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> I mean, I wanna stop global warming as much as you do. But an unsustainable business model is doomed to fail. This company needs to start making a profit (and

> I mean, I wanna stop global warming as much as you do. But an unsustainable business model is doomed to fail. This company needs to start making a profit (and not just a quarterly non-GAAP profit... I mean a real GAAP profit measured on a yearly basis) So many darlings don't ever post profits though. Palo Alto Networks is a prime example. They've never posted a GAAP profit, ever. Yet... It trades at ~38x and the stock has rocketed over the years. Non-GAAP reporting is a racket and should be illegal.

dragontamer 8y ago
Fair enough. But there's a big difference between losing 127 million / year like Palo Alto networks, and losing 700 million / QUARTER like Tesla just did. Yes, 700 million gone in one quarter.
- windexh8er 8y ago
  The amount is only relevant if it's a trend or unfounded. I know it's en vogue to be a Tesla naysayer, however they have posted profits previously. My point was that with Palo Alto Networks they have zero quarters of profit over 25+ quarters. And, while they are the example I chose, they're very much not alone.
  - deleted 8y ago
    [deleted]
  - dragontamer 8y ago
    This isn't a software company. Tesla is a car company with only ~15% gross margin. It wasn't ONLY Tesla that lost a bunch of sales last quarter. Across the board, Toyota, Ford, GM, and more have been closing factories and preparing for an incoming slowdown in sales. Car sales are well known to be cyclic: people only buy new cars when they need a car... and we're entering the cycle where most people don't need a new car. A ~70,000 cars delivered quarter (like Q1 2019) results in a loss of $700,000,000. Tesla can only do this maybe 4 or 5 more times before they completely run out of cash (depending on how many capital raises / additional debt they take on. They currently only have $2.2 Billion, so their cash-burn currently extrapolates to a little over ~3 quarters !!). And general economic conditions make it look like things are getting worse, not better, for Tesla and the general car industry. > My point was that with Palo Alto Networks they have zero quarters of profit over 25+ quarters. When you're spending $1 Billion/year on sales/marketing, and losing $100 Million/year, you have a sustainable business. Palo Alto Networks is profitable as long as they drop their marketing expenses just slightly (~10% less marketing). I'm willing to give Palo Alto Executives the benefit of the doubt: that their marketing costs are worth the debt. Its also not a very big loss: Palo Alto Networks can sustain this net-loss for another 10+ years (Cash on Hand is ~1 Billion, and they are losing only ~100 million/year) Tesla on the other hand has... like 7 quarters... at the current burn rate. And unlike Palo Alto Networks, there's no easy solution in their financial sheets: Tesla's financial statements look relatively lean, no fat in there and yet they are unable to consistently make a profit.
    - windexh8er 8y ago
      > When you're spending $1 Billion/year on sales/marketing, and losing $100 Million/year, you have a sustainable business. If I read this correctly you're defending spending $1Bn in marketing to generate $100M loss when you're business is at run rate? Cash on hand doesn't matter. If it truly takes that level investment in marketing to get to that level of profit you're just delaying the inevitable. As an aside Palo Alto Networks is not a software company. >50% of their revenue comes from hardware firewall sales (a dying market). If you do the long term math on them the business looks much weaker than you posit because margins are much tighter on the software portions of the products. You can't sell a virtual firewall for 6-figures on hardware you build for less than $15k.

dragontamer 8y ago

Fair enough. But there's a big difference between losing 127 million / year like Palo Alto networks, and losing 700 million / QUARTER like Tesla just did. Yes, 700 million gone in one quarter.

windexh8er 8y ago
The amount is only relevant if it's a trend or unfounded. I know it's en vogue to be a Tesla naysayer, however they have posted profits previously. My point was that with Palo Alto Networks they have zero quarters of profit over 25+ quarters. And, while they are the example I chose, they're very much not alone.
- deleted 8y ago
  [deleted]
- dragontamer 8y ago
  This isn't a software company. Tesla is a car company with only ~15% gross margin. It wasn't ONLY Tesla that lost a bunch of sales last quarter. Across the board, Toyota, Ford, GM, and more have been closing factories and preparing for an incoming slowdown in sales. Car sales are well known to be cyclic: people only buy new cars when they need a car... and we're entering the cycle where most people don't need a new car. A ~70,000 cars delivered quarter (like Q1 2019) results in a loss of $700,000,000. Tesla can only do this maybe 4 or 5 more times before they completely run out of cash (depending on how many capital raises / additional debt they take on. They currently only have $2.2 Billion, so their cash-burn currently extrapolates to a little over ~3 quarters !!). And general economic conditions make it look like things are getting worse, not better, for Tesla and the general car industry. > My point was that with Palo Alto Networks they have zero quarters of profit over 25+ quarters. When you're spending $1 Billion/year on sales/marketing, and losing $100 Million/year, you have a sustainable business. Palo Alto Networks is profitable as long as they drop their marketing expenses just slightly (~10% less marketing). I'm willing to give Palo Alto Executives the benefit of the doubt: that their marketing costs are worth the debt. Its also not a very big loss: Palo Alto Networks can sustain this net-loss for another 10+ years (Cash on Hand is ~1 Billion, and they are losing only ~100 million/year) Tesla on the other hand has... like 7 quarters... at the current burn rate. And unlike Palo Alto Networks, there's no easy solution in their financial sheets: Tesla's financial statements look relatively lean, no fat in there and yet they are unable to consistently make a profit.
  - windexh8er 8y ago
    > When you're spending $1 Billion/year on sales/marketing, and losing $100 Million/year, you have a sustainable business. If I read this correctly you're defending spending $1Bn in marketing to generate $100M loss when you're business is at run rate? Cash on hand doesn't matter. If it truly takes that level investment in marketing to get to that level of profit you're just delaying the inevitable. As an aside Palo Alto Networks is not a software company. >50% of their revenue comes from hardware firewall sales (a dying market). If you do the long term math on them the business looks much weaker than you posit because margins are much tighter on the software portions of the products. You can't sell a virtual firewall for 6-figures on hardware you build for less than $15k.