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Judging by the nosedive that the stock price is taking in after hours trading (down over 12% from $264.88 at close an hour ago to $236 right now), the outlook o

Judging by the nosedive that the stock price is taking in after hours trading (down over 12% from $264.88 at close an hour ago to $236 right now), the outlook of this letter isn't great.

kenhwang 7y ago
They missed market expectations. They lost 6x more money (-$2.31/share vs expected -$0.35/share) and sold less cars ($6.3b sales vs $6.5b expected) than the market wanted with more capex to come (China Gigafactory, Model Y).
- gordon_freeman 7y ago
  Not sure how does the CapEx gets allocated for the projects that are already progressing. For example: Tesla started building GF2 in China a few months ago so any idea in which Quarter(s) Tesla account for the CapEx? Is it before the project starts or at the end or every month gets even distribution of CapEx allocation from Start until End of the project.
  - toomuchtodo 7y ago
    China GF is GF3. GF2 is in Buffalo, NY (old SolarCity facility, which also manufactures Supercharger station hardware). I can't speak to how GF3 capex is being accounted for, but competition was fierce to provide financing to Tesla [1]. China pulled out all of the stops not just for permitting and financing, but also construction (GF3 is already having Model 3 production line equipment installed, after breaking ground in January [2]). In less than a year, it will go from vacant land to producing Model 3s. [1] https://www.teslarati.com/tesla-gigafactory-3-funding-chinese-banks-model-3-production-insider/ https://www.teslarati.com/tesla-gigafactory-3-funding-chines... [2] https://www.youtube.com/watch?v=XI6nJOic4BM https://www.youtube.com/watch?v=XI6nJOic4BM (June 22 2019) Tesla Gigafactory 3 in Shanghai China Update
    - navigatesol 7y ago
      Linking to a Teslarati article, that's a laugh. When will you realize that this company makes things up at every turn? They are cutting capex, again. They are slashing prices on cars with "unlimited demand". Let's see in a year how it's going,and what excuse you and they will have.
      - toomuchtodo 7y ago
        Is that Youtube video fake? The ~90k vehicles Tesla sold this quarter? "Fake news"? I have no excuses, just proof of hundreds of thousands of Tesla vehicles on the road, and billions of dollars worth of manufacturing capacity running. Come back in a year we shall.
        navigatesol 7y ago
        >The ~90k vehicles Tesla sold this quarter And made less revenue than last quarter. Brilliant. Is the 1 billion dollars lost this year after saying profits forever fake? The lawsuits from whistleblowers? Months long waits for parts? The miniscule growth after slashing prices greatly? The securities violations? Tesla Solar selling the least it ever has? I could care less about some factory shell in China. They told you they'd build 10k a week in Fremont, didn't they? You have rose coloured glasses.
        umeshunni 7y ago
        > And made less revenue than last quarter. Brilliant. They made $5.3B this quarter and $3.7B last quarter. Where are you getting your numbers from?
        navigatesol 7y ago
        I meant the last delivery record quarter. Information overload on Tesla ER day. More cars, less revenue was the point. Anyway, like the financials matter here. It's all about the next promise.
  - lancewiggs 7y ago
    When invoices arrive from the build of the project they would be put into a capital expense account. I would imagine that the costs include upfront and ongoing components, as that's what contractors need. The asset (plant) is valued as the total of the invoices received and depreciation applies, which gives an ongoing tax shield.
  - rgbrenner 7y ago
    Simply buying a capital asset is not an expense. It just moves assets from one asset account (cash, for example) to another (fixed asset account). You then depreciate the asset over the expected life of the asset. So if you depreciate it over 30 years, then in year 1 you would record a depreciation expense of 3.33%. (That's for straight line depreciation.. there are accelerated schedules.) In other words.. It's spread out over the expected life of the asset. Also the depreciation usually wouldn't start until the asset has been put into production.
bryanlarsen 7y ago
"Buy on rumours, sell on news". The stock is up about 50% since its low a month and a half ago when rumours of good deliveries started. A small pullback is expected. But maybe not 12%.
- tempsy 7y ago
  Still down 40% from 52 week highs.
  - Retric 7y ago
    Still up over 10x since 2010... It’s really a question of when bought/shorted if things are looking good or bad.
tenpies 7y ago
The letter is usually the tip of the Tesla bad news iceberg. The 10-Q won't be released for several days and will almost certainly do more damage because it adds more detail (both intentional and unintentional).

