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Tesla Third Quarter 2018 Update [pdf]

369 points by chollida1 8y ago

scotchio 8y ago
Congrats to Tesla! This is HILARIOUS to see after the thousands and thousands of negative articles and press over the last year.
- chrisco255 8y ago
  Bring on the electric revolution! Agreed...has there ever been so much hate levied at a company playing a HUGE role in moving technology forward?
  - goshx 8y ago
    And not only technologies, but sustainable solutions that will impact about everyone in the planet with the cut in CO2 emissions.
- akira2501 8y ago
  > This is HILARIOUS to see after the thousands and thousands of negative articles and press over the last year. I wouldn't hold your breath just yet, the last quarter posted a loss, the one before a gain, and the one before that was a loss. Tesla is showing some signs of long-term capability here, but they're far from out of the woods and into a complete success story.
  - rconti 8y ago
    They will absolutely continue to print money for another quarter or three. They need sustained demand domestically, though. Followed by international sales (lots of pent-up international demand already, so that's not an issue in the short-mid term) Of course, then they need to start gearing up (read: sink massive piles of cash into) to produce the Model Y, and the Roadster, and refresh/redesign the S and the X. And scale superchargers. And scale the repair network. They're certainly not out of the woods, but I think this is one of the best signs yet that they will make it.
kumarm 8y ago
Congrats to Tesla and Musk. The numbers are just insane: "The electric car-maker reported adjusted earnings of $2.90 per share on revenue of $6.82 billion, exceeding average analyst expectations of losses of 15 cents per share on revenue of $6.32 billion."
- tardo99 8y ago
  What are "adjusted" earnings?
  - fancyfish 8y ago
    They take the "official" accounting earnings and add back in charges they either 1) don't feel represent the true financial position or 2) are one-off charges. In this case they back out stock-based compensation (like most companies), turning GAAP earnings of $311m into adjusted earnings of $516m. Voila!
    - deleted 8y ago
      [deleted]
    - mandeepj 8y ago
      It can also include the fines payable after settlement with SEC
      - tanderson92 8y ago
        Worth noting that Tesla didn't really experience those losses due its special stock issuance to Musk to cover the portion of the fine that was due to Tesla. The only material effect to Tesla's corporate finances from that debacle was Musk now has more concentrated equity ownership of the company.
        kgwgk 8y ago
        I think that money helps on the cashflows side, but not in the income statement.
chollida1 8y ago
One thing to consider that an analyst pointed out. Telsa has alot of net 60 and 90 and 120 day relationships with suppliers, but gets paid from car sales much quicker. This means that they can "financially engineer" quarters to make their cash flow look much better than it would if the payment periods were all net 30. Pre Close: - bit of a perfect storm for Tesla to make a profit - Model X ramp up spend is mostly done, Model Y ramp up spend hasn't really started yet. - Model Y ramp up could be $250 million/quarter drag - Started selling dual motor Model X, more than single motor, (probalby push for more expensive cars first to try and get profitable) - this will mean we'll ahve to watch per car margins going forward as less profitable models are rolled out. - Solar weighing on results, Spent 2 Billion to buy Solar City, and assumed alot of debt in the transaction - solar installations have fallen through the floor since then, - Tesla is no longer largest solar company in the US - with multiple layoffs in Solar City division - The Model 3 outsold all but four sedans in the U.S. last quarter. - Tesla Junk Bonds trading at 86 cents on dollar, an 8% Yield, not too spicy, probably means bond market expects to be paid off in cash not shares. - Good quote from car analyst "So Tesla going from 0% to 1% U.S. market share and not profitable or cash-flow positive for the ytd -- `Yay, Tesla!' -- but let's not get crazy. This is still a niche brand building vehicles by hand in a tent." Numbers: - 3Q Adj EPS $2.90, Est. Loss/Shr 15c - 3Q revenue $6.82 billion, estimate $6.31 billion - 3Q capex $510.3 million, estimate $612.9 million - 3Q adj. automotive gross margin +25.5%, estimate +19.5% (BD - 3Q Free Cash Flow $881.0M, Est. $280.0M holy shit that's incredible - Tesla has made money!!! net income of $300 million, now can they show that they didn't just cook the books for a quarter? - back to 3 Billion of cash in the bank - even without ZEV(Zero emission credits) Tesla would still be well into the black Misc: - 15 days of inventory, for Model 3, about a quarter of what other companies have - building an average of 4,300 Model 3's per week - labour hours are down on the assembly line by 30% - little under 20% of Model 3 pre orders have cancelled - Musk said he wants to start producing cars in China next year, this is a put up or shut-up situation as they've sat on the factory and done nothing since announcing it. - China acceleration seems to be pretty darn Tariff driven AutoPilot: - now on software upgrade 9.0, which can change lanes and exit highways on its own.
- aerovistae 8y ago
  > theyv'e sat on the factory and done nothing since announcing it What? They only just announced it a few months ago. Jesus... "why haven't you colonized the moon yet, it's been a decade you've been working on this and you have nothing to show"
dgritsko 8y ago
This is a really, really big deal. They've still got a long way to go (as I'm sure Musk would be the first person to admit), but turning a profit is no small feat and should be applauded as such.
- agumonkey 8y ago
  It is. Musk shall enjoy the pride of having cracked through the glass ceiling. I wasn't happy with everything he did but still.
  - shaklee3 8y ago
    That's not what the glass ceiling is...
    - agumonkey 8y ago
      ha ??
      - QuantumGood 8y ago
        A glass ceiling is a metaphor used to represent an invisible barrier that keeps a given demographic (typically applied to minorities) from rising beyond a certain level in a hierarchy. The metaphor was first coined by feminists in reference to barriers in the careers of high-achieving women. –Wikipedia
        shaklee3 8y ago
        Exactly. Musk doesn't qualify.
- dragontamer 8y ago
  I dunno. Its not yet a yearly profit. Its a quarterly profit (which is good for sure!!) but they're -$1.5 Billion from Q1 and Q2 so far. So they're likely going to be very negative on this year.
shafyy 8y ago
Fuck, yeah!
cagenut 8y ago
such an amazing example of how reality and conventional wisdom on the internet are so totally out of sync.
_zachs 8y ago
Just shows how fake all of the "expert analysis" is. It's so painfully obvious that all of the expectations of losses of 15 cents/share were just paid for by either the govt./big oil.
- dgritsko 8y ago
  Or maybe that "expert analysis" is really difficult, with a lot of complicated factors that are hard to reason about effectively?
  - onemoresoop 8y ago
    That's what they say when getting it wrong. Yes it's complicated, I agree, and all predictions should be taken with a boulder of salt
Endama 8y ago
My understanding is that the conditions inside of Tesla's manufacturing are brutal. I have friends who work on the production side and they effectively tell me corporate culture is driven by fear. I am definitely cheering Tesla on for global warming reasons but I worry that Musk is running a Faustian bargain that may bite him in the backside long term. These numbers though are really exciting.
- fossuser 8y ago
  I have friends that work there too and I've heard from some that they love it and some that they didn't. It's been enough of a spread that I suspect it's just normal "my manager is bad" type of variety.
  - Endama 8y ago
    Ah fair enough, thanks for the share!
  - agumonkey 8y ago
    yeah, it was a big question around the 5000/week ramp up, but if nothing cracked I guess everything is back to normal~.
- spike021 8y ago
  I've got a friend on the assembly line in Fremont. He says he doesn't mind the hours too much. However, they basically keep adding extra or overtime shifts to his schedule. I think right now he might be working 5 or 6 day weeks, and I'm fairly sure they're minimum 8 hours, and obviously with overtime could be several hours above that. Sounds awful, but in some ways isn't that how manufacturing has sort of always been?
  - mikestew 8y ago
    Sounds awful Sounds better than bustin' ass for 60 hours/week for my base salary. Your friend is getting paid 1.5X for every hour over 40. And, yes, it is not uncommon over the years. My dad would seemingly work every overtime hour given. And at time-and-a-half, so would I.
fossuser 8y ago
I picked up a Model 3 performance about a month ago, I'd recommend anyone interested in Tesla go visit a store and test drive one. They're so far beyond anything anyone else is making.
- nikofeyn 8y ago
  when i visited china, it was filled with electric cars from multiple manufacturers, and the fit and finish was just as good if not better than tesla. i don't view tesla as beyond anyone. when other car manufacturers enter the market, tesla might have a hard time keeping up because other manufacturers know how to build cars and not just an okay car with an electric motor.
