5 ms·

Year-over-year revenue flat, year-over-year GAAP income down 25% on 20k more units delivered. Hard to understand...

by aguyfromnb 7y ago

new_realist 7y ago
It’s a deteriorating margin mix; discounts to move metal.
- aguyfromnb 7y ago
  I guess the hard to understand part is: how does a $50B company that is growing revenue at 1% annually more than double its market cap in 3 months. It's insane (ludicrous?)!
  - toomuchtodo 7y ago
    They’re growing while the market for legacy automakers is shrinking. Everyone else is tapped out, while there’s still a whole lot of people left on Earth who’ll buy Tesla products (and you’ll notice Tesla keeps changing where the production firehose is pointed based on local incentives maximizing sales). Heck, Fiat has to hand over almost $2B to Tesla just to be permitted to sell cars in Europe because they have little to no low or zero emissions vehicles to sell. As an investor desperate for returns, do you invest in the past or the future?
    - aguyfromnb 7y ago
      >They’re growing while the market for legacy automakers is shrinking. Do you have data for this? Tesla had, essentially zero growth in the US in 2019, which is where it sells half of its cars. There are many companies that had higher growth than that, including Volvo, which grew 10% in the US. LandRover sold 125k units in the US in 2019, which is far more than the Model S + X (its competitors). So, I'm not sure where you get the idea that everyone else is shrinking while Tesla is growing. Some companies might be, but some are growing faster than Tesla. These are not mysteries; there is data out there.
      - deleted 7y ago
        [deleted]
      - hw 7y ago
        The growth will come from China, where there's still plenty of EV incentives by the government. Growth in US will depend on new EV incentives IMO
        xkjkls 7y ago
        Why is that a bull thesis though? If the growth is that dependent on subsidies?
        toomuchtodo 7y ago
        China is one of the biggest markets in the world and is committed to the rapid deployment of EVs. Unlike the US, those subsides will be around for a while. China also gave Tesla very favorable loan terms for the China Gigafactory.
        xkjkls 7y ago
        > Unlike the US, those subsides will be around for a while. Why? That doesn't seem like a stable investment thesis. > China also gave Tesla very favorable loan terms for the China Gigafactory. And if Tesla doesn't meet a number of targets the Chinese government takes complete ownership of the factory. They didn't give the good financing terms out of goodwill. Tesla entered an incredibly risky proposition with its Chinese factory.
        toomuchtodo 7y ago
        You asked what the bill thesis is. Bull thesis is there’s a ton of growth ahead for Tesla. Market reaction seems to agree. If one disagrees with the market, short TSLA. Hasn’t worked out that well for those starting with relatively large amounts of capital, but maybe shorts are still right! Vote with your dollars.
  - mrtksn 7y ago
    What I do not understand is, what the company performance has anything to do with its stock performance? It's not like they are paying dividends, right? Totally unrelated markets, it's no different than the crypto coin markets. Even the volatility is similar. Besides that, Tesla has a rockstar CEO. He can achieve things that conventional companies can't even dream of. If he needs money he can do a publicity stunt and collect the money. It's a cult and the members believe in the cause and the members are quite affluent.
    - xkjkls 7y ago
      > What I do not understand is, what the company performance has anything to do with its stock performance? It's not like they are paying dividends, right? Stocks are valued at the long term discounted value of their future cash flows. Are the markets always accurate and rational? No, but that's how they are intended to be valued.
      - mrtksn 7y ago
        Is there a central authority that makes the calculation and assigns the right value? AFAIK, there's no such thing and the price is determined by the amount that a buyer agrees to pay. It has nothing to do with company performance. The company performance can result in an acquisition, bankruptcy or shares sales/buybacks though, but until that happens nobody knows.
        xkjkls 7y ago
        > It has nothing to do with company performance. If that's true then no one would ever invest in stocks.
        mrtksn 7y ago
        Why wouldn't they?
        xkjkls 7y ago
  - nordsieck 7y ago
    > I guess the hard to understand part is: how does a $50B company that is growing revenue at 1% annually more than double its market cap in 3 months. This is just my opinion: The way people were valuing Tesla is a massively valuable stock with a high potential of blowing up. From the looks of things, Tesla has crossed into prolonged profitability. It's not a huge increase in revenue, but it is a big decrease in the chance of bankruptcy. Additionally, because Tesla can self fund and doesn't have to rely on the markets to raise money, they don't have to care very much about short sellers driving the price down. The bull case (robo-taxis, etc.) is still there, but the chance of Tesla going bankrupt is much lower than 1 year ago, so the stock has shot up.
