Tesla reports great Q3 results, expects to be cash flow positive by Q4

http://www.engadget.com/2012/11/05/tesla-q3-2012-earnings/

by filipemonte • 14 years ago

147 40 14 years ago

Hopefully their financials continue to be, if not strong, at least good enough to support the business. They seem to have good leadership and great ideas about how car transportation and the industry needs to change.

hayksaakian• 14 years ago

Great news.

Its interesting how in some political ads I've been seeing, a politician is 'called out' for supporting funding for companies like Tesla specifically.

redwood2• 14 years ago

There's this idea floating around that governments shouldn't support businesses. I guess there is nuance in that some might say: government should support business sectors, but not specifics businesses over others.

Anyway it's an odd argument when we look at the history of the country where governments and specific companies often worked hand in hand and continue to do so in so many areas.

Many argue that the American government ought to be more aggressive about being pro-business, as our friends abroad are. E.g. if the Taiwanese, Israelis, Chinese, etc have very strong government-private partnerships (e.g. subsidies for engineering jobs, or green-lighting through regulatory processes, or access to cheap capital) then the US competitors have trouble competing. What I find so odd is the same camp that often says the US needs to be more pro-business, is often, as you describe, against government support of American business!

twoodfin• 14 years ago

There's a difference between being pro-business and pro-market.

Historically, industrial policy doesn't have a terrific track record.

dkhenry4• 14 years ago

Just because other countries are corruptly sponsoring businesses to line the pockets of politicians doesn't mean we should be doing that in America. There needs to be an ideological line drawn that says we will _not_ pick winners in a market, and we will _not_ protect failing businesses. That means large and small companies get the same levels of "support" from the government, none. Once you stop doing that you end up with a fascist co-mingling of government and industry ( kinda like we have now )

orangecat• 14 years ago

I guess there is nuance in that some might say: government should support business sectors, but not specifics businesses over others.

And I wouldn't even agree with that. We've seen what happens when government decides to support Hollywood.

redwood2• 14 years ago

Maybe it's also worth noting that many Americans are threatened by the success of Tesla, and they happen to reside in swing states.

Ultimately Tesla, if it really does continue to grow, will need to build factories in the traditional manufacturing states if it wants to gain the political traction the automotive sector enjoys.

tocomment2• 14 years ago

Why's the stock going down so far today?

cryptoz• 14 years ago

Well it was up almost 9% yesterday. Today's down is probably just a calming down of the large increase yesterday (but I don't know, I'm just making that up).

tocomment2• 14 years ago

That seems to happen a lot to stocks after a large daily increase or decrease (it reverts somewhat the next day)

Has anyone investigated that as an investing strategy?

codex• 14 years ago

I don't understand why Tesla's losses keep increasing; now they're losing $33M a month, up from $20M a month a year ago and roughtly the same as last quarter. That with $50M in revenue this quarter and actual shipping product. Can someone explain? Are they still purchasing capital equipment? Are their overheads that high?

That said, $30M a month is not that many cars. If they can sell them, and losses don't increase as a function of sales, which seems to be the case now, they will eventually be in good shape.

EDIT: TL;DR: This quarter they lost the same amount as last quarter but sold 25 million more in cars. That means for every additional dollar in car they sold over last quarter, they lost that dollar. Not exactly scalable but hopefully temporary.

thematt• 14 years ago

Probably, all those new charging stations come to mind.

vitobcn• 14 years ago

Tesla refers to short term costs associated with the production ramp.

Their statement is available at: http://ir.teslamotors.com/secfiling.cfm?filingID=1193125-12-...

"The third quarter was a fundamental turning point for Tesla as we successfully transitioned to a mass production car company, growing from manufacturing 5 cars per week at the beginning of the quarter to 100 cars per week by the end. That rate has doubled since last month and is now at over 200 cars per week or 10,000 cars per year, which is at the critical threshold needed for Tesla to generate positive operating cash flow. One month from now, we expect Tesla to double production again and achieve the target rate of 400 cars per week or 20,000 per year. Despite many short term costs associated with the ramp, Tesla nonetheless expects to get approximately halfway to the 25% gross margin target by end of year."

edit: until they are not producing at least 200 cars / week, the operating cost of their manufacturing line is actually larger than the money they make from those cars produced. So, based on that logic Tesla should be losing money but less than in the past. However, in this quarter they went from manufacturing 5 cars/week to 100, which is something you can probably only do by revamping your operations (e.g. acquire new machinery, hire new people, etc.) Therefore, you have to incur a cost now in order to get the benefits in the future.

mtgx• 14 years ago

They're going to ship a lot more cars.

timdorr• 14 years ago

Right now they are building the Signature series cars. These are the first 1000 cars. The reservations for these cars involved a $40k payment up front, in some cases up to 3 years ago. General production cars only required a $5k payment up front. As a result, they are only capturing ~$50k per car, versus ~$85k once GP cars start rolling off the line.

In addition, they've been ramping up production (they're roughly halfway to their target 400/wk goal), and that involves overhead like training new staff and building out an operations team. They should get to full production capacity at the end of the month, but they've already hired those extra workers and they're going to burn through cash while they get up to speed.

jcampbell1• 14 years ago

> As a result, they are only capturing ~$50k per car, versus ~$85k once GP cars start rolling off the line.

That is not how GAAP accounting works. You record revenue when you finish building the car and it leaves the factory gate, not when you accept a deposit.

xutopia• 14 years ago

If you're scaling up production this is common. You invest a lot in the ability to produce something you can sell. It makes sense to have a loss while you ramp up. It's an investment.

xoail3• 14 years ago

I loaded few hundred shares of TSLA in my portfolio only because I love the innovation this company has to offer. I would normally not invest in a company that has high uncertainty like Tesla but something about the company and Elon Musk made me own a piece of it. I am not sure if it was a good investment, but I am happy to be a part of it.

filipemonte• 14 years ago

You will not regret, if you analyze her companies you will see that he transform every market he worked. Paypal is still (my opinion) the best online payment system, space x is the first private company to explore the space and already has a lot of success, tesla is only starting but i think everyone will need and want a eletric car with free charges all over the US.

xoail3• 14 years ago

Yes, I agree that Elon would likely take the company to profitability but it will be interesting to see if there is any money to be made by stock owners of today when Tesla hits profitability tomorrow.

martythemaniak• 14 years ago

It's not often that us investing plebs can get in and bet on people like Musk fairly early on.

I did the same thing about a year ago and I'm still happy that I did, despite the stock not moving over the past year. I do believe Tesla can become a major car manufacturer during the transition to electric cars, since this period will likely be fatal to some of the weaker legacy companies.

I also realized that I may have purchased a ticket to Mars. If Musk's plans for both Tesla and SpaceX pan out, my Telsa shares will hopefully be worth as much as a trip to Mars in 30-35 years :)

xoail3• 14 years ago

I agree... and I'd be happy to see Tesla really bring innovation in automobile industry not just in electric car segment. But I also fear it being acquired by behemoths like GM or Toyota, that would just kill all the innovation.

Tesla reports great Q3 results, expects to be cash flow positive by Q4

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