15 ms·

Q2 2020 Update

126 points by marc__1 6y ago

chollida1 6y ago
Pre Close: - From Bloomberg re Robinhood and TSLA "number of Robinhood accounts holding Tesla shares (in some form) is at an all- time high of 496,890. Tesla is the second-most popular stock on the platform over the last 24 hours, and the 19th-most popular stock over the last 7 days." Looking at: - if profitiable check for amount of regulatory credits that Telsa gets from other automakers, this could be the difference between profitablity and not, though if this is what puts them over them edge then be a bit concerned - Is Texax truck factory happening or not? If so, what kind of tax incentives did they get as these types of tax deals are the first thing that could get cut if reports of Texas', um Texas sized, budget gaps exits, Tulsa is the other option, maybe with the SC ruling Tulsa is native land there could be some weird tax deal there?? - Tesla's capex was cut way back from almost $3B forcats to under $1.3, helps make them look profitiable last year at the expense of that having to be made up this or next year, look for capex to be much higher - Model Y and X and S are only made in Fremont, though Shanghai will start producing the Y soonish, still lots of geographical risk as the pandemic and factory shutdown illustrated, Musk must do better here - Model Y was discounted and its brand new, Model S and X were discounted as well, TSLA really pushing to make their quarter for cars delivered, watch for gross margins to be down but numbers to be very juiced for a large beat Numbers: - Rev $6B vs $5.5B, down from previous highs, but with teh lock down, pretty darn good!! - profit of 50cents per share on a GAAP basis, nice, though credits really juiced this - 4 quarters of profitability, though not always pretty or organic is really nice to see - Net Income was $451M vs ($74M), nice but mostly a factor of major discounting of cars and credit sales - Cash and cash equivalents @ $8.5B, nice!!! - Solar, yawn, 27 MW installed, why even bother at this point? - handed over 90,000 vehicles, different from produced Outcome: - market cap is now $320B, wow!! - stock is flat on day as one would expect with so much vol leading up to announcement. The Post earnings drift traders are probably staying away as you need nerves of steel to trade TSLA earnings:) - Musk is now able to exercise an additional 1.69 million stock options, meaning he would reap a $2.1 billion gain if he exercised and could immediately sell the shares. - S&P 500 here we come, so /r/wallstreetbets and robinhood, congrats you guys did it!!!
- itsoktocry 6y ago
  >if profitiable check for amount of regulatory credits that Telsa gets from other automakers, this could be the difference between profitablity and not, though if this is what puts them over them edge then be a bit concerned $400MM+ in regulatory credits. GAAP Profit is around $120MM so far in 2020, with almost $800MM in credit sales. Crazy.
- ksec 6y ago
  >- S&P 500 here we come, so /r/wallstreetbets and robinhood, congrats you guys did it!!! Thanks for the summary. This should have been top comment. My risk appetite tells me not invest on something I dont understand. And I dont understand Tesla's valuation. But from an outsider perspective, this has been fun to watch.
- sbahr001 6y ago
  I am really surprised how solid their finances are. $320 billion is definitely over-value in term of profit/value ratio. They are starting to be valued as a tech company which is good and bad. It looks that Elon is not valuing Tesla as a tech company in the traditional sense, but a utility/car company. It builds custom tech to improve those services. Their intellectual capital is undervalued in my opinion and may worth more than $100 billion. No car company at this moment, can come close to Tesla, and they are all spending billions, to develop batteries, vehicles, self driving tech, and infrastructure. They are even working together as they can't cover the costs on their own. Imagine Tesla selling their batteries/engines/platform/superchargers to every car company(like an intel for cars). They can sustain their revenue by providing the supercharger network(cloud service) to go with it; with a supercharger network being the new gas station, using clean energy(near zero cost energy). Then add their self-driving platform auto companies can lease.
giacaglia 6y ago
Given their net income is positive, what is the probability that they are added to s&p500?
- pruthvishetty 6y ago
  High.
- marc__1 6y ago
  High, because of the Criteria to join the S&P500[0]: - a market cap of $8.2 billion - its headquarters in the U.S. - the value of its market capitalization trade annually at least a quarter-million of its shares trade in each of the previous six months - most of its shares in the public’s hands - at least a year since its initial public offering - the sum of the previous four quarters of earnings must be positive as well as the most recent quarter. [0] https://www.spglobal.com/spdji/en/documents/methodologies/methodology-sp-us-indices.pdf https://www.spglobal.com/spdji/en/documents/methodologies/me...
  - deleted 6y ago
    [deleted]
  - jfengel 6y ago
    If they are added to S&P 500, does that mean that a bunch of index tracking funds buying it all at once? I would assume that's already been priced in, if so.
    - knrz 6y ago
      It does, but the rebalancing occurs in September I think.
      - hrpnk 6y ago
        A company can issue new shares for the index funds instead of requiring those to buy the shares on the market. Otherwise, with the low free float, such demand would move the price higher.
AgloeDreams 6y ago
Positive financial results, one surprise to be seen here is a massive reduction in model S builds, more than 60% drop-off QoQ Presumably due to COVID, but maybe not?
- sbahr001 6y ago
  I would argue that the model S/X should be updated for their respective costs; They pretty much sell a 6 year old interior that was "space age" at the time. Since then their have been minor interior/exterior and looks extremely dated as the competition has "caught" up and the cheaper models surpass it. The only main changes to the car have been better battery and performance, the latter doesn't improve the day to day experience of the car. When your spending 100k on a car you expect Mercedes type of luxury. Previously, Tesla didn't have to compete on that because the Model S/X were ahead of its time an proof of concept cars, with the release of Model 3/Y there is no reason to have one, unless you need the additional size and want to have an electric vehicle on principle.
  - grecy 6y ago