    - xkjkls 7y ago
      > From the looks of things, Tesla has crossed into prolonged profitability How? They lost $800 million in 2019. > Additionally, because Tesla can self fund and doesn't have to rely on the markets to raise money, they don't have to care very much about short sellers driving the price down. They still have increasing bills and huge liabilities. Acting like they have no risks if they don't raise money is crazy.
      - nordsieck 7y ago
        > They lost $800 million in 2019. You're not wrong. Of course the counterpoint is that they were profitable both the 3rd and 4th quarter. > They still have increasing bills and huge liabilities. That is true. However, some of their debt will convert into equity as long as the stock price remains where it is. More broadly, I'm not trying to convince anyone that Tesla is some sort of value stock. It's not. It's absurdly volatile. There's also a good chance that they won't win the race to level 5 autonomy. All I'm saying is: enough people believe in the upside and think the downside has been diminished sufficiently to drive up the price to where it is. Maybe they're wrong. Maybe they're right. I certainly don't know.
        xkjkls 7y ago
        > Of course the counterpoint is that they were profitable both the 3rd and 4th quarter. Less so than last year. Why do we believe this is sustainable over a full year? > More broadly, I'm not trying to convince anyone that Tesla is some sort of value stock. It's not. There seem to be people who do, and I want to insure that they don't lose their whole retirement savings chasing that.
gamblor956 7y ago
More discounts, marketing expenses, and spending on the Chinese factory.
- aguyfromnb 7y ago
  They guided for $2.5 billion in capex, and only spent $1.3 billion.
  - zhengyi13 7y ago
    Ignorant question: if they spent only ~1/2 their projected capex, how did that happen? Did they get a bunch of great deals on land/machinery/etc? Or did they not build all the things they intended at the time they gave that guidance?
    - jsight 7y ago
      Their guidance for US production is relatively low compared to some of their guidance in the past. I'm guessing this means sluggish demand for the Model Y and a more cost-conservative approach to launching the product.
  - gamblor956 7y ago
    Right, but we're not talking about quarterly guidance, we're talking about YoY comparisons.
- xkjkls 7y ago
  Where is the Chinese factory expenses on their balance sheet?
andy_ppp 7y ago
Scaling is costly?
- aguyfromnb 7y ago
  Can you explain how that affects revenue?
  - andy_ppp 7y ago
    Did revenue go down???
- xkjkls 7y ago
  Are they scaling? Gross margin is down YoY? That's the exact opposite of scaling.
jrbuhl 7y ago
In the document "GAAP gross profit of $4.1B remained essentially flat in 2019 compared to 2018. Volume growth and successful cost reduction efforts were offset by normalization of ASP, mix shift towards Model 3 and a higher lease mix."
Animats 7y ago
Tesla is at breakeven. Marginally profitable for 2019, but R&D was cut by more than the difference between last year's loss and this year's profit. Still $26 billion in long term debt, up a bit from last year. Not clear on the terms on that. They had to agree to some awful terms about two years ago, but dodged the bullet on some of those. Read the numbers on page 21-22 first, of course.
- jsight 7y ago
  R&D was at $356 million in Q4 18 and $345 million in Q4 19. For the year, it moved from 1.4 billion in 18 to just over 1.3 billion in 19. I don't see how these minor differences were a major factor.
  - xkjkls 7y ago
    R&D hasn't been up to depreciation for a year.
- xkjkls 7y ago
  They weren't profitable in 2019 though.
  - xedeon 7y ago
    This is false. https://qz.com/1734436/tesla-turns-a-profit/ https://qz.com/1734436/tesla-turns-a-profit/
    - justapassenger 7y ago
      It's non-GAAP profit, which is not very useful metrics. GAAP they lost over $800M last year.
      - xedeon 7y ago
        Way to move the goalpost.
woodpanel 7y ago
As a TSLA ahareholder I'm enjoying this ride but am honestly equally puzzled. The numbers are not good. On a related note: FB has been profitable for years, is growing earnings each year by more than 20% and just beat wall street expectations, which wall street rewards with -6% on after-markets trading. Huh?!
- adventured 7y ago
  Facebook is getting punished based on expectations. Investors were looking for indications of faster growth and better margins. Expenses skyrocketed 51% in 2019, while sales growth is running closer to half that and looks permanently trapped under 30%, which is combining to crush their profit margin. The market never likes to see a company like Facebook lose margin so rapidly. Their margin fell from 45% to 34% for 2018 vs 2019. Investors are going to want to see that stop falling sooner rather than later. After the big FB rally, the report was mostly underwhelming. Entirely different expectations on the shoulders of FB vs Tesla at this juncture of their operational histories.