  - ddoolin 8y ago
    You should share what those cars are. Also, when are they planning to enter the market at large? Why haven't they done so yet? I don't doubt other major manufacturers will soon give Tesla a run for their money, but mysterious Chinese manufacturers? Certainly.
    - Certhas 8y ago
      This isn't some secret. "Global annual sales of EVs surpassed one million for the first time in 2017, and China (where EV sales doubled in 2017) accounted for more than half of those." https://www.wired.co.uk/article/electric-car-sales-china-vs-tesla https://www.wired.co.uk/article/electric-car-sales-china-vs-... This is only natural if you accept that batteries are the key technology here, and China is bringing far more battery tech online than anyone else: http://www.visualcapitalist.com/china-leading-charge-lithium-ion-megafactories/ http://www.visualcapitalist.com/china-leading-charge-lithium...
    - nikofeyn 8y ago
      you are the one uninformed, so maybe you should do a search? there is nothing mysterious about chinese auto manufacturers, in particular the ones making electric vehicles. what do you consider the "market at large"? as someone else mentioned to you, china is the biggest electric vehicle maker and seller in the world. china is also the world's largest auto market. some of the ones that i have personal experience with are nio, geely, saic roewe, and byd. there are many, many more. i have ridden in the last three brands multiple times and saw the nio showroom cars. the three brands i rode in were very nice cars and obviously affordable since most of my rides in them were with didi drivers, china's uber. hacker news, along with many in technology in the u.s., has a huge bias against china. but this is going to catch up with the u.s. in a bad way. china is catching up, and in many cases, exceeding, the u.s. in many industries. https://www.wired.co.uk/article/electric-car-sales-china-vs-tesla https://www.wired.co.uk/article/electric-car-sales-china-vs-... https://www.bloomberg.com/news/features/2018-04-23/china-s-carmakers-want-to-dominate-world-s-next-era-of-driving https://www.bloomberg.com/news/features/2018-04-23/china-s-c...
ArtWomb 8y ago
Massive beat. Free cash flow chart demonstrates the magnitude: https://pbs.twimg.com/media/DqTLT1SU8AA92uB.jpg https://pbs.twimg.com/media/DqTLT1SU8AA92uB.jpg My prediction is they ramp up R&D spend and hoist a slew of consumer products. Or even get into aviation. Such as this drone spinoff from a former battery engineer. If you are a recent engineering grad, next couple of years will be a great time to join ;) https://impossible.aero/ https://impossible.aero/
ChuckMcM 8y ago
They have to be happy with those numbers, interesting question of whether they continue to sell the S,X,3's and generate a pile of cash before they start burning it on model Y development. In general it should also muzzle a lot of the nay sayers, it isn't easy to lie about money in the bank. Solar City is a disappointment. I keep watching the solar roof tile business to see if that goes anywhere. I'm getting close to putting in Powerwalls and getting off the grid completely, the PG&E shenanigans are just that annoying for grid tied solar systems.
- dev_dull 8y ago
  Just a heads up. Make sure you get both solar and powerwall at the same time if you don’t yet already have solar. I learned the hard way about the additional cost associated with replacing the ac inverter. Here we’re mandated by the city to be connected to the grid at ~$10 a month, which (along with net metering) pretty much disincentives a powerwall.
  - ChuckMcM 8y ago
    I was early to the solar thing, I put in a 5kW system in 2002[1] and we've replace one of the inverters when it failed with a single 6kW inverter. So any Powerwall install is going to be either in addition to that, or as part of a re-engineer to replace the panels with new panels that have more power for the same footprint. When you say 'mandated by the city' do you mean to say that you can't get a permit to put up solar unless you grid tie it? And if so does your power company allow for an even 'watts in vs watts out' scheme? [1] And yes it has paid for itself and is nominally cash flow positive at this point.
- marvin 8y ago
  Could you expand on why you think SolarCity is a disappointment? To be sure, they're slow developing and rolling out their product in volume, but your last sentence points out the massive strategic disadvantage a lot of utilities might have in a few years. To me, this seems very promising for a company developing tech that can be used, to a significant degree even through software/policy changes, to greatly reduce grid dependency. If utilities keep squeezing adopters of renewable energy by charging ridiculous connection fees, there's a significant risk they will have a nasty surprise once storage adoption is high enough.
zaroth 8y ago
Absolutely positively jaw dropping numbers. So much for predictions of bankruptcy! Hopefully this will give pause to the hate campaign, but for some reason I think it’ll just make them scream louder. Couldn’t be happier to be scheduled to take delivery of my Model 3 in 2.5 weeks. Should have bought shares too!
propman 8y ago
Tesla could realistically hit 500,000 cars next year, almost 10% of total cars sold in America. The electric revolution is here and it’s finally profitable! Budget EVs with solid range are coming next year too with the 2019 leaf! Convince congress to extend the federal tax rebate (no real increase in spending just keeping what’s already there) by like 2 years which is just maybe $1-2B more and electric will be the way to go for good!
- antisthenes 8y ago
  What's just as amazing is that this whole revolution is done off the back of the Li-Ion 18650/21700 battery cell. Time will tell how good of a choice it is.
  - greglindahl 8y ago
    I recall reading many HN posters commenting that this cylindrical form factor was a terrible choice for cars. Now several other carmakers have adopted it.
    - ethbro 8y ago
      The Edison (E26/7, circa-1900) base isn't the best choice for light bulbs. But it is good enough. And now we're plugging high-powered LED bulbs into them. Technology finds a way. Be first!
    - sliken 8y ago
      From an engineering perspective it's suboptimal since they have small surface area relative to volume. That's probably why Telsa went with the 2170 instead of the 26650, which has a larger diameter. Despite this disadvantage the Telsa battery cost, power density, cost per kwh, peak power, and longevity are unmatched. Especially as measure by real people driving real cars on real roads. So sure in theory batteries with more surface area would have greater package efficiencies. So far nobody has managed to.
      - 8y ago
myth_buster 8y ago
I wasn't following it closely but it does tickle me that the headline couple of hours earlier was __Tesla stock skyrockets after legendary short seller goes long__ [0]. [0] https://www.marketwatch.com/story/tesla-stock-skyrockets-after-legendary-short-seller-goes-long-2018-10-23 https://www.marketwatch.com/story/tesla-stock-skyrockets-aft...
andrewmunsell 8y ago
One massive advantage that I'm not sure most people realize quite yet is the Supercharger network. No manufacturer (other than Porsche talking about it recently) has actually built out chargers for their cars. Every other electric car has to rely on a broken, sparse, expensive charger network. Blink chargers and some ChargePoint chargers are expensive in many places ($2 an hour!), and Blink is notorious for having broken charging stations. There's 4 ChargePoint stations in a garage near me that have been broken and unmaintained for years, and they're out of warranty and the mall doesn't have a financial incentive to fix them. And then there's the DC fast chargers. I'm not aware of a single BEV (Volts or other PHEVs are excluded here) that can travel across the US with a reasonable route without worrying about finding chargers along the way. In fact, last time I looked, there was no physical way I could do a road trip I've been meaning to do through the western US in my i3 (my car, of course, has half the battery range of a Bolt) because of a lack of chargers. Tesla's Supercharger build out is extremely important to their future. Until other companies step up and install DCFC stations everywhere (and figure out the CCS vs CHAdeMO format war), Tesla is going to have a massive advantage. Sure, not everyone is going to want to do a multi-thousand mile road trip, but driving one of Tesla's cars might make them.
- crwalker 8y ago
  How long do you think the current Supercharger network will be a large competitive advantage? I agree with Benedict Evan's point that electric charging will become a commodity: https://www.ben-evans.com/benedictevans/2018/8/29/tesla-software-and-disruption https://www.ben-evans.com/benedictevans/2018/8/29/tesla-soft...
  - olivermarks 8y ago
    Wouldn't it be awful if you could only buy Ford gasoline from Ford gas stations? The lock in model is attractive until you think about broader implication, I agree with Evans too that it will be a commodity race to the bottom for recharging, with cost introduced for the power
    - stephengillie 8y ago
andrewmunsell 8y ago