    > When your spending 100k on a car you expect Mercedes type of luxury This is the old way of thinking, and it illistrates perfectly why the other auto manufacturers have been caught flat footed re EVs. For many decades what you said held true - more money on a car meant a higher quality interior. Now things have changed dramatically, because what we thought of as a "car" has changed so much. You can now spend 100k to get a car that never emits a single toxic chemical while being used. A vehicle that much cheaper to drive and own. A vehicle that requires significantly less maintenance, a vehicle that is silent and less fatiguing to drive, etc. etc. This are all the reasons besides "I got a more luxury interior", and they're the kind of reasons that make an EV compelling.
    - reducesuffering 6y ago
      All those reasons apply to buying a 38k Model 3 instead. Tesla is agreeing with grandparent as they are planning to next-gen the S and X. As a customer, what compelling reason is there to spend on the S and X over the 3 and Y? Sales and production are strongly reflecting that.
itsoktocry 6y ago
The difference in the narrative versus the financial data is stark: Quarterly revenue has not shown any growth for nearly 2 years, despite introducing more models and expanding global deliveries. Their sales of regulatory credits this year is greater than all of the net income ever earned in their entire history.
- nickik 6y ago
  When almost ever other car company is burning money, sustaining massive investment in multiple new massive factories, launching new products, and producing cars with pretty good margin and not losing money is an pretty big accomplishment. Its not that long ago people were arguing even a small crisis would wipe out Tesla.
  - itsoktocry 6y ago
    >producing cars with pretty good margin and not losing money is an pretty big accomplishment. If you back out the regulatory credits they've lost money on every car they've ever sold, for almost 20 years. Where do you get "good margins" from? This is an example of narrative versus financial data.
    - SEJeff 6y ago
      Tesla's first car was the Roadster, and it was released in 2008. How do you get "almost 20 years" when the first car they released was 12 years ago? Tesla was founded in 2003, but even that is not 20 years.
      - deleted 6y ago
        [deleted]
    - nickik 6y ago
      The margins on the car are actually very good, this is evident in the official data and confirmed by expert breakdowns. They don't make money because they are investing lots of money all the time. People seem to miss that they only launched their first large production cars a few years ago. Its insanely difficult to start a car company and to scale it to the level Tesla is now with a product that basically nobody else can do profitable is a gigantic achievement. They are currently building 3 huge new factories.
samfisher83 6y ago
What are regulatory credits? I thought the 7500 credit ran out?
- elil17 6y ago
  This is separate from the consumer EV tax credit. Every car manufacturer must produce a certain percentage of electric cars. If their actual EV sales aren’t enough to cover that requirement, they can purchase “EV credits” from companies that exceeded their regulatory requirements to avoid a fine. Essentially this policy gets car companies that aren’t producing EVs to subsidize the ones that are.
  - michaelmior 6y ago
    Interesting! I wasn't aware of this credit. How it's structured is fascinating in that they essentially have to pay their competitors for not meeting the quota. (Of course the markets for EV vs ICE is somewhat different, but not disjoint.)
    - elil17 6y ago
      Yeah it’s an awesome system! Similar ideas exist for controlling carbon emissions (like a cap and trade system, where, to oversimplify it, everyone gets an equal amount of “greenhouse gas points” which you can either spend on polluting or sell to others)
      - mamon 6y ago
        Actually, this system is counterproductive, I think. Starting production of EVs costs you money, but it also takes time, and the penalties for not meeting quotas are something you have to pay right now. So, in the end, the money you spend buying "EV credits" is the money taken away from your R&D budget on EVs. You might argue that the company receiving money for "EV credits" would invest them in increasing the production, but that's often not the case - since they have already met their quotas and are off the hook, they are free to simply hand this money out to shareholders in form of a dividend.
JMTQp8lwXL 6y ago
I've seen a great deal of speculative investment in Tesla as of recently. I pray no middle class people will lose their entire net worth, much less in the middle of a crisis.
- jeffbee 6y ago
  Old people on my Nextdoor are asking whether they should buy some TSLA, which was as good a signal as any I've ever seen when the same people were asking if they should maybe get some bitcoins (at $20k each). TSLA like every other US equity right now is supported by retail momentum alone.
  - xnx 6y ago
    TSLA is absolutely the present-day BTC.
    - notJim 6y ago
      I really need to get better at getting into these asset bubbles. I'm too late for Tesla, and it doesn't look like BTC has been going anywhere lately. Anyone got any tips for me?
      - simonebrunozzi 6y ago
        I'm not sure if you're trying to be sarcastic, otherwise, I don't think a straight answer can be satisfactory for you. Also, it might not be the best use of this forum.
      - thebean11 6y ago
        Bitcoin halved recently, things could get interesting soon but who knows.
- rconti 6y ago
  One interesting comment I heard is that Tesla is the biggest company NOT in the S&P 500 (I believe that was the index, at least). So even if Tesla had the exact same retail 'excitement' as, say, Microsoft or Apple or GM, they'd have much wilder fluctuations in stock price because they don't have that massive institutional index fund investment to dampen the swings.
kccqzy 6y ago
Off topic but why is the document written with painful amount of tracking? (By tracking I mean in the typography sense, i.e. letter spacing, not that the document is tracking you.) It almost seems like they don't want people to actually read the document.
- eyesee 6y ago
  I suspect they're not embedding the correct font in the PDF, leading to strange spacing.
  - cozzyd 6y ago
    Indeed, it's using some font named GothamSSm which is not embedded and getting replaced by some random Sans font by your PDF viewer. What idiotic PDF generator doesn't automatically embed non-standard fonts? (apparently Powerpoint...)
- dingaling 6y ago
  That's kerning. Tracking is when you adjust the kerning equally to expand a word to fit a space.
jennyyang 6y ago
Revenues down Year over Year, and yet their stock price is 8x. Profiability increased, but its market cap is larger than Toyota which has over 10x the revenues. This stock is truly one for /r/wallstreetbets.
- danhak 6y ago
  You realize their factory was shut down for much of this period, right? Comparing YOY quarterly figures here is very disingenuous.
  - reducesuffering 6y ago
    Only 2 months out of the year
    - danhak 6y ago
      About half of the quarter under discussion.
  - jennyyang 6y ago
