
Tesla reports great Q3 results, expects to be cash flow positive by Q4 - filipemonte
http://www.engadget.com/2012/11/05/tesla-q3-2012-earnings/
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codex
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.

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timdorr
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.

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jcampbell1
> 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.

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Mvandenbergh
They did say "cashflow" positive by Q4 though, cashflow is recorded when cash
moves, not when revenue accrues.

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hayksaakian
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.

~~~
redwood
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!

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dkhenry
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 )

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rayiner
Yes! We should do things based on ideology! Not results! Not empiricism!
Instead: principles and handwaving.

Singapore proved that heavy government subsidization of research can pay
enormous dividends in economic growth. Other countries are having tremendous
success doing the same.

~~~
dkhenry
So what do you say when the government doesn't decide to support your start
up, but instead picks your competitor and runs you out of business because
they happen to be related to a senator ? The ends don't always justify the
means.

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rayiner
Leaving aside the silliness of deciding macroeconomic policy on hypothetical
edge cases for a moment... How often does that happen? The US government is
utterly paranoid about nepotism, to the extent that we waste a huge amount of
money in the bidding process for government contracts because we don't want to
seem as if we're favoring anyone, even if that favor is the result of
something like having done good work in the past. It's an imagined problem.

~~~
dkhenry
This isn't an edge case. In fact the NYT just did an expose on how this
effects China[1]. You will also find this kind of corruption in every other
country where the government is allowed to openly partner in private ventures.
Heck we did it in America with Boeing under the pretense of security and
managed to mothball our entire aviation industry.

1\. [http://www.nytimes.com/2012/10/26/business/global/family-
of-...](http://www.nytimes.com/2012/10/26/business/global/family-of-wen-
jiabao-holds-a-hidden-fortune-in-china.html?hp&_r=0)

See Also: <http://en.wikipedia.org/wiki/Yukos>

~~~
rayiner
It's an edge case in the US, and it's not like we don't have public/private
partnerships here.

~~~
dkhenry
For now its an edge case. Thats partially the case because we put such
stringent restrictions on the kinds of assistance we can offer, but even in
America there are claims of corruption with giving out government assistance.

[http://www.politifact.com/florida/statements/2011/nov/15/ame...](http://www.politifact.com/florida/statements/2011/nov/15/americans-
prosperity/solyndra-ad-president-barack-obama-taxpayer-money/)

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xoail
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.

~~~
martythemaniak
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 :)

~~~
xoail
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.

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chucknelson
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.

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tocomment
Why's the stock going down so far today?

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cryptoz
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).

~~~
tocomment
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?

~~~
GoTeamMN
Hi,

I used to invest back in the day. Anyway, there are many investing strategies.
They all have names such as Value, Growth, Event Driven, etc. I won't list
them all. The investing strategy that attempts to exploit movements in stock
price after an event (e.g. the type that you are asking about for the earnings
announcement in the Tesla example) is called "Event Driven" investing. Another
example of an "event" would be after an acquisition is announced to the
public. Typically the target (one being acquired) stock will go up and the
acquiror (one acquiring) will go down. Investors often try to take advantage
of this trend. What is the relationship that investors are betting on if the
target price always (usually) goes up, and the acquirer going down? Closing
risk. At any point the acquisition, despite being publicly announced, could
fall apart because of due diligence issues, etc.

Relating all that back to your question about Tesla: the fundamental value or
true value of a company may or may not be reflected in a company's stock
price. Think of the stock market as a manifestation of what people (investors)
might believe the value is, but the reality is that the fundamentals might be
vastly different. The reversion back to norm is something that happens as the
market (investors who are imperfect--trust me--think AIG, Bear Stearns,
Lehman) attempts to settle on true value.

Side note: Volatility in the stock price could also be attributed to a small
float (not that many shares outstanding which leads to a small number of
investors causing spikes in the price), but I'd have to look at Tesla's stock
info to be certain.

Hope this helps,

Jenny