Cross posting from the other thread: One massive advantage that I'm not sure most people realize quite yet is the Supercharger network. No manufacturer (other than Porsche talking about it recently) has actually built out chargers for their cars. Every other electric car has to rely on a broken, sparse, expensive charger network. Blink chargers and some ChargePoint chargers are expensive in many places ($2 an hour!), and Blink is notorious for having broken charging stations. There's 4 ChargePoint stations in a garage near me that have been broken and unmaintained for years, and they're out of warranty and the mall doesn't have a financial incentive to fix them. And then there's the DC fast chargers. I'm not aware of a single BEV (Volts or other PHEVs are excluded here) that can travel across the US with a reasonable route without worrying about finding chargers along the way. In fact, last time I looked, there was no physical way I could do a road trip I've been meaning to do through the western US in my i3 (my car, of course, has half the battery range of a Bolt) because of a lack of chargers. Tesla's Supercharger build out is extremely important to their future. Until other companies step up and install DCFC stations everywhere (and figure out the CCS vs CHAdeMO format war), Tesla is going to have a massive advantage. Sure, not everyone is going to want to do a multi-thousand mile road trip, but driving one of Tesla's cars might make them.
- dang 8y ago
  > Cross posting from the other thread Please don't. It lowers the signal/noise ratio and makes it harder (a lot harder!) to merge threads. Instead, let us know at hn@ycombinator.com if there are two discussions going on about the same thing. We'll happily move your comment over along with the other on-topic ones.
cs702 8y ago
It appears Tesla shorts have lost. * Free cash flow of $881M for the quarter equates to $3.5B annualized. Current market cap is around $50B, so Tesla is trading for $50B / $3.5B = 14.3x annualized free cash flow. Even if this figure is not sustainable in the short to medium term, Tesla no longer looks that expensive. * $3.0B of cash and cash equivalents at quarter-end, increasing by $731M during the quarter -- consistent with reported free cash flow. Tesla no longer seems to be facing a cash crunch in the near term. Very impressive. It remains to be seen whether this kind of profitability is sustainable, especially as more competition enters the market for EVs... but for now, Musk, his team, and his shareholders are looking like big winners.
- jacques_chester 8y ago
  > Tesla no longer seems to be facing a cash crunch in the near term. I agree these numbers are, essentially, a spectacular turnaround over the past 6 months for which Tesla deserve enormous credit. That said, current assets are $7.92 billion and current liabilities are $9.77 billion. It's one thing to have around three billion dollars of cash at hand, but not as great if you have three and half billion dollars of bills falling due soon. Tesla's current ratio is below 1, they will need that positive cashflow to remain consistent to deal themselves out of debt in time.
  - dragontamer 8y ago
    I'm not sure why this comment is being downvoted, but its true. Tesla's moment of profitability has come, but it was SUPPOSED to come Dec 2017. Or at least, by the original plans. Tesla's debt structure over the next year is complicated, with March 2019 convertibles coming in soon. But in either case, Tesla has to build $920 Million to pay back that loan... among many others in the coming years. Elon Musk really needs another round of capital raises, either stock offerings or bond offerings. If those are successful, then the company will be in a much better spot. Their cash-on-hand is very weak and is definitely a valid point of criticism at the moment.
- compcoffee 8y ago
  How is this about "shorts"? I thought the "longs" were all about long term thinking? Why do they claim victory after one decent quarter? Do you realize stock price is still well below the highs? How are the shareholders winners here?
40acres 8y ago
Great numbers and congratulations to Tesla. If we as a country are going to lessen our dependence on fossil fuels companies like Tesla will need to lead the way. Just a side note that Tesla received a ~$500m loan from the US government back in 2009, which was paid back in 2013 (the loan went out to some other automakers for electric vehicle R&D), and I believe the tax break on electric cars are still valid. Tesla is a really nice example of there being a problem that is both in the interest of the public and private sector to solve, and those sectors working together to innovate.
- mylons 8y ago
  we are basically living Dune until we're off petroleum from Saudi Arabia.
  - bohm 8y ago
    We are off petroleum from Saudi Arabia. The US now is a net petrol exporter thanks to fracking. We have the cheapest oil in the world.
    - toomuchtodo 8y ago
      Oil is fungible. We're on oil as long as Saudi Arabia is contributing oil to the global marketplace. Take their oil off the marketplace, watch the price skyrocket.
    - shookness 8y ago
      Fracking shale oil is a bad investment. Most of the drilling and exploration companies heavily involved in shale oil "tight oil" fracking are suffering financially due to poor estimates of well productivity and longevity. The primary reason for low oil prices in the Permian is due to a lack of pipeline in that region. The US is not actually self-sufficient in regards to crude oil used to refine into gasoline and other fuel products.
    - wuunderbar 8y ago
      So why do we continue to pander to Saudia Arabia politically? Note: I have a very shallow understanding of the US-SA relationship.
colordrops 8y ago
The last few big Tesla threads on HN were non-stop piling the shit onto Tesla talking about how untenable they are, bad business model, inability to scale, etc, etc. Is that just an indication that the short sellers have sock puppets here on HN as well? HN happens to be an important source of Tesla news.
- olivermarks 8y ago
  Even Zerohedge is positive on results https://www.zerohedge.com/news/2018-10-24/tesla-soars-historic-results-revenue-earnings-free-cash-flow-soar https://www.zerohedge.com/news/2018-10-24/tesla-soars-histor... comments interesting though
- jacques_chester 8y ago
  Or maybe some of us think Elon Musk is a bit of a wanker and noticed that the numbers didn't look good. It really can be as simple as that.
  - cam3ham 8y ago
    except they suddenly look amazing now?
- tptacek 8y ago
  Please read the Guidelines, linked below, which specifically ask you not to post comments insinuating sockpuppets and shills.
- adventured 8y ago
  I got smacked with waves of downvotes for repeatedly stating a few obvious things: the Model 3 would sell at least 100,000 units this year and that Tesla wasn't going bankrupt anytime soon or going to run out of money soon. These outcomes were not difficult to compute at all. I was mocked for it here, the responses were wildly emotional in nature instead of rational and analytical. You basically couldn't hold a disciplined conversation about Tesla on HN at the time. Despite that abnormal behavior (abnormal for HN), I don't think the very aggressively negative posters on HN were shills at all, they were merely incapable of being objective about Musk & Tesla, falling back on emotional reaction instead. Musk generates an unusually strong negative reaction in some people, they either plainly dislike his personality, or are just falling into the common psychological trap of wanting to see someone brought low (cutting the tall poppies). That reaction then colors how they see Tesla and how they judge the facts of a situation. Failure to correctly assess a situation is almost always a better explanation than something malevolent as motivation.
dwighttk 8y ago
I was confused because my ticker shows TSLA down about 2%, but it is up ~12% in after hours trading.
synaesthesisx 8y ago
Amazing results - I am especially taking great pleasure in watching the shorts get decimated. The Model 3 is a game-changer for the masses. I walked past 6 of them just on my way to get coffee this morning. We're truly witnessing the EV revolution.
- threeseed 8y ago
  I will never understand why Tesla people are so obsessed with short sellers. They exist for every company. And the majority of them would have hedged their bets in some form so it's not like they are likely to lose substantial amounts of money. Tesla almost seems to be similar to Trump in that they need a fictitious enemy to distract the attention away from themselves.
  - mediaman 8y ago
    Everyone's got shorts, but Tesla's short position as percent of float is very high, at almost 29%. GM, for example, is under 2%, and Ford around 3%. That makes it a material point of discussion. Second, yes, they are probably hedged. But usually they hedge against correlated securities such as industry competitors so they can hedge away risk they don't want to take (i.e., they have a position against Tesla, but no position about car sales in general, so they hedge against the rest of the industry to protect themselves against economic growth raising all car sales). So if Tesla reports good numbers relative to the industry, it will absolutely impact shorts and they are likely to lose substantial amounts of money. What else would they be hedging with? Maybe their bonds, if you had some sort of complicated capital structure arbitrage play, but I haven't seen much of a case being made about the bonds being undervalued relative to equity. Having said that, I think shorts play an important role in the economy to keep companies honest.