Year-over-year revenue flat, year-over-year GAAP income down 25% on 20k more units delivered. Hard to understand...

new_realist 7y ago

It’s a deteriorating margin mix; discounts to move metal.

aguyfromnb 7y ago
I guess the hard to understand part is: how does a $50B company that is growing revenue at 1% annually more than double its market cap in 3 months. It's insane (ludicrous?)!
- toomuchtodo 7y ago
  They’re growing while the market for legacy automakers is shrinking. Everyone else is tapped out, while there’s still a whole lot of people left on Earth who’ll buy Tesla products (and you’ll notice Tesla keeps changing where the production firehose is pointed based on local incentives maximizing sales). Heck, Fiat has to hand over almost $2B to Tesla just to be permitted to sell cars in Europe because they have little to no low or zero emissions vehicles to sell. As an investor desperate for returns, do you invest in the past or the future?
  - aguyfromnb 7y ago
    >They’re growing while the market for legacy automakers is shrinking. Do you have data for this? Tesla had, essentially zero growth in the US in 2019, which is where it sells half of its cars. There are many companies that had higher growth than that, including Volvo, which grew 10% in the US. LandRover sold 125k units in the US in 2019, which is far more than the Model S + X (its competitors). So, I'm not sure where you get the idea that everyone else is shrinking while Tesla is growing. Some companies might be, but some are growing faster than Tesla. These are not mysteries; there is data out there.
    - deleted 7y ago
      [deleted]
    - hw 7y ago
      The growth will come from China, where there's still plenty of EV incentives by the government. Growth in US will depend on new EV incentives IMO
      - xkjkls 7y ago
        Why is that a bull thesis though? If the growth is that dependent on subsidies?
        toomuchtodo 7y ago
        China is one of the biggest markets in the world and is committed to the rapid deployment of EVs. Unlike the US, those subsides will be around for a while. China also gave Tesla very favorable loan terms for the China Gigafactory.
        xkjkls 7y ago
        > Unlike the US, those subsides will be around for a while. Why? That doesn't seem like a stable investment thesis. > China also gave Tesla very favorable loan terms for the China Gigafactory. And if Tesla doesn't meet a number of targets the Chinese government takes complete ownership of the factory. They didn't give the good financing terms out of goodwill. Tesla entered an incredibly risky proposition with its Chinese factory.
        toomuchtodo 7y ago
        You asked what the bill thesis is. Bull thesis is there’s a ton of growth ahead for Tesla. Market reaction seems to agree. If one disagrees with the market, short TSLA. Hasn’t worked out that well for those starting with relatively large amounts of capital, but maybe shorts are still right! Vote with your dollars.
- mrtksn 7y ago
  What I do not understand is, what the company performance has anything to do with its stock performance? It's not like they are paying dividends, right? Totally unrelated markets, it's no different than the crypto coin markets. Even the volatility is similar. Besides that, Tesla has a rockstar CEO. He can achieve things that conventional companies can't even dream of. If he needs money he can do a publicity stunt and collect the money. It's a cult and the members believe in the cause and the members are quite affluent.
  - xkjkls 7y ago
    > What I do not understand is, what the company performance has anything to do with its stock performance? It's not like they are paying dividends, right? Stocks are valued at the long term discounted value of their future cash flows. Are the markets always accurate and rational? No, but that's how they are intended to be valued.
    - mrtksn 7y ago
      Is there a central authority that makes the calculation and assigns the right value? AFAIK, there's no such thing and the price is determined by the amount that a buyer agrees to pay. It has nothing to do with company performance. The company performance can result in an acquisition, bankruptcy or shares sales/buybacks though, but until that happens nobody knows.
      - xkjkls 7y ago
        > It has nothing to do with company performance. If that's true then no one would ever invest in stocks.
        mrtksn 7y ago
        Why wouldn't they?
        xkjkls 7y ago
- nordsieck 7y ago
  > I guess the hard to understand part is: how does a $50B company that is growing revenue at 1% annually more than double its market cap in 3 months. This is just my opinion: The way people were valuing Tesla is a massively valuable stock with a high potential of blowing up. From the looks of things, Tesla has crossed into prolonged profitability. It's not a huge increase in revenue, but it is a big decrease in the chance of bankruptcy. Additionally, because Tesla can self fund and doesn't have to rely on the markets to raise money, they don't have to care very much about short sellers driving the price down. The bull case (robo-taxis, etc.) is still there, but the chance of Tesla going bankrupt is much lower than 1 year ago, so the stock has shot up.
  - xkjkls 7y ago
    > From the looks of things, Tesla has crossed into prolonged profitability How? They lost $800 million in 2019. > Additionally, because Tesla can self fund and doesn't have to rely on the markets to raise money, they don't have to care very much about short sellers driving the price down. They still have increasing bills and huge liabilities. Acting like they have no risks if they don't raise money is crazy.
    - nordsieck 7y ago
      > They lost $800 million in 2019. You're not wrong. Of course the counterpoint is that they were profitable both the 3rd and 4th quarter. > They still have increasing bills and huge liabilities. That is true. However, some of their debt will convert into equity as long as the stock price remains where it is. More broadly, I'm not trying to convince anyone that Tesla is some sort of value stock. It's not. It's absurdly volatile. There's also a good chance that they won't win the race to level 5 autonomy. All I'm saying is: enough people believe in the upside and think the downside has been diminished sufficiently to drive up the price to where it is. Maybe they're wrong. Maybe they're right. I certainly don't know.
      - xkjkls 7y ago
        > Of course the counterpoint is that they were profitable both the 3rd and 4th quarter. Less so than last year. Why do we believe this is sustainable over a full year? > More broadly, I'm not trying to convince anyone that Tesla is some sort of value stock. It's not. There seem to be people who do, and I want to insure that they don't lose their whole retirement savings chasing that.

