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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 tradi

by 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?
- SEJeff 8y ago
  I went long at $218 160 and have held on for the ride the entire time. So far it was the right call, I guess we'll really be able to tell in a few more years.
kylec 8y ago
Why is there this obsession with trying to defeat shorts in the Tesla community? Every negative comment or story about Tesla or Elon is accused of being fake news purpotrated by shorts. It’s really weird, I’ve never seen it in any other community, and it doesn’t seem healthy.
- dragontamer 8y ago
  There's some degree of competitive play that I think is healthy. People like to be right, and "the bulls" vs "the bears" is a common theme among investors. Where things get unhealthy is when people start to push conspiracy theories with "the shorts" controlling media. And Tesla discussions consistently cross the line into conspiracies. With that being said, this particular comment you've replied to seems relatively tame compared to what I normally see around the internet (and its tame even by the standards of this Hacker News discussion! I'm seeing some "conspiracy level" comments elsewhere in this discussion right now...) . There's nothing really wrong with claiming that the shorts were wrong on Q3 predictions IMO, as long as the author doesn't go full-on conspiracy theorist... it isn't too bad to push the classical bulls vs bears discussion which have gone on for over a century.
- drexlspivey 8y ago
  Because it is the most shorted stock in the history of the stock market.
  - RivieraKid 8y ago
    It's not, there are and were many other stocks with higher short/long ratios.
- JaRail 8y ago
  We associate shorts with all the trolls you see in Tesla threads, spreading lies about EVs, climate change, etc. It just gets old listening to that.
samfisher83 8y ago
They FCF for the year til date is -$1.0 Billion, but the the Q results are amazing. I don't how they pulled it off.
RivieraKid 8y ago
They've only lost if TSLA is not overvalued. (The "us vs them" mentality is really tiring by the way.) The Q3 numbers don't significantly change expected future cashflows. Don't forget that they've tried really hard to make the numbers look as good as possible, they've pulled every trick they could think of. I've been quite bearish on Tesla and Q3 changed my mind to some extent. But, it's just one data point, people are biased to extrapolate short-term trends. Does Q3 really change our understanding of Tesla's financial situation? This is a good big picture analysis (the author is very knowledgable about equity valuation, check him out on wikipedia): http://aswathdamodaran.blogspot.com/2018/06/twists-and-turns-in-tesla-story-boring.html http://aswathdamodaran.blogspot.com/2018/06/twists-and-turns...
tomatocracy 8y ago
My impression is that many Tesla shorts had covered to book profit on the way down from high 300s which I'm pretty sure they would count as a "win". Short interest has declined since earlier in the year. Positive Q3 was widely expected. Citron Research (one of the more well-known Tesla shorts) was among those who saw this coming and publicly not only took profits on their short position but moved into a long position ahead of earnings. The scale of the positive FCF is however a big shock. It's not clear at this point how much of this was "real" and how much short-term timing or one-off factors. As a big part of the short case was/is a short-term free cashflow/need for funds story, I'm sure this will be picked over in some detail over the next few days. The longer-term bear case is simply about relative value and harder to assail with one good quarter. Difficult to take a short position on that basis though.

by cs702 8y ago

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?

SEJeff 8y ago
I went long at $218 160 and have held on for the ride the entire time. So far it was the right call, I guess we'll really be able to tell in a few more years.

kylec 8y ago

Why is there this obsession with trying to defeat shorts in the Tesla community? Every negative comment or story about Tesla or Elon is accused of being fake news purpotrated by shorts. It’s really weird, I’ve never seen it in any other community, and it doesn’t seem healthy.

dragontamer 8y ago
There's some degree of competitive play that I think is healthy. People like to be right, and "the bulls" vs "the bears" is a common theme among investors. Where things get unhealthy is when people start to push conspiracy theories with "the shorts" controlling media. And Tesla discussions consistently cross the line into conspiracies. With that being said, this particular comment you've replied to seems relatively tame compared to what I normally see around the internet (and its tame even by the standards of this Hacker News discussion! I'm seeing some "conspiracy level" comments elsewhere in this discussion right now...) . There's nothing really wrong with claiming that the shorts were wrong on Q3 predictions IMO, as long as the author doesn't go full-on conspiracy theorist... it isn't too bad to push the classical bulls vs bears discussion which have gone on for over a century.
drexlspivey 8y ago
Because it is the most shorted stock in the history of the stock market.
- RivieraKid 8y ago
  It's not, there are and were many other stocks with higher short/long ratios.
JaRail 8y ago
We associate shorts with all the trolls you see in Tesla threads, spreading lies about EVs, climate change, etc. It just gets old listening to that.

samfisher83 8y ago

They FCF for the year til date is -$1.0 Billion, but the the Q results are amazing. I don't how they pulled it off.

RivieraKid 8y ago

They've only lost if TSLA is not overvalued. (The "us vs them" mentality is really tiring by the way.) The Q3 numbers don't significantly change expected future cashflows. Don't forget that they've tried really hard to make the numbers look as good as possible, they've pulled every trick they could think of. I've been quite bearish on Tesla and Q3 changed my mind to some extent. But, it's just one data point, people are biased to extrapolate short-term trends. Does Q3 really change our understanding of Tesla's financial situation? This is a good big picture analysis (the author is very knowledgable about equity valuation, check him out on wikipedia): http://aswathdamodaran.blogspot.com/2018/06/twists-and-turns-in-tesla-story-boring.html http://aswathdamodaran.blogspot.com/2018/06/twists-and-turns...

tomatocracy 8y ago

My impression is that many Tesla shorts had covered to book profit on the way down from high 300s which I'm pretty sure they would count as a "win". Short interest has declined since earlier in the year. Positive Q3 was widely expected. Citron Research (one of the more well-known Tesla shorts) was among those who saw this coming and publicly not only took profits on their short position but moved into a long position ahead of earnings. The scale of the positive FCF is however a big shock. It's not clear at this point how much of this was "real" and how much short-term timing or one-off factors. As a big part of the short case was/is a short-term free cashflow/need for funds story, I'm sure this will be picked over in some detail over the next few days. The longer-term bear case is simply about relative value and harder to assail with one good quarter. Difficult to take a short position on that basis though.