    Their stock price rose 8x. There's nothing in these numbers that justifies this type of meteoric rise exception pure, unadulterated speculation. They wouldn't have even been profitable if they couldn't sell their regulatory credits. How is that justifiable for an 8x YoY increase?
    - sacred_numbers 6y ago
      The potential upside for Tesla is huge. If they can become the Apple of electric cars and if electric cars become standard, they could be worth trillions. The reason their valuation was not in the trillions is because there is a risk that they will go bankrupt, that other companies will take the lead in EVs, or that EVs will not be where the market is headed in the foreseeable future. The reason for the jump in valuation is that those risks are being steadily reduced. EV competition is scarce, Tesla's cash reserves and consistent free cash flow hugely reduce the risk of bankruptcy, and the market is continuing to demonstrate that it wants electric cars (at least Tesla electric cars, that is), even during a pandemic. There is certainly an element of speculation and retail investor FOMO, but if Tesla's institutional investors didn't think this valuation could be justified at all they probably would have sold by now. Time will tell how reasonable the valuation really is, but betting against Tesla has not worked out very well so far.
jt94mf90d 6y ago
infinity squeeze time
xoxoy 6y ago
So many red flags Profit is all regulatory credits, actual auto sales flat to down, accounts receivable balance is now 1.4B or >20% of revenue, interest income is $8M (down -20%) even though global interest rates were cut to near 0 in Q2, R&D and service spending down despite dozens of projects the company claims to be working on.
- css 6y ago
  On a TTM basis, GAAP OI is $1.23 billion against regulatory credits of $1.05 billion. They are actually barely profitable without the credits (though negative in the current quarter). Edit: re receivables, I don't necessary see a problem there - DSO of about 21 days - especially considering they also have all the residential receivables from their solar business.
  - xoxoy 6y ago
    potentially helped by partial shutdowns and furloughs and bonus cuts. they had inventory from Q1 they could sell.
- unixhero 6y ago
  Maybe it's red flags when you make conservative measurements against a traditional industry proxy measurement - and applying classic investment banking logic. However you have got to remember that this is not just another company, it's not just another brand. They've already changed the world, it's all there in their track record.
  - xoxoy 6y ago
    i’m talking specifically about their questionable accounting outside of the product itself.
  - realtalk_sp 6y ago
    They don't have any significant monopolistic advantage and they're operating in a highly price-sensitive, competitive market. My personal theory is that Musk knows this and his real objective is to provoke car manufacturers into competing on electric. From Musk's point of view, the win is likely not Tesla making any significant amount of money for shareholders but instead it driving the whole market towards electric, thereby achieving the "real" objective of lowering emissions. Many of his behaviors over the years suggest this could be the case: publishing a 'master plan', releasing Tesla's patents, noting the stock price was "too high", and sinking all of his PayPal money into SpaceX, Tesla, and Solar City (and then borrowing to pay his rent).
deleted 6y ago
[deleted]
ehsankia 6y ago
I know the domain name is there, but shouldn't the post title contain "Tesla"?
- bobsoap 6y ago
  Seconded. A hint that it links to a PDF would also be welcomed by everyone on a phone.
  - dhritzkiv 6y ago
    Out of curiosity, why is viewing a PDF unwelcome on a mobile device?
    - swrj 6y ago
      Some browsers and apps auto download the pdf.
- Lendal 6y ago
  Unnecessary. Tesla is the only company whose quarterly updates regularly make the front page of Hacker News. For some reason.
  - simonebrunozzi 6y ago
    Google, Microsoft, Amazon, they all somehow make the front page of HN with their quarterly reports. Not just Tesla.
RivieraKid 6y ago
120M net profit and 782M in regulatory credits in 1H 2020.
donor20 6y ago
Wish they would fix their customer service story.
lubujackson 6y ago
TSLA in some ways reminds me of Amazon at the beginning. Way overpriced, but kept reinvesting into new things as it went and the stock price kept going up and profits stayed zero forever while the company kept building itself bigger and bigger. So I can see the bull perspective. However... Car manufacturing is not the same as slinging books online. Profits are consistently thin and Tesla's only edge is in battery tech and being a status symbol. So it is trying to be the Apple of cars but also grow like Amazon. And their aren't breakeven without credits, so it is kind of like if 2004 Amazon was able to reach breakeven only because Barnes & Noble had to pay Amazon for not having a website. Also, I am unconvinced that one car brand will be the "Apple of cars" since there is no ecosystem lock-in and at the end of the day it is a fashion/trend symbol - precisely when unemployment is nuts and the economy is in the shitter. It quickly could become more of a overly flashy negative than cool aspirational thing, kind of a rich-is-bad type of reach that Hummer had with gas-is-bad. Maybe Elon pulls it off, but at this price it is really investing in a future that hasn't been built or even imagined yet.
- agumonkey 6y ago
  is it battery tech only ? I heard they were using non traditional electric motors too (switched reluctance ?) Also note that 'only battery tech' may become extremely important in the post fossil fuel world.
- lazyjones 6y ago
  > Car manufacturing is not the same as slinging books online. Profits are consistently thin Margins in retail shopping used to be consistently very thin, that's not generally the case with cars (think Ferrari...).
- dawnerd 6y ago
  > Tesla's only edge is in battery tech and being a status symbol. You might want to do some research into Tesla if that's all you think they have going for them. Their software, energy generation, and charging infrastructure are also setting them way apart from everyone.
- michalxnet 6y ago
Kareem71 6y ago
I remember Elon at one time claiming that model y demand will outstrip model 3, x, and s combined. It’s getting harder and harder to believe his claims
- jeremiahhs 6y ago
  Well the Model Y has been on sale since March in the middle of a pandemic. The Model 3 has been on sale for 3 years. I think we'll have a better view on Model Y demand in the coming year.
- vardump 6y ago
  Wikipedia about Tesla Model Y on December 24th 2019: "The Tesla Model Y is an upcoming electric compact crossover utility vehicle (CUV) in development by Tesla, Inc.[1] It was unveiled in March 2019[2], with deliveries planned to begin in summer 2020.[3]" They did manage to start production 3-4 months early. But certainly this time can't be indicative of the model's success?
