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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
by 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 agoOn 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 agopotentially helped by partial shutdowns and furloughs and bonus cuts. they had inventory from Q1 they could sell.
- unixhero 6y agoMaybe 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 agoi’m talking specifically about their questionable accounting outside of the product itself.
- realtalk_sp 6y agoThey 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).
- jeremiahhs 6y agoMusk's only compensation for Tesla is related to share price. He is therefore doing everything he can to take a large market share from the incumbents - they have had 8 years to respond to the Model S, and have done nothing.
- Already__Taken 6y agoI'm pretty sure musk had literally said this is not your theory. that's why there was there patent stunt. It not some plot rather being the change you want to see, a even if Tesla collapses they moved the EV needle.
- realtalk_sp 6y agoI can assure you that Musk has at no point intimated that Tesla is not a worthy investment and that he's not interested in profit maximization. He has only ever hinted at this peripherally, as described.
- unixhero 6y agoYes, this is exactly my point. Thanks.
- _ph_ 6y agoAuto sales are down because their main factory has been closed down for quite some part of Q2. That they don't show huge losses as a consequence is outright amazing and a very good sign.
- ShamelessC 6y agoNot a finance person, so forgive my ignorance, but why is it "bad" that their profits come from credits? Considering they're specifically in the EV market and will continue to receive those sorts of credits so long as the policies remain in place, isn't this a totally valid way to make profits for them?