    - FireBeyond 8y ago
      > Tesla's short position as percent of float is very high, at almost 29%. GM, for example, is under 2%, and Ford around 3%. Auto comparisons are worthwhile, but equally valid are comparisons to companies of a similar age, not just established stalwarts (for better or worse).
shroom 8y ago
Great news but I have to ask. Maybe someone here can share their view/opinion about the market and what’s going on. Musk can’t tweet about going private. So a major short seller sue him and Tesla. Stock ”crash” during two months. Short seller completly turn around and now long the stock which rises A DAY before this report? Eyebrows should be raised so high everyone go bald. Where Will this end with SEC? And How is this not manipulation from both sides? Disclaimer: Sure I am a fan boy and we all ”knew” they were going to make a profit soon. Great work and this is promising for the future!
- compcoffee 8y ago
  This is called late economic cycle hysteria. No rules. I've been through two of them, things get crazier.
  - dforrestwilson 8y ago
    How do you envision things getting crazier?
  - aphextron 8y ago
    Do go on...
  - tozeur 8y ago
    Could you please expound on that subject?
- gamblor956 8y ago
  The problem wasn't that Musk can't tweet about going private. The problem was that he made a false claim about planning to go private in a direct and bald-faced attempt to manipulate the stock to the detriment of short-sellers. As a CEO in charge of the company, he doesn't get to lie to the public, his shareholders, or putative shareholders, about what he plans to do. He doesn't have to tell them everything--but he absolutely cannot lie to them. A shortseller not connected to the company isn't in the same position. Since they're not a company insider, they don't have any knowledge of what the company is doing and others follow their advice at their own risk. It's only a problem when they make false claims that aren't supportable by data or reasonable (if not necessarily accurate) analysis.
hydroreadsstuff 8y ago
The revenue for one quarter seems high. Did they carry over some sales from the past or is there something it drawing from future quarters? Edit: Congratz!
- samfisher83 8y ago
  Well You can't count future sales as revenue. To recognize revenue you have to deliver the product. Here are the things from wikipedia: Risks and rewards have been transferred from the seller to the buyer The seller has no control over the goods sold Collection of payment is reasonably assured The amount of revenue can be reasonably measured Costs of earning the revenue can be reasonably measured
  - hydro2 8y ago
    I see, thanks. So you could delay deliveries. They claim to remain profitable next quarter. Which is a good sign. I just couldn’t help noticing. I also don’t see an expected revenue for next quarter. Crossing my fingers for them.
jsight 8y ago
I feel like the way that the press reports on corporate earnings in general is in bad need of an overhaul. There is a lot of talk in here about "rare" profits and the needs for financing, but little about why that might be the case. Does the reporter genuinely believe that a business like Tesla could be built without doing those things? If you had to recreate Tesla from scratch tomorrow, how much would it cost? And wouldn't you have even bigger loans and debt than the business does? There is just so much context that is not merely left out, but replaced with confusion.
- jacques_chester 8y ago
  I don't think anyone objects to Tesla taking on debt to finance its growth. The thing is that if your debts are falling due and you don't have enough cash to pay them, you will need to borrow money, sell shares or renegotiate the debts. Your only other option is bankruptcy. Elon Musk nailed his colours to the mast earlier in the year by saying Tesla would not take on any new debt in 2018. And issuing shares has gotten a bit less simple since his "taking Tesla private" tweet. Which leaves renegotiation or bankruptcy. It remains to be seen whether creditors will renegotiate to avoid the hassle of bankruptcy and the possibility of significant upside through some kind of debt/equity deal. Or whether they will look at the $10Bn of PPE on the assets side of the balance sheet and say "well we can probably get $5Bn for that in a firesale to Toyota, Ford or GM and come out ahead".
lechiffre10 8y ago
NON-Gaap reports are a joke. Honestly, why are they still legal? All reports should be GAAP. Accounting mechanics make it easy for non-gaap to show a profit!
- ddoolin 8y ago
  They give both in this report, and GAAP first, why the complaint?
- tim333 8y ago
  GAAP can give an inaccurate picture so management can give non GAAP numbers to show how they see things. They still have to produce GAAP figures as well by law. Or: >Management also believes that presentation of the non-GAAP financial measures provides useful information to our investors regarding our financial condition and results of operations because it allows investors greater transparency to the information used by Tesla management in its financial and operational decision-making so that investors can see through the eyes of Tesla management regarding important financial metrics that Tesla management uses to run the business as well as allows investors to better understand Tesla’s performance. as they put it
i_phish_cats 8y ago
Saudi Crown Prince is pleased with his investment.
joering2 8y ago
Congrats not only to Musk, but the whole team that pulled this off!
onemoresoop 8y ago
Congrats Elon. Now go get some sleep
rdl 8y ago
It would be interesting if they bought Workhorse, the electric delivery drone and pickup and van company. Low market cap, lots of good projects out, and possibly complementary capabilities.
iamgopal 8y ago
Even the largest automakers of the world will be like bug hit by a windshield. This is Nokia vs Apple all over again.
paulpauper 8y ago
Amazing how quickly things can change with Tesla. Just a month ago the sky seemed to be falling, with constant negative press news about the SEC, concerns over Elon Musk's mental health, Tesla losing money, and so on. Had someone shorted Tesla just a week ago based on the media's pessimism, they would be down 20%. of course, Tesla could face problems, but this was a really solid earning report that dispels a lot of the gloom we have been seeing lately.
- fossuser 8y ago
  In hindsight Elon’s frustration with the negative press makes sense since he’s seeing these numbers along the way. Though he did end up making things worse, but I would probably find the negative press frustrating too.
- hylianwarrior 8y ago
  Yeah, I think more than anything this highlights the extent that media outlets seized on and amplified the outrage.
- tozeur 8y ago
  That’s cause you were plugged into mainstream sensationalist media.
- nickik 8y ago
  The press, helped by Elon, started to ignore production when it really started to do well. Funny how that happens. Would have been interesting what would have happened if Elon hadn't fucked up.
  - lazyjones 8y ago
    It‘s not surprising that the reputation of the press is worsening when it values drama around eccentric personalities higher than simple facts and research.
- qubax 8y ago
  It's the neverending battle between the short side and longs when it comes to TSLA. Whenever there is some negative news, the shorts just spam social media. The same with the longs.
aphextron 8y ago
Anyone paying any attention in the Bay Area over the last few months has known what the Wall Street shorts and national media don't. Model 3 is an unbelievably massive success. It went from zero on the road, to more common than seeing a BMW 3 series in 6 months.
- JunkDNA 8y ago
  I’ve seen a ton of them in suburban Philadelphia (Main Line). I travel to SF frequently and have spent a lot of time in Palo Alto. Model 3’s are at least as common on the roads here in suburban Philly as the Model S was in downtown Palo Alto a year or so ago. I know Tesla’s strategy was to ship close to HQ first and then expand elsewhere. Seeing this many here makes me think they are hitting their stride in a big way.
- kitsunesoba 8y ago
  Indeed. In SF it’s now strange to go a day without seeing multiple Teslas. They’re everywhere.
- empath75 8y ago
  The bay area is a different planet from the rest of the world.
  - ecpottinger 8y ago
    I am in Ontario Canada, and I have seen a number of them here.
    - emptyfile 8y ago
      My country has no Tesla's registered. More anecdotes anyone?
      - olau 8y ago
        Due to lack of demand or lack of supply?
consumer451 8y ago
For anyone interested, here is a link to the earnings call: https://edge.media-server.com/m6/p/omd73p8r https://edge.media-server.com/m6/p/omd73p8r
sidcool 8y ago
This is massive for Tesla. I cannot imagine they have achieved this after the tumultuous last few months. Tesla is bigger than Musk, that's the key to its success. I agree that Musk's blind ambition and hubris has made this possible, but now is a good time for Tesla to get a veteran COO to take things to the next level. Congrats Tesla. Your growth is a source of inspiration for me.