xchaotic 6y ago
Purely anecdotal but we are in the market for a new car when our current lease runs out. We were looking at Tesla and the quality is not there and dealerships means we can’t test etc. The valuation is crazy, VW can literally flip the switch and start producing more e-Golfs etc when the demand is there.
- Crash0v3rid3 6y ago
  But can VW produce batteries at the scale of Tesla? I doubt it.
- andrewxdiamond 6y ago
  If VW could do that, why havent they? Tesla proved there is a market
  - _mog1 6y ago
    Tesla hasn't proved that you can make a reasonable amount of profit compared to your investment when selling to that market. Hell, they haven't showed you can make any profit on that investment, they're still deep in the red. It would take them something like 10+ more years at their current income to even break even. Is it really such a surprise that companies that need to make money aren't dying to get into that market?
    - marvin 6y ago
      Then, suddenly, the day arrives when battery tech has advanced to the point where it's obvious even to casual observers that battery tech is the future. Hell, it's the present by then. We're almost there. Battery tech is still following an exponential decline in price/performance. Problem is, now the rest of the industry is 10 years behind. They were hoping to just buy this tech from their suppliers, but so is everyone else. All profit gone in a bidding war. Making your own requires double-digit billions of investments (OK, plausible) and 10 years lead time. Let's be super charitable and say 5 due to the existence proof and leaky personnel. Now they've got to catch up while their newly equal-sized competitor eats their lunch. Classic innovator's dilemma, and it's as obvious today as it was in 2013. Probably more.
xondono 6y ago
Why is “making most of your money from interest” better than “making most of your money from credits”? If you asked me what’s more likely, for interest rates (to customers) to fall or for emission credits to stop, I know where I’d put my bets Edit: It’s an actual question, not just rethorical
_ph_ 6y ago
Some comments to the results: - Production was very limited in Q2 as the Freemont factory was completely down for quite some time. Getting the delivery count they managed, was a small miracle, of course helped by the ramping up Shanghai factory. So making still a profit is a great result. If the factory does not get closed down in Q3, sale numbers should be quite a bit better. - Yes, they certainly moved all profits they could legally book into Q2 to help the numbers, that is a quite normal practice, the booking rules set clear limits to what is possible. - Tesla won't make huge profits however good the business will be going, as they are investing a lot into growth. They are still extending the Shanghai factory, building the Berlin factory and just announced in the earnings call, that they are starting to build the next factory in Austin, Texas. Tesla is going from 1 factory in 2019 to 2 in 2020 and possible 4 at the end of 2021.
bitxbit 6y ago
Can we be realistic here? I am 100% behind zero emission electric vehicles. However, we are still 10-15 years out from even reaching the necessary infrastructure to support more than 10% market pen. Certain patents will have expired by then. I also despise the fact that Tesla was largely funded by US tax payers and they will likely shift majority of manufacturing abroad in the near future.
- _ph_ 6y ago
  How was Tesla funded by the tax payer at all?
  - RandallBrown 6y ago
    Electric vehicle tax credits?
    - wenc 6y ago
      Well, EV tax credits are subsidies for a "category" -- electric vehicles -- not specific companies. Every EV customer gets them, and their intention is incentivize the transition to electric transportation, so they're working as they should.
      - neximo64 6y ago
        So its not taxpayer funded?
        wenc 6y ago
        It is, but the original complaint was disingenuous.
    - _ph_ 6y ago
      That was not a funding going to the company, only to the customers. It made the cars a bit more affordable, that certainly helped. But it didn't fund the company. Also, they have long expired for Tesla, the only companies benefitting from the tax credits are the competing companies.
Animats 6y ago
OK, they're profitable, and sales are flat to decreasing. Viewed as a mature company, what are they worth?
- 9nGQluzmnq3M 6y ago
  These are not normal times: flat sales during Q2 is quite an achievement when all your competition tanked by ~30%.
  - Animats 6y ago
    The question here is, what's it worth without assuming great future growth? Tesla is in the price range of BMW, in the midrange luxury segment. Assume they stay there. What's Tesla's value?
    - bryanlarsen 6y ago
      > Assume they stay there Hopefully that assumption doesn't hold. Quoting from the earnings call: "Our cars are not affordable enough—we need to fix that. We are making progress in that regard. We need to not go bankrupt, obviously, but we're not trying to be too profitable. One or 2 percent, it's not too crazy. Slightly profitable and maximize growth, making the cars as affordable as possible"
      - Animats 6y ago
        Tesla's price movement has been in the other direction - upward. The Model 3 was originally supposed to sell for $35,000. Now, it's "$39,990 - $56,990".
        reducesuffering 6y ago
        More recently there were 2k cuts on 3 and Y and major cuts on S and X.
        6y ago
russellbeattie 6y ago
Anecdotal story: I registered to buy a Model Y. But then covid hit and I'm now working at home and really have no need for a new car, plus with the economy in freefall, I have no desire to pick up that much debt. Combine this with Musk's threats to leave California, his other crazy rants, and tweets about the red pill, there's zero way I'm going to buy a Tesla any time soon, if ever. I may or may not be representative of Tesla's target customer, but if you go by the Warren Buffet school of investing in what you know, then I would suspect Tesla's immediate future does not look good.
neverlandMan 6y ago
well, and all this is after the ceo said they are overvalued a couple of weeks back!
- xyst 6y ago
  He said that about his company 2 months ago (not weeks). https://www.cnbc.com/2020/05/01/tesla-ceo-elon-musk-says-stock-price-is-too-high-shares-fall.html https://www.cnbc.com/2020/05/01/tesla-ceo-elon-musk-says-sto...
pvelagal 6y ago
Regulatory credits ? I don’t understand the motivation behind them. How do selling and buying these help any emission standards ?
- yyy888sss 6y ago
  It's just a punitive tax on the producers of heavy emitters, with the proceed going to Tesla instead of the government. Tesla is treated very generously as their cars count as emitting 0g Co2, which is not the case unless they are recharged with renewable energy.

