Heard a little rumor a press release on Q4 numbers is coming out soon... Did anyone else hear this?
I think there might be some confusion about profitability and cash flow break even here. Throughout 2011 and 2012 Tesla spent heavily on capital equipment getting manufacturing line ready. That is one reason they burned through cash. But those big capital expenses are behind them now, and it sounds like tesla is actually putting cash into the bank now. Ie they are cash break even or better now that they are selling cars quickly. However all that capital expense including all the r&d get amortized over many many years and is charged against profit on their official earnings. So that is why they won't be profitable for a while yet.
Greg-- if you are making more money than spending, you're turning a profit. The question is how much money was tesla in the hole by the end of 2012? If Q4 was break even, they would end up being 306m loss in operations, as well as expected 240m in capital expenditure. Total approx. 546m in the hole, with 427 in cash to cover it. Yes, there are some accounting adjustments like net res payment, depreciation, inventory, accounts payable,etc... However, this wont offset outflows enough to sustain further losses into 2013 without eating away most of the cash.. Elon's statement comes off as they will have to continue to dip into cash each quarter for a while before they can cover all costs safely. If they end up with less than 200m going into Q1, with anticipated losses for a few more quarters, people are going to get worrisome about being able to pay off the 50m loan payments starting in June, as well the ability to cover reservation cancelations on a large scale safely. This would put pressure on tesla to have another offering sooner then expected(if ever expected)... The need for cash is what the naysayers are pounding on. I hate that this might be an opportunity for them to continue the negative narrative.
Prime opportunity for Tesla to come out with some amazing news. Give some assurance to those of us out there things are okay.
Just to add, the delivery problems, as well as the possible sudden change in how they recognize revenue (not on delivery to customer, but on hand off of car to third party like UPS), etc... will create further negative speculation until Feb 11. Some sort of positive official tesla news or blog will help counter what is surely to come in the following days and weeks.
"Yes, there are some accounting adjustments like net res payment, depreciation, inventory, accounts payable,etc... However, this wont offset outflows enough to sustain further losses into 2013 without eating away most of the cash."
Cash flow positive means exactly that accounting adjustments like net res payment, depreciation, inventory, accounts payable,etc. are enough prevent any eating away of cash on hand, and the only reason that they don't have a profit is due to accounting adjustments.
One last thing Greg... I want to wait till feb 11. I would prefer it, but when Elon makes statements on profitability and production rates, as well as give an outlook for the year to come after award presentation, he's not waiting himself. Partial information that fuels the negative narative and affects investor and public perception. Best either to say nothing or come out with own official statement to explain the situation.
Not sure if someone mentioned this before, but Musk said that they would be profitable after 8000 cars delivered. They should reach that by the end of this quarter.
@Tinj, Yes. I believe Elon said they wopuld break even with an annual production rate of 8000. He was not just addressing startup, but long term continuing operations as well. I believe he was trying to get the analysts off the 20000 annual figure as a make-it or break-it figure for Tesla's survival. It is actually much less than that- 8000.
Respectfully to you... There has been NO change in how they recognize revenue for "sold" cars or reservations.
Only your understanding of the definition of "delivery" has changed (IMO)
Basically a car is cobsidered sold when its tendered to the transport carrier
I've worked in ecommerce and I can tell you this is exactly how it works. Retailers recognize shipped sales when they tender packages to carriers (such as FedEx, UPS, USPS)
It's a big deal when companies don't follow standard accounting practices and I certainly strongly feel that TM has followed standard practices.
Honesty and clarity are always the best policy and in this case you'd have a big problem if the customer sent the 100k "package" back to Tesla if not what they ordered. Tesla SEC docs state "upon delivery" rev rec happens, does not state upon delivery to third party transport. I know there is room for interpretation, but typically a customer inspect the car before signing off on receiving it. This is the car buyer's expectation. If not Tesla's, then it must be clear in writing.
Anyway, Tesla's different. I think in being different gotta keep the transparency on things like this solid from the start. We all are risking a lot on this big idea. Desperately want it to succeed, but gotta be hard nosed on these issues to ensure they deliver on its promise.
Anyone doesn't have at least 5 years horizon, shouldn't really be in any stock, let alone TM.
TM could really well trade back to $20 base on a lot of factors.
Take a look Apple, it lost 25% of value in the last few months and they are still selling everything like hotcakes.