369 points by chollida1 8y ago

Congrats to Tesla! This is HILARIOUS to see after the thousands and thousands of negative articles and press over the last year.

chrisco255 8y ago
Bring on the electric revolution! Agreed...has there ever been so much hate levied at a company playing a HUGE role in moving technology forward?
- goshx 8y ago
  And not only technologies, but sustainable solutions that will impact about everyone in the planet with the cut in CO2 emissions.
akira2501 8y ago
> This is HILARIOUS to see after the thousands and thousands of negative articles and press over the last year. I wouldn't hold your breath just yet, the last quarter posted a loss, the one before a gain, and the one before that was a loss. Tesla is showing some signs of long-term capability here, but they're far from out of the woods and into a complete success story.
- rconti 8y ago
  They will absolutely continue to print money for another quarter or three. They need sustained demand domestically, though. Followed by international sales (lots of pent-up international demand already, so that's not an issue in the short-mid term) Of course, then they need to start gearing up (read: sink massive piles of cash into) to produce the Model Y, and the Roadster, and refresh/redesign the S and the X. And scale superchargers. And scale the repair network. They're certainly not out of the woods, but I think this is one of the best signs yet that they will make it.

kumarm 8y ago

Congrats to Tesla and Musk. The numbers are just insane: "The electric car-maker reported adjusted earnings of $2.90 per share on revenue of $6.82 billion, exceeding average analyst expectations of losses of 15 cents per share on revenue of $6.32 billion."

tardo99 8y ago
What are "adjusted" earnings?
- fancyfish 8y ago
  They take the "official" accounting earnings and add back in charges they either 1) don't feel represent the true financial position or 2) are one-off charges. In this case they back out stock-based compensation (like most companies), turning GAAP earnings of $311m into adjusted earnings of $516m. Voila!
  - deleted 8y ago
    [deleted]
  - mandeepj 8y ago
    It can also include the fines payable after settlement with SEC
    - tanderson92 8y ago
      Worth noting that Tesla didn't really experience those losses due its special stock issuance to Musk to cover the portion of the fine that was due to Tesla. The only material effect to Tesla's corporate finances from that debacle was Musk now has more concentrated equity ownership of the company.
      - kgwgk 8y ago
        I think that money helps on the cashflows side, but not in the income statement.

chollida1 8y ago

One thing to consider that an analyst pointed out. Telsa has alot of net 60 and 90 and 120 day relationships with suppliers, but gets paid from car sales much quicker. This means that they can "financially engineer" quarters to make their cash flow look much better than it would if the payment periods were all net 30. Pre Close: - bit of a perfect storm for Tesla to make a profit - Model X ramp up spend is mostly done, Model Y ramp up spend hasn't really started yet. - Model Y ramp up could be $250 million/quarter drag - Started selling dual motor Model X, more than single motor, (probalby push for more expensive cars first to try and get profitable) - this will mean we'll ahve to watch per car margins going forward as less profitable models are rolled out. - Solar weighing on results, Spent 2 Billion to buy Solar City, and assumed alot of debt in the transaction - solar installations have fallen through the floor since then, - Tesla is no longer largest solar company in the US - with multiple layoffs in Solar City division - The Model 3 outsold all but four sedans in the U.S. last quarter. - Tesla Junk Bonds trading at 86 cents on dollar, an 8% Yield, not too spicy, probably means bond market expects to be paid off in cash not shares. - Good quote from car analyst "So Tesla going from 0% to 1% U.S. market share and not profitable or cash-flow positive for the ytd -- `Yay, Tesla!' -- but let's not get crazy. This is still a niche brand building vehicles by hand in a tent." Numbers: - 3Q Adj EPS $2.90, Est. Loss/Shr 15c - 3Q revenue $6.82 billion, estimate $6.31 billion - 3Q capex $510.3 million, estimate $612.9 million - 3Q adj. automotive gross margin +25.5%, estimate +19.5% (BD - 3Q Free Cash Flow $881.0M, Est. $280.0M holy shit that's incredible - Tesla has made money!!! net income of $300 million, now can they show that they didn't just cook the books for a quarter? - back to 3 Billion of cash in the bank - even without ZEV(Zero emission credits) Tesla would still be well into the black Misc: - 15 days of inventory, for Model 3, about a quarter of what other companies have - building an average of 4,300 Model 3's per week - labour hours are down on the assembly line by 30% - little under 20% of Model 3 pre orders have cancelled - Musk said he wants to start producing cars in China next year, this is a put up or shut-up situation as they've sat on the factory and done nothing since announcing it. - China acceleration seems to be pretty darn Tariff driven AutoPilot: - now on software upgrade 9.0, which can change lanes and exit highways on its own.

aerovistae 8y ago
> theyv'e sat on the factory and done nothing since announcing it What? They only just announced it a few months ago. Jesus... "why haven't you colonized the moon yet, it's been a decade you've been working on this and you have nothing to show"

dgritsko 8y ago

This is a really, really big deal. They've still got a long way to go (as I'm sure Musk would be the first person to admit), but turning a profit is no small feat and should be applauded as such.

agumonkey 8y ago
It is. Musk shall enjoy the pride of having cracked through the glass ceiling. I wasn't happy with everything he did but still.
- shaklee3 8y ago
  That's not what the glass ceiling is...
  - agumonkey 8y ago
    ha ??
    - QuantumGood 8y ago
      A glass ceiling is a metaphor used to represent an invisible barrier that keeps a given demographic (typically applied to minorities) from rising beyond a certain level in a hierarchy. The metaphor was first coined by feminists in reference to barriers in the careers of high-achieving women. –Wikipedia
      - shaklee3 8y ago
        Exactly. Musk doesn't qualify.
dragontamer 8y ago
I dunno. Its not yet a yearly profit. Its a quarterly profit (which is good for sure!!) but they're -$1.5 Billion from Q1 and Q2 so far. So they're likely going to be very negative on this year.

shafyy 8y ago

Fuck, yeah!

cagenut 8y ago

such an amazing example of how reality and conventional wisdom on the internet are so totally out of sync.

_zachs 8y ago

Just shows how fake all of the "expert analysis" is. It's so painfully obvious that all of the expectations of losses of 15 cents/share were just paid for by either the govt./big oil.

dgritsko 8y ago
Or maybe that "expert analysis" is really difficult, with a lot of complicated factors that are hard to reason about effectively?
- onemoresoop 8y ago
  That's what they say when getting it wrong. Yes it's complicated, I agree, and all predictions should be taken with a boulder of salt

Endama 8y ago

My understanding is that the conditions inside of Tesla's manufacturing are brutal. I have friends who work on the production side and they effectively tell me corporate culture is driven by fear. I am definitely cheering Tesla on for global warming reasons but I worry that Musk is running a Faustian bargain that may bite him in the backside long term. These numbers though are really exciting.

fossuser 8y ago
I have friends that work there too and I've heard from some that they love it and some that they didn't. It's been enough of a spread that I suspect it's just normal "my manager is bad" type of variety.
- Endama 8y ago
  Ah fair enough, thanks for the share!
- agumonkey 8y ago
  yeah, it was a big question around the 5000/week ramp up, but if nothing cracked I guess everything is back to normal~.
spike021 8y ago
I've got a friend on the assembly line in Fremont. He says he doesn't mind the hours too much. However, they basically keep adding extra or overtime shifts to his schedule. I think right now he might be working 5 or 6 day weeks, and I'm fairly sure they're minimum 8 hours, and obviously with overtime could be several hours above that. Sounds awful, but in some ways isn't that how manufacturing has sort of always been?
- mikestew 8y ago
  Sounds awful Sounds better than bustin' ass for 60 hours/week for my base salary. Your friend is getting paid 1.5X for every hour over 40. And, yes, it is not uncommon over the years. My dad would seemingly work every overtime hour given. And at time-and-a-half, so would I.

fossuser 8y ago

I picked up a Model 3 performance about a month ago, I'd recommend anyone interested in Tesla go visit a store and test drive one. They're so far beyond anything anyone else is making.