gamblor956 7y ago

More discounts, marketing expenses, and spending on the Chinese factory.

aguyfromnb 7y ago
They guided for $2.5 billion in capex, and only spent $1.3 billion.
- zhengyi13 7y ago
  Ignorant question: if they spent only ~1/2 their projected capex, how did that happen? Did they get a bunch of great deals on land/machinery/etc? Or did they not build all the things they intended at the time they gave that guidance?
  - jsight 7y ago
    Their guidance for US production is relatively low compared to some of their guidance in the past. I'm guessing this means sluggish demand for the Model Y and a more cost-conservative approach to launching the product.
- gamblor956 7y ago
  Right, but we're not talking about quarterly guidance, we're talking about YoY comparisons.
xkjkls 7y ago
Where is the Chinese factory expenses on their balance sheet?

andy_ppp 7y ago

Scaling is costly?

aguyfromnb 7y ago
Can you explain how that affects revenue?
- andy_ppp 7y ago
  Did revenue go down???
xkjkls 7y ago
Are they scaling? Gross margin is down YoY? That's the exact opposite of scaling.

jrbuhl 7y ago

In the document "GAAP gross profit of $4.1B remained essentially flat in 2019 compared to 2018. Volume growth and successful cost reduction efforts were offset by normalization of ASP, mix shift towards Model 3 and a higher lease mix."

Animats 7y ago

Tesla is at breakeven. Marginally profitable for 2019, but R&D was cut by more than the difference between last year's loss and this year's profit. Still $26 billion in long term debt, up a bit from last year. Not clear on the terms on that. They had to agree to some awful terms about two years ago, but dodged the bullet on some of those. Read the numbers on page 21-22 first, of course.

jsight 7y ago
R&D was at $356 million in Q4 18 and $345 million in Q4 19. For the year, it moved from 1.4 billion in 18 to just over 1.3 billion in 19. I don't see how these minor differences were a major factor.
- xkjkls 7y ago
  R&D hasn't been up to depreciation for a year.
xkjkls 7y ago
They weren't profitable in 2019 though.
- xedeon 7y ago
  This is false. https://qz.com/1734436/tesla-turns-a-profit/ https://qz.com/1734436/tesla-turns-a-profit/
  - justapassenger 7y ago
    It's non-GAAP profit, which is not very useful metrics. GAAP they lost over $800M last year.
    - xedeon 7y ago
      Way to move the goalpost.

woodpanel 7y ago

As a TSLA ahareholder I'm enjoying this ride but am honestly equally puzzled. The numbers are not good. On a related note: FB has been profitable for years, is growing earnings each year by more than 20% and just beat wall street expectations, which wall street rewards with -6% on after-markets trading. Huh?!

adventured 7y ago
Facebook is getting punished based on expectations. Investors were looking for indications of faster growth and better margins. Expenses skyrocketed 51% in 2019, while sales growth is running closer to half that and looks permanently trapped under 30%, which is combining to crush their profit margin. The market never likes to see a company like Facebook lose margin so rapidly. Their margin fell from 45% to 34% for 2018 vs 2019. Investors are going to want to see that stop falling sooner rather than later. After the big FB rally, the report was mostly underwhelming. Entirely different expectations on the shoulders of FB vs Tesla at this juncture of their operational histories.