Q2 2020 Update

126 points by marc__1 6y ago

Pre Close: - From Bloomberg re Robinhood and TSLA "number of Robinhood accounts holding Tesla shares (in some form) is at an all- time high of 496,890. Tesla is the second-most popular stock on the platform over the last 24 hours, and the 19th-most popular stock over the last 7 days." Looking at: - if profitiable check for amount of regulatory credits that Telsa gets from other automakers, this could be the difference between profitablity and not, though if this is what puts them over them edge then be a bit concerned - Is Texax truck factory happening or not? If so, what kind of tax incentives did they get as these types of tax deals are the first thing that could get cut if reports of Texas', um Texas sized, budget gaps exits, Tulsa is the other option, maybe with the SC ruling Tulsa is native land there could be some weird tax deal there?? - Tesla's capex was cut way back from almost $3B forcats to under $1.3, helps make them look profitiable last year at the expense of that having to be made up this or next year, look for capex to be much higher - Model Y and X and S are only made in Fremont, though Shanghai will start producing the Y soonish, still lots of geographical risk as the pandemic and factory shutdown illustrated, Musk must do better here - Model Y was discounted and its brand new, Model S and X were discounted as well, TSLA really pushing to make their quarter for cars delivered, watch for gross margins to be down but numbers to be very juiced for a large beat Numbers: - Rev $6B vs $5.5B, down from previous highs, but with teh lock down, pretty darn good!! - profit of 50cents per share on a GAAP basis, nice, though credits really juiced this - 4 quarters of profitability, though not always pretty or organic is really nice to see - Net Income was $451M vs ($74M), nice but mostly a factor of major discounting of cars and credit sales - Cash and cash equivalents @ $8.5B, nice!!! - Solar, yawn, 27 MW installed, why even bother at this point? - handed over 90,000 vehicles, different from produced Outcome: - market cap is now $320B, wow!! - stock is flat on day as one would expect with so much vol leading up to announcement. The Post earnings drift traders are probably staying away as you need nerves of steel to trade TSLA earnings:) - Musk is now able to exercise an additional 1.69 million stock options, meaning he would reap a $2.1 billion gain if he exercised and could immediately sell the shares. - S&P 500 here we come, so /r/wallstreetbets and robinhood, congrats you guys did it!!!

itsoktocry 6y ago
>if profitiable check for amount of regulatory credits that Telsa gets from other automakers, this could be the difference between profitablity and not, though if this is what puts them over them edge then be a bit concerned $400MM+ in regulatory credits. GAAP Profit is around $120MM so far in 2020, with almost $800MM in credit sales. Crazy.
ksec 6y ago
>- S&P 500 here we come, so /r/wallstreetbets and robinhood, congrats you guys did it!!! Thanks for the summary. This should have been top comment. My risk appetite tells me not invest on something I dont understand. And I dont understand Tesla's valuation. But from an outsider perspective, this has been fun to watch.
sbahr001 6y ago
I am really surprised how solid their finances are. $320 billion is definitely over-value in term of profit/value ratio. They are starting to be valued as a tech company which is good and bad. It looks that Elon is not valuing Tesla as a tech company in the traditional sense, but a utility/car company. It builds custom tech to improve those services. Their intellectual capital is undervalued in my opinion and may worth more than $100 billion. No car company at this moment, can come close to Tesla, and they are all spending billions, to develop batteries, vehicles, self driving tech, and infrastructure. They are even working together as they can't cover the costs on their own. Imagine Tesla selling their batteries/engines/platform/superchargers to every car company(like an intel for cars). They can sustain their revenue by providing the supercharger network(cloud service) to go with it; with a supercharger network being the new gas station, using clean energy(near zero cost energy). Then add their self-driving platform auto companies can lease.

giacaglia 6y ago

Given their net income is positive, what is the probability that they are added to s&p500?

pruthvishetty 6y ago
High.
marc__1 6y ago
High, because of the Criteria to join the S&P500[0]: - a market cap of $8.2 billion - its headquarters in the U.S. - the value of its market capitalization trade annually at least a quarter-million of its shares trade in each of the previous six months - most of its shares in the public’s hands - at least a year since its initial public offering - the sum of the previous four quarters of earnings must be positive as well as the most recent quarter. [0] https://www.spglobal.com/spdji/en/documents/methodologies/methodology-sp-us-indices.pdf https://www.spglobal.com/spdji/en/documents/methodologies/me...
- deleted 6y ago
  [deleted]
- jfengel 6y ago
  If they are added to S&P 500, does that mean that a bunch of index tracking funds buying it all at once? I would assume that's already been priced in, if so.
  - knrz 6y ago
    It does, but the rebalancing occurs in September I think.
    - hrpnk 6y ago
      A company can issue new shares for the index funds instead of requiring those to buy the shares on the market. Otherwise, with the low free float, such demand would move the price higher.

AgloeDreams 6y ago

Positive financial results, one surprise to be seen here is a massive reduction in model S builds, more than 60% drop-off QoQ Presumably due to COVID, but maybe not?

sbahr001 6y ago
I would argue that the model S/X should be updated for their respective costs; They pretty much sell a 6 year old interior that was "space age" at the time. Since then their have been minor interior/exterior and looks extremely dated as the competition has "caught" up and the cheaper models surpass it. The only main changes to the car have been better battery and performance, the latter doesn't improve the day to day experience of the car. When your spending 100k on a car you expect Mercedes type of luxury. Previously, Tesla didn't have to compete on that because the Model S/X were ahead of its time an proof of concept cars, with the release of Model 3/Y there is no reason to have one, unless you need the additional size and want to have an electric vehicle on principle.
- grecy 6y ago
  > When your spending 100k on a car you expect Mercedes type of luxury This is the old way of thinking, and it illistrates perfectly why the other auto manufacturers have been caught flat footed re EVs. For many decades what you said held true - more money on a car meant a higher quality interior. Now things have changed dramatically, because what we thought of as a "car" has changed so much. You can now spend 100k to get a car that never emits a single toxic chemical while being used. A vehicle that much cheaper to drive and own. A vehicle that requires significantly less maintenance, a vehicle that is silent and less fatiguing to drive, etc. etc. This are all the reasons besides "I got a more luxury interior", and they're the kind of reasons that make an EV compelling.
  - reducesuffering 6y ago
    All those reasons apply to buying a 38k Model 3 instead. Tesla is agreeing with grandparent as they are planning to next-gen the S and X. As a customer, what compelling reason is there to spend on the S and X over the 3 and Y? Sales and production are strongly reflecting that.

