Damn I should have known that. You hear so many deride Tesla over and over I internalized the “they were profitable for one damn quarter” and took it as fact.
In terms of being profitable or not a quarter, can't you use accounting techniques to twist this? I know that you can play off assets that still need to be paid as income. Or is the meaning always precise?
For example, the first two don't say much; the third is much more significant and probably difficult to fake.
Personally, I think the most important is whether they can follow their game plan: make a lot of debt for car n, pay all off plus make a little; restart for car n+1. Also, n+1 should sell more units than n.
It's very interesting to read back over their 2018 Q4 report. They knew that starting up international deliveries would have a significant impact on recognizing revenue on all the vehicles they were able to build, whereas selling locally they can count on selling them pretty much as they came off the line;
> While the number of Model 3 vehicles produced should increase sequentially in Q1, deliveries in North America during Q1 will be lower
than the prior quarter as we start delivering cars in Europe and China for the first time. As a result of the start of Model 3 expansion into
Europe and China, deliveries will be lower than production by about 10,000 units due to vehicle transit times to these markets.
What actually happened was that production rate fell by ~10,000 from 86.5k to 77.1k and they also had deliveries fall behind production by 15,000 instead of their expected 10k;
> In Q4 2018, Tesla produced a total of 86,555 vehicles, and delivered 90,700 vehicles. In Q1 2019, Tesla produced 77,100 vehicles and delivered 63,000 .
I'd have to research the cause of the production drop, but that combined with a larger than expected delivery lag (compared to the prior quarter where they actually over-delivered vs. their production rate) is why they had such a tremendous loss. On top of all that I'm pretty sure gross margins also fell, and the S/X/3 mix became significantly more 3 dominant as the tax credit dropped.
So while I would not dispute that there are tricks that can be pulled, mostly in this case that would come down to the level of CapEx, which for Tesla is now below their depreciation. That's a metric which typically shows a slowing growth company, but in the case of Tesla could just be more reflective of how wasteful their spending actually was in the past (e.g. trying to fully automate production al la "alien dreadnought" and failing).
But in the case of Q4 2018 vs. Q1 2019 really what happened is they had significant issues with production, deliveries, and margins all at once driving down revenue well past anything they could correct by controlling spending.
Not to carry on about it, but any company can decide how much they want to invest in future growth, and if they will raise money to finance that, or if they will constrain their expenses based on their revenue and margins. That's not financial engineering or an accounting trick, that's just basic risk management and calibrating your spending based on your growth opportunity versus your cost of capital.
What we've seen in 2019, I think, is a focus on aligning the company for profit before the next push. I would not expect Tesla to have increasingly large profits each quarter, because it would be strange for them to sit on an increasing cash hoard ($5B+) when they have so many good ideas on how to spend it. Namely, building more factories for Model 3 & Y, getting into battery cell production, and whole new lines needed for the upcoming truck, and Semi production.
You sounds fairly informed about the financials, and that's appreciated. Still:
>What we've seen in 2019, I think, is a focus on aligning the company for profit before the next push.
They are not profitable. They achieved profitability this quarter, but have lost money every year for their entire existence. Is this different from Q3'18?
>because it would be strange for them to sit on an increasing cash hoard ($5B+)
I'm not sure they have a "cash hoard" for any longer than the 10 minutes of their quarterly report. Drawing on debt debt to increase cash balance doesn't affect the balance sheet.
>Namely, building more factories for Model 3 & Y
Where did building more factories, and staffing them, show up in the financial reports? How can all of the labour and capital expenses stay the same (or fall) while this occurs? It's confusing that a company can essentially double its productive capacity without it being seen in the numbers. Can you shed light on that?
Despite what some of the conspiracy theorists on this site say, I may be...anti-Tesla? But only because I think it's such a compelling story. I don't short it (I don't short anything), and I don't talk about it outside of this site (where I talk about it too much). I really don't get it: the financials are a mess, Elon is, imho, a jerk, and yet...
