
Tesla Model 3 deliveries beat Wall Street targets, shares up 7% - jayess
https://finance.yahoo.com/news/tesla-model-3-deliveries-beat-201958136.html
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omarforgotpwd
Amazing. The Tesla haters were going to town on them all quarter, claiming
bankruptcy was imminent and there was "no demand".

Now they've delivered more cars than any other quarter in their history.

~~~
threeseed
Of course they delivered more cars.

The Model 3 is substantially cheaper than the S/X models which means you get
more volume with lower margins. And we are seeing quarter by quarter a drop in
the ARPU as the S/X models are being cannibalised by the Model 3.

It's amazing that Musk has twisted the narrative to be all about deliveries
instead of profitability. But ultimately unless they can dramatically reign in
costs it will be their downfall.

~~~
woodandsteel
If you are a typical Tesla hater then you have been making mistaken
predictions every quarter for the last ten years.

~~~
threeseed
I like how any criticism what so ever of Tesla/Musk results in comments like
this.

How about addressing my points. Specifically focusing on profitability and
their declining ARPU.

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jmpman
Ive been bearish on the stock since the $7500 credit expired. However, this
weekend, the stars aligned, and I pulled the trigger on a Model 3. It’s
nothing less than amazing (panel gap issues aside). I now understand why Tesla
has so many fans. They’re light years ahead of the competition.

~~~
DeonPenny
Even bob lutz gave them praise and said there is no panel gap issue

~~~
jmpman
I’ve got a model 3 which has panel gap issues. That’s my data point.

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11thEarlOfMar
Very curious to learn whether they are cash flow positive this quarter, and
whether/how much gross margins went up.

If so, and demand exceeded deliveries, could be sailing into blue skies.

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smilekzs
My inner cynist asks:

So when a company beats whatever targets set by analysts, the stock goes up.
What happens if analysts deliberately set targets that they believe the
company would have slim chance of achieving? What if only some (arguably
optimistic) analysts set a high target which the pessimists act on?

I think it's likely I have some fundamental misunderstandings on how "targets"
work in general, but I can't help but feel that "all Tesla news can and will
be interpreted as a weakness"...

~~~
microtherion
It's somewhat odd that the stock is benchmarked against conservative analyst
estimates, instead of against the predictions of the company's own CEO:

[https://twitter.com/elonmusk/status/1098013283372589056](https://twitter.com/elonmusk/status/1098013283372589056)

Any Tesla cheerleaders willing to bet that Tesla will build ~340k cars in
2H2019? Or is this another "LOL, nothing that Musk says matters" moment?

~~~
tigershark
He said that Tesla will be able to build 500k cars per year by the end of the
year. It absolutely doesn’t mean that they will build 500k cars this year. Btw
his predictions of ~400k deliveries for the year wouldn’t be that far off if
they continue to deliver ~100k cars per quarter like in the current quarter.

~~~
microtherion
Oh, he has said all sorts of things, e.g. 420k - 600k:
[https://www.livemint.com/companies/people/elon-musk-s-new-
fo...](https://www.livemint.com/companies/people/elon-musk-s-new-forecast-
for-2019-up-to-600-000-cars-1551413855883.html)

YTD, they delivered 160k, so it would take 120k a quarter to get them to 400k
cars in 2019, or 130k to get them to 420k cars. I'll take the under.

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gok
They're almost certainly still losing money, however.

~~~
11thEarlOfMar
I bought AMZN stock in 1996. Rode it up to $420 ($60 at today's prices), then
back down to $14. In 2004, it was around $55. Quarter after quarter, AMZN was
reporting massive losses and massive borrowing. Debt climbed to $2BB or
thereabouts. I was sitting on a modest profit, and I lost faith and sold.

It turns out that the massive losses and debt were because AMZN was building a
monster company. Building a monster, capital-intensive company, and bringing
it up fast, requires huge debt.

The question at this point in TSLA's life is the growth rate. At the time I
sold, AMZN's revenue were also growing at a huge rate, 40-50% annually.

Write TSLA off if you want, but I've seen this movie before and those who
invest for the long haul are going to be very well rewarded.

