but I'm pretty pessimistic. Seeking Alpha is a mixed bag, but the authors are no more biased than the average wall street analyst. People who comment here also have their own agendas. Bias should be expected everywhere. As for your claim that anybody can write an article on there, that's not strictly true. They have a real name policy and failing to disclose properly can and will get you in trouble with the SEC. By the way, having a short position and writing about why you are short (or the inverse) isn't a conflict of interest by any stretch of the imagination. The seeking alpha model is adversarial (like the justice system). People at opposing sides make their case and clearly state on which side their financial interest resides. Poor arguments get pilloried in the comments section. I think this model works remarkably well in practice. In order to figure out what's really going on forensic investigation is necessary, and that goes way beyond the plain GAAP figures.
- NickM 10y ago
  > Tesla is neither at scale nor profitable. They're selling barely 15,000 cars per quarter, compared to Toyota's 2.5 million. Tesla's sales last quarter were 24.5k cars, hardly "barely 15,000". Q4 is expected to meet or exceed that, despite being a shorter quarter. If you pick the biggest car manufacturer in the world to compare them to, then of course they're going to look small. There are plenty of well-established, profitable car manufacturers that build far fewer cars than Toyota. I don't want to argue semantics, so I'll leave it open for debate as to whether or not they're "at scale", but comparing them to a startup that hasn't figured out how to turn a profit yet seems highly disingenuous. > They've been "profitable" for a single quarter by selling Tesla's at a deep discount. If they can sell cars at a deep discount and still be profitable, then clearly the margins must be pretty good.
  - gizmo 10y ago

by NickM 10y ago

forgetsusername 10y ago

>They have already reached scale Compared to the rest of the car industry? They are a fraction of a percent of the market. >and are already profitable. They cashed in all their ZEV credits to achieve one quarter of profitability. How did they do with those backed out? I mean, they could be profitable, but going by last quarter is deceiving. >They're just pouring their profits back into further growth. You assume that the car industry isn't capital intensive, and that the other manufacturers are not also spending heavily on R&D. But they are. >Conflict of interest, anyone? Uh, no. It's an investing site. If you have a negative view of a stock why wouldn't you possibly short it? Or do you believe that these small-time Seeking Alpha authors are moving the market?

EdHominem 10y ago
> Or do you believe that these small-time Seeking Alpha authors are moving the market? Attempting to, yes. > It's an investing site. If you have a negative view of a stock why wouldn't you possibly short it? Oh yes, of course. But if you write an article about it first, to try to cause the effect you're warning about, you might just be a scammer.

JumpCrisscross 10y ago

> They're just pouring their profits back into further growth This justifies adding back R&D per unit, but not sales expenses.

gizmo 10y ago

Tesla is neither at scale nor profitable. They're selling barely 15,000 cars per quarter, compared to Toyota's 2.5 million. They're growing by taking on debt, diluting shareholders, subsidies, and other creative tricks (Model 3 preorders). They've been "profitable" for a single quarter by selling Teslas at a steep discount. Last quarter's report has been widely derided for the financial engineering therein. We'll have to wait and see what the sales numbers will be this quarter, but I'm pretty pessimistic. Seeking Alpha is a mixed bag, but the authors are no more biased than the average wall street analyst. People who comment here also have their own agendas. Bias should be expected everywhere. As for your claim that anybody can write an article on there, that's not strictly true. They have a real name policy and failing to disclose properly can and will get you in trouble with the SEC. By the way, having a short position and writing about why you are short (or the inverse) isn't a conflict of interest by any stretch of the imagination. The seeking alpha model is adversarial (like the justice system). People at opposing sides make their case and clearly state on which side their financial interest resides. Poor arguments get pilloried in the comments section. I think this model works remarkably well in practice. In order to figure out what's really going on forensic investigation is necessary, and that goes way beyond the plain GAAP figures.

NickM 10y ago
> Tesla is neither at scale nor profitable. They're selling barely 15,000 cars per quarter, compared to Toyota's 2.5 million. Tesla's sales last quarter were 24.5k cars, hardly "barely 15,000". Q4 is expected to meet or exceed that, despite being a shorter quarter. If you pick the biggest car manufacturer in the world to compare them to, then of course they're going to look small. There are plenty of well-established, profitable car manufacturers that build far fewer cars than Toyota. I don't want to argue semantics, so I'll leave it open for debate as to whether or not they're "at scale", but comparing them to a startup that hasn't figured out how to turn a profit yet seems highly disingenuous. > They've been "profitable" for a single quarter by selling Tesla's at a deep discount. If they can sell cars at a deep discount and still be profitable, then clearly the margins must be pretty good.
- gizmo 10y ago