itsoktocry 6y ago

The difference in the narrative versus the financial data is stark: Quarterly revenue has not shown any growth for nearly 2 years, despite introducing more models and expanding global deliveries. Their sales of regulatory credits this year is greater than all of the net income ever earned in their entire history.

nickik 6y ago
When almost ever other car company is burning money, sustaining massive investment in multiple new massive factories, launching new products, and producing cars with pretty good margin and not losing money is an pretty big accomplishment. Its not that long ago people were arguing even a small crisis would wipe out Tesla.
- itsoktocry 6y ago
  >producing cars with pretty good margin and not losing money is an pretty big accomplishment. If you back out the regulatory credits they've lost money on every car they've ever sold, for almost 20 years. Where do you get "good margins" from? This is an example of narrative versus financial data.
  - SEJeff 6y ago
    Tesla's first car was the Roadster, and it was released in 2008. How do you get "almost 20 years" when the first car they released was 12 years ago? Tesla was founded in 2003, but even that is not 20 years.
    - deleted 6y ago
      [deleted]
  - nickik 6y ago
    The margins on the car are actually very good, this is evident in the official data and confirmed by expert breakdowns. They don't make money because they are investing lots of money all the time. People seem to miss that they only launched their first large production cars a few years ago. Its insanely difficult to start a car company and to scale it to the level Tesla is now with a product that basically nobody else can do profitable is a gigantic achievement. They are currently building 3 huge new factories.

samfisher83 6y ago

What are regulatory credits? I thought the 7500 credit ran out?

elil17 6y ago
This is separate from the consumer EV tax credit. Every car manufacturer must produce a certain percentage of electric cars. If their actual EV sales aren’t enough to cover that requirement, they can purchase “EV credits” from companies that exceeded their regulatory requirements to avoid a fine. Essentially this policy gets car companies that aren’t producing EVs to subsidize the ones that are.
- michaelmior 6y ago
  Interesting! I wasn't aware of this credit. How it's structured is fascinating in that they essentially have to pay their competitors for not meeting the quota. (Of course the markets for EV vs ICE is somewhat different, but not disjoint.)
  - elil17 6y ago
    Yeah it’s an awesome system! Similar ideas exist for controlling carbon emissions (like a cap and trade system, where, to oversimplify it, everyone gets an equal amount of “greenhouse gas points” which you can either spend on polluting or sell to others)
    - mamon 6y ago
      Actually, this system is counterproductive, I think. Starting production of EVs costs you money, but it also takes time, and the penalties for not meeting quotas are something you have to pay right now. So, in the end, the money you spend buying "EV credits" is the money taken away from your R&D budget on EVs. You might argue that the company receiving money for "EV credits" would invest them in increasing the production, but that's often not the case - since they have already met their quotas and are off the hook, they are free to simply hand this money out to shareholders in form of a dividend.

JMTQp8lwXL 6y ago

I've seen a great deal of speculative investment in Tesla as of recently. I pray no middle class people will lose their entire net worth, much less in the middle of a crisis.

jeffbee 6y ago
Old people on my Nextdoor are asking whether they should buy some TSLA, which was as good a signal as any I've ever seen when the same people were asking if they should maybe get some bitcoins (at $20k each). TSLA like every other US equity right now is supported by retail momentum alone.
- xnx 6y ago
  TSLA is absolutely the present-day BTC.
  - notJim 6y ago
    I really need to get better at getting into these asset bubbles. I'm too late for Tesla, and it doesn't look like BTC has been going anywhere lately. Anyone got any tips for me?
    - simonebrunozzi 6y ago
      I'm not sure if you're trying to be sarcastic, otherwise, I don't think a straight answer can be satisfactory for you. Also, it might not be the best use of this forum.
    - thebean11 6y ago
      Bitcoin halved recently, things could get interesting soon but who knows.
rconti 6y ago
One interesting comment I heard is that Tesla is the biggest company NOT in the S&P 500 (I believe that was the index, at least). So even if Tesla had the exact same retail 'excitement' as, say, Microsoft or Apple or GM, they'd have much wilder fluctuations in stock price because they don't have that massive institutional index fund investment to dampen the swings.

kccqzy 6y ago

Off topic but why is the document written with painful amount of tracking? (By tracking I mean in the typography sense, i.e. letter spacing, not that the document is tracking you.) It almost seems like they don't want people to actually read the document.

eyesee 6y ago
I suspect they're not embedding the correct font in the PDF, leading to strange spacing.
- cozzyd 6y ago
  Indeed, it's using some font named GothamSSm which is not embedded and getting replaced by some random Sans font by your PDF viewer. What idiotic PDF generator doesn't automatically embed non-standard fonts? (apparently Powerpoint...)
dingaling 6y ago
That's kerning. Tracking is when you adjust the kerning equally to expand a word to fit a space.

jennyyang 6y ago

Revenues down Year over Year, and yet their stock price is 8x. Profiability increased, but its market cap is larger than Toyota which has over 10x the revenues. This stock is truly one for /r/wallstreetbets.