nikofeyn 8y ago
when i visited china, it was filled with electric cars from multiple manufacturers, and the fit and finish was just as good if not better than tesla. i don't view tesla as beyond anyone. when other car manufacturers enter the market, tesla might have a hard time keeping up because other manufacturers know how to build cars and not just an okay car with an electric motor.
- ddoolin 8y ago
  You should share what those cars are. Also, when are they planning to enter the market at large? Why haven't they done so yet? I don't doubt other major manufacturers will soon give Tesla a run for their money, but mysterious Chinese manufacturers? Certainly.
  - Certhas 8y ago
    This isn't some secret. "Global annual sales of EVs surpassed one million for the first time in 2017, and China (where EV sales doubled in 2017) accounted for more than half of those." https://www.wired.co.uk/article/electric-car-sales-china-vs-tesla https://www.wired.co.uk/article/electric-car-sales-china-vs-... This is only natural if you accept that batteries are the key technology here, and China is bringing far more battery tech online than anyone else: http://www.visualcapitalist.com/china-leading-charge-lithium-ion-megafactories/ http://www.visualcapitalist.com/china-leading-charge-lithium...
  - nikofeyn 8y ago
    you are the one uninformed, so maybe you should do a search? there is nothing mysterious about chinese auto manufacturers, in particular the ones making electric vehicles. what do you consider the "market at large"? as someone else mentioned to you, china is the biggest electric vehicle maker and seller in the world. china is also the world's largest auto market. some of the ones that i have personal experience with are nio, geely, saic roewe, and byd. there are many, many more. i have ridden in the last three brands multiple times and saw the nio showroom cars. the three brands i rode in were very nice cars and obviously affordable since most of my rides in them were with didi drivers, china's uber. hacker news, along with many in technology in the u.s., has a huge bias against china. but this is going to catch up with the u.s. in a bad way. china is catching up, and in many cases, exceeding, the u.s. in many industries. https://www.wired.co.uk/article/electric-car-sales-china-vs-tesla https://www.wired.co.uk/article/electric-car-sales-china-vs-... https://www.bloomberg.com/news/features/2018-04-23/china-s-carmakers-want-to-dominate-world-s-next-era-of-driving https://www.bloomberg.com/news/features/2018-04-23/china-s-c...

ArtWomb 8y ago

Massive beat. Free cash flow chart demonstrates the magnitude: https://pbs.twimg.com/media/DqTLT1SU8AA92uB.jpg https://pbs.twimg.com/media/DqTLT1SU8AA92uB.jpg My prediction is they ramp up R&D spend and hoist a slew of consumer products. Or even get into aviation. Such as this drone spinoff from a former battery engineer. If you are a recent engineering grad, next couple of years will be a great time to join ;) https://impossible.aero/ https://impossible.aero/

ChuckMcM 8y ago

They have to be happy with those numbers, interesting question of whether they continue to sell the S,X,3's and generate a pile of cash before they start burning it on model Y development. In general it should also muzzle a lot of the nay sayers, it isn't easy to lie about money in the bank. Solar City is a disappointment. I keep watching the solar roof tile business to see if that goes anywhere. I'm getting close to putting in Powerwalls and getting off the grid completely, the PG&E shenanigans are just that annoying for grid tied solar systems.

dev_dull 8y ago
Just a heads up. Make sure you get both solar and powerwall at the same time if you don’t yet already have solar. I learned the hard way about the additional cost associated with replacing the ac inverter. Here we’re mandated by the city to be connected to the grid at ~$10 a month, which (along with net metering) pretty much disincentives a powerwall.
- ChuckMcM 8y ago
  I was early to the solar thing, I put in a 5kW system in 2002[1] and we've replace one of the inverters when it failed with a single 6kW inverter. So any Powerwall install is going to be either in addition to that, or as part of a re-engineer to replace the panels with new panels that have more power for the same footprint. When you say 'mandated by the city' do you mean to say that you can't get a permit to put up solar unless you grid tie it? And if so does your power company allow for an even 'watts in vs watts out' scheme? [1] And yes it has paid for itself and is nominally cash flow positive at this point.
marvin 8y ago
Could you expand on why you think SolarCity is a disappointment? To be sure, they're slow developing and rolling out their product in volume, but your last sentence points out the massive strategic disadvantage a lot of utilities might have in a few years. To me, this seems very promising for a company developing tech that can be used, to a significant degree even through software/policy changes, to greatly reduce grid dependency. If utilities keep squeezing adopters of renewable energy by charging ridiculous connection fees, there's a significant risk they will have a nasty surprise once storage adoption is high enough.

zaroth 8y ago

Absolutely positively jaw dropping numbers. So much for predictions of bankruptcy! Hopefully this will give pause to the hate campaign, but for some reason I think it’ll just make them scream louder. Couldn’t be happier to be scheduled to take delivery of my Model 3 in 2.5 weeks. Should have bought shares too!

propman 8y ago

Tesla could realistically hit 500,000 cars next year, almost 10% of total cars sold in America. The electric revolution is here and it’s finally profitable! Budget EVs with solid range are coming next year too with the 2019 leaf! Convince congress to extend the federal tax rebate (no real increase in spending just keeping what’s already there) by like 2 years which is just maybe $1-2B more and electric will be the way to go for good!

antisthenes 8y ago
What's just as amazing is that this whole revolution is done off the back of the Li-Ion 18650/21700 battery cell. Time will tell how good of a choice it is.
- greglindahl 8y ago
  I recall reading many HN posters commenting that this cylindrical form factor was a terrible choice for cars. Now several other carmakers have adopted it.
  - ethbro 8y ago
    The Edison (E26/7, circa-1900) base isn't the best choice for light bulbs. But it is good enough. And now we're plugging high-powered LED bulbs into them. Technology finds a way. Be first!
  - sliken 8y ago
    From an engineering perspective it's suboptimal since they have small surface area relative to volume. That's probably why Telsa went with the 2170 instead of the 26650, which has a larger diameter. Despite this disadvantage the Telsa battery cost, power density, cost per kwh, peak power, and longevity are unmatched. Especially as measure by real people driving real cars on real roads. So sure in theory batteries with more surface area would have greater package efficiencies. So far nobody has managed to.
    - 8y ago

myth_buster 8y ago

I wasn't following it closely but it does tickle me that the headline couple of hours earlier was __Tesla stock skyrockets after legendary short seller goes long__ [0]. [0] https://www.marketwatch.com/story/tesla-stock-skyrockets-after-legendary-short-seller-goes-long-2018-10-23 https://www.marketwatch.com/story/tesla-stock-skyrockets-aft...

andrewmunsell 8y ago

One massive advantage that I'm not sure most people realize quite yet is the Supercharger network. No manufacturer (other than Porsche talking about it recently) has actually built out chargers for their cars. Every other electric car has to rely on a broken, sparse, expensive charger network. Blink chargers and some ChargePoint chargers are expensive in many places ($2 an hour!), and Blink is notorious for having broken charging stations. There's 4 ChargePoint stations in a garage near me that have been broken and unmaintained for years, and they're out of warranty and the mall doesn't have a financial incentive to fix them. And then there's the DC fast chargers. I'm not aware of a single BEV (Volts or other PHEVs are excluded here) that can travel across the US with a reasonable route without worrying about finding chargers along the way. In fact, last time I looked, there was no physical way I could do a road trip I've been meaning to do through the western US in my i3 (my car, of course, has half the battery range of a Bolt) because of a lack of chargers. Tesla's Supercharger build out is extremely important to their future. Until other companies step up and install DCFC stations everywhere (and figure out the CCS vs CHAdeMO format war), Tesla is going to have a massive advantage. Sure, not everyone is going to want to do a multi-thousand mile road trip, but driving one of Tesla's cars might make them.

