Earnings Call 2018 Q2 (Aug 1, 2018) thread

Bokonon

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#2
Q2 Letter is out... Model 3 margins are already positive! ("But...but...but.. they lose money on every car!") :tearsofjoy:
  • Q2 Automotive gross margin increased to 20.6% GAAP and 21.0% non-GAAP
  • Model 3 gross margin turned slightly positive in Q2, expecting roughly 15% in Q3
  • Expecting to produce 50-55k Model 3s in Q3; deliveries should exceed that
  • Major cost restructuring executed in Q2
  • $2.2B of cash and cash equivalents at Q2-end, expected to grow in Q3 and Q4
  • Capex projection in 2018 adjusted to <$2.5B
 

PNWmisty

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#3
Q2 Letter is out... Model 3 margins are already positive! ("But...but...but.. they lose money on every car!") :tearsofjoy:
  • Q2 Automotive gross margin increased to 20.6% GAAP and 21.0% non-GAAP
  • Model 3 gross margin turned slightly positive in Q2, expecting roughly 15% in Q3
  • Expecting to produce 50-55k Model 3s in Q3; deliveries should exceed that
  • Major cost restructuring executed in Q2
  • $2.2B of cash and cash equivalents at Q2-end, expected to grow in Q3 and Q4
  • Capex projection in 2018 adjusted to <$2.5B
I most impressed with cash and cash equivalents remaining at end of the quarter! But I imagine a good chunk of that was unsold M3's? I imagine they could count the undelivered product as long as they had purchase commitments.

It looks like the buying opportunity was before the earnings release, not after! As I suspected. But who knows what the following weeks hold in store?
 

Bokonon

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#5
It looks like the buying opportunity was before the earnings release, not after! As I suspected. But who knows what the following weeks hold in store?
Yeah, for the moment it looks like a surprise to the upside, with the stock is currently up 5%. But we've seen in the past that TSLA can pop with anticipation before the call and then drop afterward, so I'd agree that it's a bit early to draw conclusions about where the stock will be even a week from now.

That said, assuming the major indices are flat tomorrow, I'd say tomorrow's closing should provide a pretty good indicator of near-term trend. If TSLA pops and fades significantly, or just drops at the open and keeps running down all day, that buying opportunity may still present itself... But let's be clear, I'll be completely fine if it doesn't. :)
 

slacker775

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#6
Here's an interesting bit from the letter:

Customer deposits decreased slightly compared to Q1 to $942 million. This does not reflect the incremental deposits
we received
once we opened the Model 3 configurator for orders in early Q3 2018. Deposits impact the P&L only once the vehicle gets
delivered to a customer.

That addresses some of the speculation that was going on a few weeks back during all the short battles.
 

PNWmisty

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#7
The conclusion is my favorite part:

It took 15 years to execute on our initial goal to produce an affordable, long-range electric vehicle that can also be highly profitable. In the second half of 2018, we expect, for the first time in our history, to become both sustainably profitable and cash flow positive. None of this would be possible without the incredible efforts of our employees and the support of our customers, suppliers and investors. We thank you for your unwavering support and we have never been more excited on what the next few years will produce.
I know, it's just "feel good" talk but it's history in the making. Or perhaps re-making (since electric cars outsold ICE cars unitl around 1910).
 

britjames

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#9
Revenue grew 43% to $4 billion
Adjusted net loss of $520.2 million or $3.06 per share
Operating cash flow remained in the negative territory at $129.6 billion
Total vehicle production rose 55% sequentially to 53,339 units in Q2, while shipments jumped 80% to 40,740 units
Expects to produce 50,000 to 55,000 Model 3 vehicles in Q3, by producing 6,000 Model 3 vehicles per week by late August, and also to increase production over the next few quarters beyond 6,000 per week.

[mod edit - removed link to FUD heavy website]
 
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PNWmisty

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#10
This seems like all good news to me! Any other interpretations?
I hope that's not a serious question. Because we know the shorts will have some very sinister and bearish interpretations! :eek:

It looks like a little better than what was expected, and a lot better when you consider all the sales pushed into the 3rd quarter by the tax credit accounting. I feel especially good learning that general assembly only comprises about 3% of the expense to produce a Model 3. Because I was concerned the problems with automation might be more significant in terms of ability to produce profitably.

Going forward, it's all about continuing to execute. Many risks and only a narrow pathway to continue the amazing momentum that has been building.
 

JWardell

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#11
I hope that's not a serious question. Because we know the shorts will have some very sinister and bearish interpretations! :eek:
I'm not asking the shorts, I'm asking the wonderful folks in the this forum!
 

Gavyne

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#12
This seems like all good news to me! Any other interpretations?
It's pretty much looking better than expected, which is why you see positive market response. I would imagine the shorts/anti-Tesla folks will try to hit on the demand, claiming there won't be such high demand later on. Because frankly they are running out of things to say with so many positive things going on.
 

PNWmisty

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#13
Because frankly they are running out of things to say with so many positive things going on.
I can't recall a period in Tesla's history when that stopped them from finding something new to harp on. Going forward, they will probably continue their attempts to reduce demand by misrepresenting the build quality, reliability and long-term durability of Tesla's specifically and electric cars in general.

This is actually effective too because there are a lot of gullible people out there and a lot of potential customers/fence straddlers already have a lot of misconceptions about electric cars.
 
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Gavyne

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#14
Top 5 vehicles traded in for Model 3 owners:

-Toyota Prius
-BMW 3 Series
-Honda Accord
-Honda Civic
-Leaf

This is important because it debunks the theory that Model 3 is only for the rich, and that people won't pony up the money to buy it. Yet from the trade-in's, you can see people are making giant leaps to upgrade to the Model 3. You don't have to be rich, just need to be financially responsible and save up enough money for something you want. This also shows that there won't be a demand issue like some have suggested (like running out of rich people buying $50k Model 3's).

I drove my Civic for 12 years and saved up for Model 3.
 
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garsh

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#15
Love this chart.

 

PNWmisty

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#16
Beautifully executed answer by Musk when asked if there were orders from SEC or other regulators prohibiting TSLA from raising cash in the capital markets. This question was based on a favorite theory of the shorts who were confounded by the fact that Tesla maintained they didn't need to raise additional capital and were sure it wasn't that they didn't need the money but was because they were prohibited. He answered the question in an indirect way and then made him ask it again and he answered it directly and without ambiguity in a way that must have made the a-hole feel like a birther.:cool:
 

PNWmisty

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#17
Musk has taken on a much more accommodating tone in his answer to "bone-headed questions". I think he's actually starting to enjoy taking the high road.
 

Dr. J

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#18
Adam Jonas asked the dumbest questions I've ever heard on a conference call. Sounded to me like he was trolling Elon. Questions involved the potential weaponization of autopilot (edit: in China), which would potentially bring a response from the US government.
 

Brokedoc

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#19
TSLA up 10% in aftermarket. He should compliment and apologize to analysts more often.
 

Dr. J

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#20
Musk has taken on a much more accommodating tone in his answer to "bone-headed questions". I think he's actually starting to enjoy taking the high road.
I'm liking the new tone.