danhak 6y ago
You realize their factory was shut down for much of this period, right? Comparing YOY quarterly figures here is very disingenuous.
- reducesuffering 6y ago
  Only 2 months out of the year
  - danhak 6y ago
    About half of the quarter under discussion.
- jennyyang 6y ago
  Their stock price rose 8x. There's nothing in these numbers that justifies this type of meteoric rise exception pure, unadulterated speculation. They wouldn't have even been profitable if they couldn't sell their regulatory credits. How is that justifiable for an 8x YoY increase?
  - sacred_numbers 6y ago
    The potential upside for Tesla is huge. If they can become the Apple of electric cars and if electric cars become standard, they could be worth trillions. The reason their valuation was not in the trillions is because there is a risk that they will go bankrupt, that other companies will take the lead in EVs, or that EVs will not be where the market is headed in the foreseeable future. The reason for the jump in valuation is that those risks are being steadily reduced. EV competition is scarce, Tesla's cash reserves and consistent free cash flow hugely reduce the risk of bankruptcy, and the market is continuing to demonstrate that it wants electric cars (at least Tesla electric cars, that is), even during a pandemic. There is certainly an element of speculation and retail investor FOMO, but if Tesla's institutional investors didn't think this valuation could be justified at all they probably would have sold by now. Time will tell how reasonable the valuation really is, but betting against Tesla has not worked out very well so far.

jt94mf90d 6y ago

infinity squeeze time

xoxoy 6y ago

So many red flags Profit is all regulatory credits, actual auto sales flat to down, accounts receivable balance is now 1.4B or >20% of revenue, interest income is $8M (down -20%) even though global interest rates were cut to near 0 in Q2, R&D and service spending down despite dozens of projects the company claims to be working on.

css 6y ago
On a TTM basis, GAAP OI is $1.23 billion against regulatory credits of $1.05 billion. They are actually barely profitable without the credits (though negative in the current quarter). Edit: re receivables, I don't necessary see a problem there - DSO of about 21 days - especially considering they also have all the residential receivables from their solar business.
- xoxoy 6y ago
  potentially helped by partial shutdowns and furloughs and bonus cuts. they had inventory from Q1 they could sell.
unixhero 6y ago
Maybe it's red flags when you make conservative measurements against a traditional industry proxy measurement - and applying classic investment banking logic. However you have got to remember that this is not just another company, it's not just another brand. They've already changed the world, it's all there in their track record.
- xoxoy 6y ago
  i’m talking specifically about their questionable accounting outside of the product itself.
- realtalk_sp 6y ago
  They don't have any significant monopolistic advantage and they're operating in a highly price-sensitive, competitive market. My personal theory is that Musk knows this and his real objective is to provoke car manufacturers into competing on electric. From Musk's point of view, the win is likely not Tesla making any significant amount of money for shareholders but instead it driving the whole market towards electric, thereby achieving the "real" objective of lowering emissions. Many of his behaviors over the years suggest this could be the case: publishing a 'master plan', releasing Tesla's patents, noting the stock price was "too high", and sinking all of his PayPal money into SpaceX, Tesla, and Solar City (and then borrowing to pay his rent).

deleted 6y ago

[deleted]

ehsankia 6y ago

I know the domain name is there, but shouldn't the post title contain "Tesla"?

bobsoap 6y ago
Seconded. A hint that it links to a PDF would also be welcomed by everyone on a phone.
- dhritzkiv 6y ago
  Out of curiosity, why is viewing a PDF unwelcome on a mobile device?
  - swrj 6y ago
    Some browsers and apps auto download the pdf.
Lendal 6y ago
Unnecessary. Tesla is the only company whose quarterly updates regularly make the front page of Hacker News. For some reason.
- simonebrunozzi 6y ago
  Google, Microsoft, Amazon, they all somehow make the front page of HN with their quarterly reports. Not just Tesla.

RivieraKid 6y ago

120M net profit and 782M in regulatory credits in 1H 2020.

donor20 6y ago

Wish they would fix their customer service story.

lubujackson 6y ago

TSLA in some ways reminds me of Amazon at the beginning. Way overpriced, but kept reinvesting into new things as it went and the stock price kept going up and profits stayed zero forever while the company kept building itself bigger and bigger. So I can see the bull perspective. However... Car manufacturing is not the same as slinging books online. Profits are consistently thin and Tesla's only edge is in battery tech and being a status symbol. So it is trying to be the Apple of cars but also grow like Amazon. And their aren't breakeven without credits, so it is kind of like if 2004 Amazon was able to reach breakeven only because Barnes & Noble had to pay Amazon for not having a website. Also, I am unconvinced that one car brand will be the "Apple of cars" since there is no ecosystem lock-in and at the end of the day it is a fashion/trend symbol - precisely when unemployment is nuts and the economy is in the shitter. It quickly could become more of a overly flashy negative than cool aspirational thing, kind of a rich-is-bad type of reach that Hummer had with gas-is-bad. Maybe Elon pulls it off, but at this price it is really investing in a future that hasn't been built or even imagined yet.

agumonkey 6y ago
is it battery tech only ? I heard they were using non traditional electric motors too (switched reluctance ?) Also note that 'only battery tech' may become extremely important in the post fossil fuel world.
lazyjones 6y ago
> Car manufacturing is not the same as slinging books online. Profits are consistently thin Margins in retail shopping used to be consistently very thin, that's not generally the case with cars (think Ferrari...).
dawnerd 6y ago
> Tesla's only edge is in battery tech and being a status symbol. You might want to do some research into Tesla if that's all you think they have going for them. Their software, energy generation, and charging infrastructure are also setting them way apart from everyone.
michalxnet 6y ago

Kareem71 6y ago

I remember Elon at one time claiming that model y demand will outstrip model 3, x, and s combined. It’s getting harder and harder to believe his claims

jeremiahhs 6y ago
Well the Model Y has been on sale since March in the middle of a pandemic. The Model 3 has been on sale for 3 years. I think we'll have a better view on Model Y demand in the coming year.
vardump 6y ago
Wikipedia about Tesla Model Y on December 24th 2019: "The Tesla Model Y is an upcoming electric compact crossover utility vehicle (CUV) in development by Tesla, Inc.[1] It was unveiled in March 2019[2], with deliveries planned to begin in summer 2020.[3]" They did manage to start production 3-4 months early. But certainly this time can't be indicative of the model's success?

xchaotic 6y ago

Purely anecdotal but we are in the market for a new car when our current lease runs out. We were looking at Tesla and the quality is not there and dealerships means we can’t test etc. The valuation is crazy, VW can literally flip the switch and start producing more e-Golfs etc when the demand is there.