Judging by the nosedive that the stock price is taking in after hours trading (down over 12% from $264.88 at close an hour ago to $236 right now), the outlook of this letter isn't great.

kenhwang 7y ago

They missed market expectations. They lost 6x more money (-$2.31/share vs expected -$0.35/share) and sold less cars ($6.3b sales vs $6.5b expected) than the market wanted with more capex to come (China Gigafactory, Model Y).

gordon_freeman 7y ago
Not sure how does the CapEx gets allocated for the projects that are already progressing. For example: Tesla started building GF2 in China a few months ago so any idea in which Quarter(s) Tesla account for the CapEx? Is it before the project starts or at the end or every month gets even distribution of CapEx allocation from Start until End of the project.
- toomuchtodo 7y ago
  China GF is GF3. GF2 is in Buffalo, NY (old SolarCity facility, which also manufactures Supercharger station hardware). I can't speak to how GF3 capex is being accounted for, but competition was fierce to provide financing to Tesla [1]. China pulled out all of the stops not just for permitting and financing, but also construction (GF3 is already having Model 3 production line equipment installed, after breaking ground in January [2]). In less than a year, it will go from vacant land to producing Model 3s. [1] https://www.teslarati.com/tesla-gigafactory-3-funding-chinese-banks-model-3-production-insider/ https://www.teslarati.com/tesla-gigafactory-3-funding-chines... [2] https://www.youtube.com/watch?v=XI6nJOic4BM https://www.youtube.com/watch?v=XI6nJOic4BM (June 22 2019) Tesla Gigafactory 3 in Shanghai China Update
  - navigatesol 7y ago
    Linking to a Teslarati article, that's a laugh. When will you realize that this company makes things up at every turn? They are cutting capex, again. They are slashing prices on cars with "unlimited demand". Let's see in a year how it's going,and what excuse you and they will have.
    - toomuchtodo 7y ago
      Is that Youtube video fake? The ~90k vehicles Tesla sold this quarter? "Fake news"? I have no excuses, just proof of hundreds of thousands of Tesla vehicles on the road, and billions of dollars worth of manufacturing capacity running. Come back in a year we shall.
      - navigatesol 7y ago
        >The ~90k vehicles Tesla sold this quarter And made less revenue than last quarter. Brilliant. Is the 1 billion dollars lost this year after saying profits forever fake? The lawsuits from whistleblowers? Months long waits for parts? The miniscule growth after slashing prices greatly? The securities violations? Tesla Solar selling the least it ever has? I could care less about some factory shell in China. They told you they'd build 10k a week in Fremont, didn't they? You have rose coloured glasses.
        umeshunni 7y ago
        > And made less revenue than last quarter. Brilliant. They made $5.3B this quarter and $3.7B last quarter. Where are you getting your numbers from?
        navigatesol 7y ago
        I meant the last delivery record quarter. Information overload on Tesla ER day. More cars, less revenue was the point. Anyway, like the financials matter here. It's all about the next promise.
- lancewiggs 7y ago
  When invoices arrive from the build of the project they would be put into a capital expense account. I would imagine that the costs include upfront and ongoing components, as that's what contractors need. The asset (plant) is valued as the total of the invoices received and depreciation applies, which gives an ongoing tax shield.
- rgbrenner 7y ago
  Simply buying a capital asset is not an expense. It just moves assets from one asset account (cash, for example) to another (fixed asset account). You then depreciate the asset over the expected life of the asset. So if you depreciate it over 30 years, then in year 1 you would record a depreciation expense of 3.33%. (That's for straight line depreciation.. there are accelerated schedules.) In other words.. It's spread out over the expected life of the asset. Also the depreciation usually wouldn't start until the asset has been put into production.

bryanlarsen 7y ago

"Buy on rumours, sell on news". The stock is up about 50% since its low a month and a half ago when rumours of good deliveries started. A small pullback is expected. But maybe not 12%.

tempsy 7y ago
Still down 40% from 52 week highs.
- Retric 7y ago
  Still up over 10x since 2010... It’s really a question of when bought/shorted if things are looking good or bad.

tenpies 7y ago

The letter is usually the tip of the Tesla bad news iceberg. The 10-Q won't be released for several days and will almost certainly do more damage because it adds more detail (both intentional and unintentional).