crwalker 8y ago
How long do you think the current Supercharger network will be a large competitive advantage? I agree with Benedict Evan's point that electric charging will become a commodity: https://www.ben-evans.com/benedictevans/2018/8/29/tesla-software-and-disruption https://www.ben-evans.com/benedictevans/2018/8/29/tesla-soft...
- olivermarks 8y ago
  Wouldn't it be awful if you could only buy Ford gasoline from Ford gas stations? The lock in model is attractive until you think about broader implication, I agree with Evans too that it will be a commodity race to the bottom for recharging, with cost introduced for the power
  - stephengillie 8y ago

andrewmunsell 8y ago

Cross posting from the other thread: One massive advantage that I'm not sure most people realize quite yet is the Supercharger network. No manufacturer (other than Porsche talking about it recently) has actually built out chargers for their cars. Every other electric car has to rely on a broken, sparse, expensive charger network. Blink chargers and some ChargePoint chargers are expensive in many places ($2 an hour!), and Blink is notorious for having broken charging stations. There's 4 ChargePoint stations in a garage near me that have been broken and unmaintained for years, and they're out of warranty and the mall doesn't have a financial incentive to fix them. And then there's the DC fast chargers. I'm not aware of a single BEV (Volts or other PHEVs are excluded here) that can travel across the US with a reasonable route without worrying about finding chargers along the way. In fact, last time I looked, there was no physical way I could do a road trip I've been meaning to do through the western US in my i3 (my car, of course, has half the battery range of a Bolt) because of a lack of chargers. Tesla's Supercharger build out is extremely important to their future. Until other companies step up and install DCFC stations everywhere (and figure out the CCS vs CHAdeMO format war), Tesla is going to have a massive advantage. Sure, not everyone is going to want to do a multi-thousand mile road trip, but driving one of Tesla's cars might make them.

dang 8y ago
> Cross posting from the other thread Please don't. It lowers the signal/noise ratio and makes it harder (a lot harder!) to merge threads. Instead, let us know at hn@ycombinator.com if there are two discussions going on about the same thing. We'll happily move your comment over along with the other on-topic ones.

cs702 8y ago

It appears Tesla shorts have lost. * Free cash flow of $881M for the quarter equates to $3.5B annualized. Current market cap is around $50B, so Tesla is trading for $50B / $3.5B = 14.3x annualized free cash flow. Even if this figure is not sustainable in the short to medium term, Tesla no longer looks that expensive. * $3.0B of cash and cash equivalents at quarter-end, increasing by $731M during the quarter -- consistent with reported free cash flow. Tesla no longer seems to be facing a cash crunch in the near term. Very impressive. It remains to be seen whether this kind of profitability is sustainable, especially as more competition enters the market for EVs... but for now, Musk, his team, and his shareholders are looking like big winners.

jacques_chester 8y ago
> Tesla no longer seems to be facing a cash crunch in the near term. I agree these numbers are, essentially, a spectacular turnaround over the past 6 months for which Tesla deserve enormous credit. That said, current assets are $7.92 billion and current liabilities are $9.77 billion. It's one thing to have around three billion dollars of cash at hand, but not as great if you have three and half billion dollars of bills falling due soon. Tesla's current ratio is below 1, they will need that positive cashflow to remain consistent to deal themselves out of debt in time.
- dragontamer 8y ago
  I'm not sure why this comment is being downvoted, but its true. Tesla's moment of profitability has come, but it was SUPPOSED to come Dec 2017. Or at least, by the original plans. Tesla's debt structure over the next year is complicated, with March 2019 convertibles coming in soon. But in either case, Tesla has to build $920 Million to pay back that loan... among many others in the coming years. Elon Musk really needs another round of capital raises, either stock offerings or bond offerings. If those are successful, then the company will be in a much better spot. Their cash-on-hand is very weak and is definitely a valid point of criticism at the moment.
compcoffee 8y ago
How is this about "shorts"? I thought the "longs" were all about long term thinking? Why do they claim victory after one decent quarter? Do you realize stock price is still well below the highs? How are the shareholders winners here?

40acres 8y ago

Great numbers and congratulations to Tesla. If we as a country are going to lessen our dependence on fossil fuels companies like Tesla will need to lead the way. Just a side note that Tesla received a ~$500m loan from the US government back in 2009, which was paid back in 2013 (the loan went out to some other automakers for electric vehicle R&D), and I believe the tax break on electric cars are still valid. Tesla is a really nice example of there being a problem that is both in the interest of the public and private sector to solve, and those sectors working together to innovate.

mylons 8y ago
we are basically living Dune until we're off petroleum from Saudi Arabia.
- bohm 8y ago
  We are off petroleum from Saudi Arabia. The US now is a net petrol exporter thanks to fracking. We have the cheapest oil in the world.
  - toomuchtodo 8y ago
    Oil is fungible. We're on oil as long as Saudi Arabia is contributing oil to the global marketplace. Take their oil off the marketplace, watch the price skyrocket.
  - shookness 8y ago
    Fracking shale oil is a bad investment. Most of the drilling and exploration companies heavily involved in shale oil "tight oil" fracking are suffering financially due to poor estimates of well productivity and longevity. The primary reason for low oil prices in the Permian is due to a lack of pipeline in that region. The US is not actually self-sufficient in regards to crude oil used to refine into gasoline and other fuel products.
  - wuunderbar 8y ago
    So why do we continue to pander to Saudia Arabia politically? Note: I have a very shallow understanding of the US-SA relationship.

colordrops 8y ago

The last few big Tesla threads on HN were non-stop piling the shit onto Tesla talking about how untenable they are, bad business model, inability to scale, etc, etc. Is that just an indication that the short sellers have sock puppets here on HN as well? HN happens to be an important source of Tesla news.

olivermarks 8y ago
Even Zerohedge is positive on results https://www.zerohedge.com/news/2018-10-24/tesla-soars-historic-results-revenue-earnings-free-cash-flow-soar https://www.zerohedge.com/news/2018-10-24/tesla-soars-histor... comments interesting though
jacques_chester 8y ago
Or maybe some of us think Elon Musk is a bit of a wanker and noticed that the numbers didn't look good. It really can be as simple as that.
- cam3ham 8y ago
  except they suddenly look amazing now?
tptacek 8y ago
Please read the Guidelines, linked below, which specifically ask you not to post comments insinuating sockpuppets and shills.
adventured 8y ago
I got smacked with waves of downvotes for repeatedly stating a few obvious things: the Model 3 would sell at least 100,000 units this year and that Tesla wasn't going bankrupt anytime soon or going to run out of money soon. These outcomes were not difficult to compute at all. I was mocked for it here, the responses were wildly emotional in nature instead of rational and analytical. You basically couldn't hold a disciplined conversation about Tesla on HN at the time. Despite that abnormal behavior (abnormal for HN), I don't think the very aggressively negative posters on HN were shills at all, they were merely incapable of being objective about Musk & Tesla, falling back on emotional reaction instead. Musk generates an unusually strong negative reaction in some people, they either plainly dislike his personality, or are just falling into the common psychological trap of wanting to see someone brought low (cutting the tall poppies). That reaction then colors how they see Tesla and how they judge the facts of a situation. Failure to correctly assess a situation is almost always a better explanation than something malevolent as motivation.

dwighttk 8y ago

I was confused because my ticker shows TSLA down about 2%, but it is up ~12% in after hours trading.

synaesthesisx 8y ago

Amazing results - I am especially taking great pleasure in watching the shorts get decimated. The Model 3 is a game-changer for the masses. I walked past 6 of them just on my way to get coffee this morning. We're truly witnessing the EV revolution.

threeseed 8y ago
I will never understand why Tesla people are so obsessed with short sellers. They exist for every company. And the majority of them would have hedged their bets in some form so it's not like they are likely to lose substantial amounts of money. Tesla almost seems to be similar to Trump in that they need a fictitious enemy to distract the attention away from themselves.
- mediaman 8y ago
  Everyone's got shorts, but Tesla's short position as percent of float is very high, at almost 29%. GM, for example, is under 2%, and Ford around 3%. That makes it a material point of discussion. Second, yes, they are probably hedged. But usually they hedge against correlated securities such as industry competitors so they can hedge away risk they don't want to take (i.e., they have a position against Tesla, but no position about car sales in general, so they hedge against the rest of the industry to protect themselves against economic growth raising all car sales). So if Tesla reports good numbers relative to the industry, it will absolutely impact shorts and they are likely to lose substantial amounts of money. What else would they be hedging with? Maybe their bonds, if you had some sort of complicated capital structure arbitrage play, but I haven't seen much of a case being made about the bonds being undervalued relative to equity. Having said that, I think shorts play an important role in the economy to keep companies honest.
  - FireBeyond 8y ago
    > Tesla's short position as percent of float is very high, at almost 29%. GM, for example, is under 2%, and Ford around 3%. Auto comparisons are worthwhile, but equally valid are comparisons to companies of a similar age, not just established stalwarts (for better or worse).