~~~
prepend
That’s Amazon’s story and thousands of others that failed. Trying to paint a
parallel between Tesla and Amazon based solely on they both had losses for a
certain period is foolish. You’d need a lot more similarities to make the
comparison useful.

~~~
kjksf
His argument is not that Tesla is like Amazon because they both had losses.

His argument is that Tesla's losses can be explained by investment in the
future, just like Amazon invested in the future while half of wall street was
telling them to make a profit.

Tesla is growing revenue 50% YoY for the last decade.

In Q2/2019 they delivered over 2x cars than in Q2/2018.

If you can find a single company in the history of capitalism that grew that
fast in a capital heavy manufacturing business then let me know.

Tesla is currently building a giant factory in China (at record-breaking
speed). That requires a lot of money.

When they start delivering cars from that factory sometime in Q1/Q2 2020,
their profitability will skyrocket because they'll flip from "lots of
expenses, zero revenue" to "no expense, lots of revenue".

This has happened 3 times in Tesla's history when Tesla bounced from heavy
losses to profit.

First when they scaled production of Model S and before they started investing
in design and manufacturing of Model X. Then after they scaled production of
Model X and before they started investing in design in manufacturing of Model
3. Then when they scaled production of Model 3 and before they started Model Y
/ european expansion / china factory.

~~~
gamblor956
_If you can find a single company in the history of capitalism that grew that
fast in a capital heavy manufacturing business then let me know._

Ford and Toyota both grew faster than that...Hyundai too. Also GM (the
original one). And Fiat. and Tata Motors... Actually, most of the big names in
the automotive world grew faster than Tesla. They just didn't spend a lot of
time or money constantly telling people about it because growth is irrelevant
if you can't convert the growth into profits. It's easy to grow big losing
money. It's much harder to grow big profitability.

Outside of automotive? Apple went from nearly dead to one of the world's
biggest companies in about a decade. Back in the day, the railroad and
gasoline companies grew at literally exponential rates. During the shale oil
boom, some companies became billionaires overnight.

 _When they start delivering cars from that factory sometime in Q1 /Q2 2020,
their profitability will skyrocket because they'll flip from "lots of
expenses, zero revenue" to "no expense, lots of revenue"._

That's not how finances or accounting work. A big factory costs lots of money
to run. You have to pay for the electricity to run everything, the workers,
the parts and supplies to make the cars. And you only get the revenue if you
can actually _sell_ the cars that you make. That's a big question mark in a
Chinese market that has transitioned away from demanding American luxury
goods.

 _This has happened 3 times in Tesla 's history when Tesla bounced from heavy
losses to profit._

In the financial world, we call this financial engineering. It means that
you're pushing expenses or revenue into one financial period to make another
financial period look better. Usually, if you know you have a bad quarter, you
put as many expenses as you can into that quarter so that you can goose the
numbers for your remaining quarters. _Tesla openly acknowledges doing this,
especially with regards to car deliveries._ It's one of the reasons why their
CFO left and they keep losing executives.

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new_realist
Despite heavy discounting, introduction to new markets and introduction of
lower cost variants, unit sales declined ~9% from 2018H2 to 2019H1.

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mcv
See what you can do when you're not picking stupid online fights?

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Y-bar
A general observation/question related to this style of headline we see here:
“[...] beats [analysts] target”

Why do we write like that? Wouldn’t it make more sense to write “[analysts]
misses [...] target”? It feels to me like writing “Weather rains more and
beats meteorologists’ expectations” when “Meteorologists underestimates
rainfall” would be more true.

~~~
scribu
Because you want the most salient piece of information at the start.

Otherwise, the front page of a financial site would look like this:

    
    
      * Analysts miss target regarding Tesla
      * Analysts are optimistic about Q2 returns for Boeing
      * Analysts etc.

~~~
losteric
Nothing wrong with that, but it won't happen when analysts are the ones
writing most of the material for those financial sites... of course they're
going to claim Tesla "beat expectations" rather than "analysts underestimate
Tesla"

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errantspark
and they lost three VPs in a week's time and the shares slumped
correspondingly, this bump is despite that

[edit] my mistake about the slump in share price, I had misread the chart

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peaktechisnow
Stock was $224 on June 19th, hit $224 again on the 24th and closed today at
$224. Not sure what the slump is you're referring to?

~~~
errantspark
ahahah you are absolutely correct I was looking at the wrong zoom level on the
chart, my mistake