Crash0v3rid3 6y ago
But can VW produce batteries at the scale of Tesla? I doubt it.
andrewxdiamond 6y ago
If VW could do that, why havent they? Tesla proved there is a market
- _mog1 6y ago
  Tesla hasn't proved that you can make a reasonable amount of profit compared to your investment when selling to that market. Hell, they haven't showed you can make any profit on that investment, they're still deep in the red. It would take them something like 10+ more years at their current income to even break even. Is it really such a surprise that companies that need to make money aren't dying to get into that market?
  - marvin 6y ago
    Then, suddenly, the day arrives when battery tech has advanced to the point where it's obvious even to casual observers that battery tech is the future. Hell, it's the present by then. We're almost there. Battery tech is still following an exponential decline in price/performance. Problem is, now the rest of the industry is 10 years behind. They were hoping to just buy this tech from their suppliers, but so is everyone else. All profit gone in a bidding war. Making your own requires double-digit billions of investments (OK, plausible) and 10 years lead time. Let's be super charitable and say 5 due to the existence proof and leaky personnel. Now they've got to catch up while their newly equal-sized competitor eats their lunch. Classic innovator's dilemma, and it's as obvious today as it was in 2013. Probably more.

xondono 6y ago

Why is “making most of your money from interest” better than “making most of your money from credits”? If you asked me what’s more likely, for interest rates (to customers) to fall or for emission credits to stop, I know where I’d put my bets Edit: It’s an actual question, not just rethorical

_ph_ 6y ago

Some comments to the results: - Production was very limited in Q2 as the Freemont factory was completely down for quite some time. Getting the delivery count they managed, was a small miracle, of course helped by the ramping up Shanghai factory. So making still a profit is a great result. If the factory does not get closed down in Q3, sale numbers should be quite a bit better. - Yes, they certainly moved all profits they could legally book into Q2 to help the numbers, that is a quite normal practice, the booking rules set clear limits to what is possible. - Tesla won't make huge profits however good the business will be going, as they are investing a lot into growth. They are still extending the Shanghai factory, building the Berlin factory and just announced in the earnings call, that they are starting to build the next factory in Austin, Texas. Tesla is going from 1 factory in 2019 to 2 in 2020 and possible 4 at the end of 2021.

bitxbit 6y ago

Can we be realistic here? I am 100% behind zero emission electric vehicles. However, we are still 10-15 years out from even reaching the necessary infrastructure to support more than 10% market pen. Certain patents will have expired by then. I also despise the fact that Tesla was largely funded by US tax payers and they will likely shift majority of manufacturing abroad in the near future.

_ph_ 6y ago
How was Tesla funded by the tax payer at all?
- RandallBrown 6y ago
  Electric vehicle tax credits?
  - wenc 6y ago
    Well, EV tax credits are subsidies for a "category" -- electric vehicles -- not specific companies. Every EV customer gets them, and their intention is incentivize the transition to electric transportation, so they're working as they should.
    - neximo64 6y ago
      So its not taxpayer funded?
      - wenc 6y ago
        It is, but the original complaint was disingenuous.
  - _ph_ 6y ago
    That was not a funding going to the company, only to the customers. It made the cars a bit more affordable, that certainly helped. But it didn't fund the company. Also, they have long expired for Tesla, the only companies benefitting from the tax credits are the competing companies.

Animats 6y ago

OK, they're profitable, and sales are flat to decreasing. Viewed as a mature company, what are they worth?

9nGQluzmnq3M 6y ago
These are not normal times: flat sales during Q2 is quite an achievement when all your competition tanked by ~30%.
- Animats 6y ago
  The question here is, what's it worth without assuming great future growth? Tesla is in the price range of BMW, in the midrange luxury segment. Assume they stay there. What's Tesla's value?
  - bryanlarsen 6y ago
    > Assume they stay there Hopefully that assumption doesn't hold. Quoting from the earnings call: "Our cars are not affordable enough—we need to fix that. We are making progress in that regard. We need to not go bankrupt, obviously, but we're not trying to be too profitable. One or 2 percent, it's not too crazy. Slightly profitable and maximize growth, making the cars as affordable as possible"
    - Animats 6y ago
      Tesla's price movement has been in the other direction - upward. The Model 3 was originally supposed to sell for $35,000. Now, it's "$39,990 - $56,990".
      - reducesuffering 6y ago
        More recently there were 2k cuts on 3 and Y and major cuts on S and X.
        6y ago

russellbeattie 6y ago

Anecdotal story: I registered to buy a Model Y. But then covid hit and I'm now working at home and really have no need for a new car, plus with the economy in freefall, I have no desire to pick up that much debt. Combine this with Musk's threats to leave California, his other crazy rants, and tweets about the red pill, there's zero way I'm going to buy a Tesla any time soon, if ever. I may or may not be representative of Tesla's target customer, but if you go by the Warren Buffet school of investing in what you know, then I would suspect Tesla's immediate future does not look good.

neverlandMan 6y ago

well, and all this is after the ceo said they are overvalued a couple of weeks back!

xyst 6y ago
He said that about his company 2 months ago (not weeks). https://www.cnbc.com/2020/05/01/tesla-ceo-elon-musk-says-stock-price-is-too-high-shares-fall.html https://www.cnbc.com/2020/05/01/tesla-ceo-elon-musk-says-sto...

pvelagal 6y ago

Regulatory credits ? I don’t understand the motivation behind them. How do selling and buying these help any emission standards ?

yyy888sss 6y ago
It's just a punitive tax on the producers of heavy emitters, with the proceed going to Tesla instead of the government. Tesla is treated very generously as their cars count as emitting 0g Co2, which is not the case unless they are recharged with renewable energy.