shroom 8y ago

Great news but I have to ask. Maybe someone here can share their view/opinion about the market and what’s going on. Musk can’t tweet about going private. So a major short seller sue him and Tesla. Stock ”crash” during two months. Short seller completly turn around and now long the stock which rises A DAY before this report? Eyebrows should be raised so high everyone go bald. Where Will this end with SEC? And How is this not manipulation from both sides? Disclaimer: Sure I am a fan boy and we all ”knew” they were going to make a profit soon. Great work and this is promising for the future!

compcoffee 8y ago
This is called late economic cycle hysteria. No rules. I've been through two of them, things get crazier.
- dforrestwilson 8y ago
  How do you envision things getting crazier?
- aphextron 8y ago
  Do go on...
- tozeur 8y ago
  Could you please expound on that subject?
gamblor956 8y ago
The problem wasn't that Musk can't tweet about going private. The problem was that he made a false claim about planning to go private in a direct and bald-faced attempt to manipulate the stock to the detriment of short-sellers. As a CEO in charge of the company, he doesn't get to lie to the public, his shareholders, or putative shareholders, about what he plans to do. He doesn't have to tell them everything--but he absolutely cannot lie to them. A shortseller not connected to the company isn't in the same position. Since they're not a company insider, they don't have any knowledge of what the company is doing and others follow their advice at their own risk. It's only a problem when they make false claims that aren't supportable by data or reasonable (if not necessarily accurate) analysis.

hydroreadsstuff 8y ago

The revenue for one quarter seems high. Did they carry over some sales from the past or is there something it drawing from future quarters? Edit: Congratz!

samfisher83 8y ago
Well You can't count future sales as revenue. To recognize revenue you have to deliver the product. Here are the things from wikipedia: Risks and rewards have been transferred from the seller to the buyer The seller has no control over the goods sold Collection of payment is reasonably assured The amount of revenue can be reasonably measured Costs of earning the revenue can be reasonably measured
- hydro2 8y ago
  I see, thanks. So you could delay deliveries. They claim to remain profitable next quarter. Which is a good sign. I just couldn’t help noticing. I also don’t see an expected revenue for next quarter. Crossing my fingers for them.

jsight 8y ago

I feel like the way that the press reports on corporate earnings in general is in bad need of an overhaul. There is a lot of talk in here about "rare" profits and the needs for financing, but little about why that might be the case. Does the reporter genuinely believe that a business like Tesla could be built without doing those things? If you had to recreate Tesla from scratch tomorrow, how much would it cost? And wouldn't you have even bigger loans and debt than the business does? There is just so much context that is not merely left out, but replaced with confusion.

jacques_chester 8y ago
I don't think anyone objects to Tesla taking on debt to finance its growth. The thing is that if your debts are falling due and you don't have enough cash to pay them, you will need to borrow money, sell shares or renegotiate the debts. Your only other option is bankruptcy. Elon Musk nailed his colours to the mast earlier in the year by saying Tesla would not take on any new debt in 2018. And issuing shares has gotten a bit less simple since his "taking Tesla private" tweet. Which leaves renegotiation or bankruptcy. It remains to be seen whether creditors will renegotiate to avoid the hassle of bankruptcy and the possibility of significant upside through some kind of debt/equity deal. Or whether they will look at the $10Bn of PPE on the assets side of the balance sheet and say "well we can probably get $5Bn for that in a firesale to Toyota, Ford or GM and come out ahead".

lechiffre10 8y ago

NON-Gaap reports are a joke. Honestly, why are they still legal? All reports should be GAAP. Accounting mechanics make it easy for non-gaap to show a profit!

ddoolin 8y ago
They give both in this report, and GAAP first, why the complaint?
tim333 8y ago
GAAP can give an inaccurate picture so management can give non GAAP numbers to show how they see things. They still have to produce GAAP figures as well by law. Or: >Management also believes that presentation of the non-GAAP financial measures provides useful information to our investors regarding our financial condition and results of operations because it allows investors greater transparency to the information used by Tesla management in its financial and operational decision-making so that investors can see through the eyes of Tesla management regarding important financial metrics that Tesla management uses to run the business as well as allows investors to better understand Tesla’s performance. as they put it

i_phish_cats 8y ago

Saudi Crown Prince is pleased with his investment.

joering2 8y ago

Congrats not only to Musk, but the whole team that pulled this off!

onemoresoop 8y ago

Congrats Elon. Now go get some sleep

rdl 8y ago

It would be interesting if they bought Workhorse, the electric delivery drone and pickup and van company. Low market cap, lots of good projects out, and possibly complementary capabilities.

iamgopal 8y ago

Even the largest automakers of the world will be like bug hit by a windshield. This is Nokia vs Apple all over again.

paulpauper 8y ago

Amazing how quickly things can change with Tesla. Just a month ago the sky seemed to be falling, with constant negative press news about the SEC, concerns over Elon Musk's mental health, Tesla losing money, and so on. Had someone shorted Tesla just a week ago based on the media's pessimism, they would be down 20%. of course, Tesla could face problems, but this was a really solid earning report that dispels a lot of the gloom we have been seeing lately.

fossuser 8y ago
In hindsight Elon’s frustration with the negative press makes sense since he’s seeing these numbers along the way. Though he did end up making things worse, but I would probably find the negative press frustrating too.
hylianwarrior 8y ago
Yeah, I think more than anything this highlights the extent that media outlets seized on and amplified the outrage.
tozeur 8y ago
That’s cause you were plugged into mainstream sensationalist media.
nickik 8y ago
The press, helped by Elon, started to ignore production when it really started to do well. Funny how that happens. Would have been interesting what would have happened if Elon hadn't fucked up.
- lazyjones 8y ago
  It‘s not surprising that the reputation of the press is worsening when it values drama around eccentric personalities higher than simple facts and research.
qubax 8y ago
It's the neverending battle between the short side and longs when it comes to TSLA. Whenever there is some negative news, the shorts just spam social media. The same with the longs.

aphextron 8y ago

Anyone paying any attention in the Bay Area over the last few months has known what the Wall Street shorts and national media don't. Model 3 is an unbelievably massive success. It went from zero on the road, to more common than seeing a BMW 3 series in 6 months.

JunkDNA 8y ago
I’ve seen a ton of them in suburban Philadelphia (Main Line). I travel to SF frequently and have spent a lot of time in Palo Alto. Model 3’s are at least as common on the roads here in suburban Philly as the Model S was in downtown Palo Alto a year or so ago. I know Tesla’s strategy was to ship close to HQ first and then expand elsewhere. Seeing this many here makes me think they are hitting their stride in a big way.
kitsunesoba 8y ago
Indeed. In SF it’s now strange to go a day without seeing multiple Teslas. They’re everywhere.
empath75 8y ago
The bay area is a different planet from the rest of the world.
- ecpottinger 8y ago
  I am in Ontario Canada, and I have seen a number of them here.
  - emptyfile 8y ago
    My country has no Tesla's registered. More anecdotes anyone?
    - olau 8y ago
      Due to lack of demand or lack of supply?

consumer451 8y ago

For anyone interested, here is a link to the earnings call: https://edge.media-server.com/m6/p/omd73p8r https://edge.media-server.com/m6/p/omd73p8r

sidcool 8y ago

This is massive for Tesla. I cannot imagine they have achieved this after the tumultuous last few months. Tesla is bigger than Musk, that's the key to its success. I agree that Musk's blind ambition and hubris has made this possible, but now is a good time for Tesla to get a veteran COO to take things to the next level. Congrats Tesla. Your growth is a source of inspiration for me.