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Another quarter, another loss ex-regulatory credits. I think that's 5 in a row?

alexandros 6y ago
So we're taking out regulatory credits but leaving in the CEO award, right? I guess if you cherry pick your one time items you can make any number appear.
- brianwawok 6y ago
  This is why there is GAP
- itsoktocry 6y ago
  This company is worth a trillion dollars, is barely growing, makes no money and is starting to lose share in some markets. I don't think I'm the one that has to do the cherry picking.
bryanlarsen 6y ago
It's fair to exclude vulnerable non-recurring revenue such as regulatory credits to get a better picture of a companies health. But if you do that, you also need to exclude vulnerable non-recurring expense as well -- aka the stock-based compensation which has no impact on cash and will disappear if the company stops growing.
- itsoktocry 6y ago
  I'll bet you it will be a long time before stock based compensation slows down. It's part of the game.
  - bryanlarsen 6y ago
    Elon gets $0 without revenue growth. https://electrek.co/2020/05/28/tesla-elon-musk-first-tranche-compensation-plan-worth-million/ https://electrek.co/2020/05/28/tesla-elon-musk-first-tranche...
    - itsoktocry 6y ago
      It's mostly market cap based, says so right in the article you linked.
      - bryanlarsen 6y ago
        He's already hit the market cap goal for the 12th milestone. It's the EBITDA goal that's holding him back from collecting all of them.
- itsoktocry 6y ago
  FYI, apparently the adjusted EPS number adds back stock comp, but doesn't remove the reg credits.
viscanti 6y ago
Would we expect Tesla to optimize for profitability ex-regulatory credits? It seems like they know what they'll get from that, and they invest in building out new gigafactories based on the total net income they have, or they pass the savings onto customers (which leads to more sales). What makes ex-regulatory credit profitability a metric that anyone should care about?
- itsoktocry 6y ago
  >and they invest in building out new gigafactories based on the total net income they have Oh look, another person making the claim capex comes off top line income.
  - dhnajsjdnd 6y ago
    I didn’t interpret the comment that way. If a company is trying to be cash flow neutral, they could (very roughly) consider the net income to be the amount left over for capex.
    - itsoktocry 6y ago
      Is that how you imagine billion dollar automotive factories get built? Tesla saves up some money and buys the parts as they have the cash?
      - dhnajsjdnd 6y ago
        Of course not, finance people make a bunch of spreadsheets and then the factories poof into existence. The regulatory credits factor into those spreadsheets.
  - viscanti 6y ago
    Tesla just announced they were profitable for the full year of 2020. What's the compliant about top line income? They make money from sales and from credits because governments want to incentivize the sale of electric cars. My point is that the relevant thing seems to be unit economics. They seem to make a profit on most models, and the ones that aren't profitable at the point of sale, seem to have the price of the credits factored in. What value would anyone get from looking at profitability ex-credits?
hntrader 6y ago
Well their competitors are benefiting from unpriced externalities. I could also say "Another quarter, another profit for Toyota ex-externalities". They're also going to optimise their pricing around the existence of credits. The pricing that maximises the equation margin*volume will differ with and without credits. Ideally we do away with the credits and get straight to the point by taxing carbon directly.

So we're taking out regulatory credits but leaving in the CEO award, right? I guess if you cherry pick your one time items you can make any number appear.

brianwawok 6y ago
This is why there is GAP
itsoktocry 6y ago
This company is worth a trillion dollars, is barely growing, makes no money and is starting to lose share in some markets. I don't think I'm the one that has to do the cherry picking.

bryanlarsen 6y ago

It's fair to exclude vulnerable non-recurring revenue such as regulatory credits to get a better picture of a companies health. But if you do that, you also need to exclude vulnerable non-recurring expense as well -- aka the stock-based compensation which has no impact on cash and will disappear if the company stops growing.

itsoktocry 6y ago
I'll bet you it will be a long time before stock based compensation slows down. It's part of the game.
- bryanlarsen 6y ago
  Elon gets $0 without revenue growth. https://electrek.co/2020/05/28/tesla-elon-musk-first-tranche-compensation-plan-worth-million/ https://electrek.co/2020/05/28/tesla-elon-musk-first-tranche...
  - itsoktocry 6y ago
    It's mostly market cap based, says so right in the article you linked.
    - bryanlarsen 6y ago
      He's already hit the market cap goal for the 12th milestone. It's the EBITDA goal that's holding him back from collecting all of them.
itsoktocry 6y ago
FYI, apparently the adjusted EPS number adds back stock comp, but doesn't remove the reg credits.

viscanti 6y ago

Would we expect Tesla to optimize for profitability ex-regulatory credits? It seems like they know what they'll get from that, and they invest in building out new gigafactories based on the total net income they have, or they pass the savings onto customers (which leads to more sales). What makes ex-regulatory credit profitability a metric that anyone should care about?

itsoktocry 6y ago
>and they invest in building out new gigafactories based on the total net income they have Oh look, another person making the claim capex comes off top line income.
- dhnajsjdnd 6y ago
  I didn’t interpret the comment that way. If a company is trying to be cash flow neutral, they could (very roughly) consider the net income to be the amount left over for capex.
  - itsoktocry 6y ago
    Is that how you imagine billion dollar automotive factories get built? Tesla saves up some money and buys the parts as they have the cash?
    - dhnajsjdnd 6y ago
      Of course not, finance people make a bunch of spreadsheets and then the factories poof into existence. The regulatory credits factor into those spreadsheets.
- viscanti 6y ago
  Tesla just announced they were profitable for the full year of 2020. What's the compliant about top line income? They make money from sales and from credits because governments want to incentivize the sale of electric cars. My point is that the relevant thing seems to be unit economics. They seem to make a profit on most models, and the ones that aren't profitable at the point of sale, seem to have the price of the credits factored in. What value would anyone get from looking at profitability ex-credits?

hntrader 6y ago

Well their competitors are benefiting from unpriced externalities. I could also say "Another quarter, another profit for Toyota ex-externalities". They're also going to optimise their pricing around the existence of credits. The pricing that maximises the equation margin*volume will differ with and without credits. Ideally we do away with the credits and get straight to the point by taxing carbon directly.