Q4 will not move the stock upward if that's what you are waiting for. All the delivery information already known, as well as production rate. There isn't anything new to unveil in Q4.
I check TM stock price often, and wish it to go down every time so my automatic buy will pick up more shares. The lower the stock price, the happier I am.
The revelation of information and transparency as they now begin to actually make and sell thousands of cars a quarter is very relevant. Never has tesla been at this point in its history, so it is very important to make an extra effort to address issues early. Better for Tesla to control the direction of its own narrative as opposed to naysayers or it will affect stock price. And if the price goes down significantly and they need to raise money through an additional offering at a discounted price, then your five year time horizon might have to be revised as would mine.
Apple is no comparison so that's not a fair example of Tesla's situation...
Nothing is really known about Q4 until Feb 11. I wish Elon would keep to that more or allow Tesla to make an official statement of some kind to shareholders directly.
+ 1 (at least for the near term) lol!!
I don't think the stock price affects TMC's demand for cash, which is driven by sales, operations, and product development. It will only be an issue if they have to make another offering.
Just got this in my email:
I agree with gangawu on all counts. Deliveries, reservation rates and production are already baked into the cake. I believe the stock is priced to reflect a successful 2013 with 20k cars delivered at 25% GM (previously stated goals). So while the Q4 numbers probably won't have an effect on the price, guidance could. If we were to hear 30k cars per year or better than expected GM, that would help.
My concerns are with the reports of delivery inefficiencies, like due bill items that have to be shipped later (HPWC, grey 21" wheels for a while, seats, detail jobs) and warranty work. Those are issues that will hopefully clear up but also become more challenging as more cars are delivered into the field.
Other questions I have are regarding the build out of service centers and supercharger stations and the costs/progress of completing them.
Overall, I am encouraged by the success and limited number or failures so far in the ramp. I think there's a good chance we see unexpected upside events, like word of mouth leading to spikes in reservations in the near future, or an acquisition in the distant future.
Disclosure, I own a Jan call that will probably expire worthless. I expect my finalize button to appear before then (Friday).
Heard Tesla will not report Q4 earnings on Monday... Does anyone know if this true?
On the Yahoo Finance page, they seemed to think it was happening.
Yes, well, yahoo isn't really tops when it comes to financial reporting. According the wall street journal, the earnings announcement will be sometime between the 11th and the 18th. Tesla hasn't yet issued a press release announcing the date.
"While some sources have said Tesla would report on Monday, the company told IBD Friday that it had not yet confirmed a report date. It likely will report soon, in any case."
Bimoes, Greg -- thanks for the info
Tesla confirmed to IBD late Friday that the company would report Monday morning.
Can you provide a link please? There is still no press release and nothing on the investor web page:http://ir.teslamotors.com/events.cfm
There're a couple of shareholder disclosures for Feb. 7. Deepak sold 5000 shares at $39.50, and bought 5000 at $14.17 under a warrant. Kimball Musk sold 3846 shares at $39.467, and bought none.
But no statements about Feb. 11 ....
Here is the link:
That would be great if true. Then conference call Monday after close
Look forward to the earnings call guidance tomorrow... Hope to hear a nice surprise or two...
nnt - Why do you care? None of them had door pockets.
nnt- yea, and the windshields are gonna crack. So why are you here?
According to a Form 13G filed with the SEC on Feb. 14, 2013, Fidelity Investments has taken a 15% (14.99) stake in Tesla.
Twitter to a CEO is like a like a telephone to a scorned drunk ex-girlfriend. Always regret using it the morning after... Please Elon dont get into it will trolls anymore!
institutional investors are listed here and updated every 3 months (just got an update a few days ago)
@Nicu, Thanks, that could reduce searcing for past actions. The Tesla investor site-bottom right of any Tesla site page- lists their filings when they make them. RSS feeds, too.
Surprise #1: profitable in Q1...
You can read the 4th quarter shareholder letter here:
Surprise #2: ended the year with 221 in cash. This will make a lot of nay sayers very unhappy.
Yeah, feel kind of upbeat about these results. Everything was a just a little worse than I expected except the fact that they will be slightly profitable in Q1 and solid cash levels. That kind of outweighs everything, but I was a little suprised by the cancellation rate and that they only delivered 2650 cars for the year. Not bad by any means though and very prmising for the future.
Surprise #3: no mention of model x
NO MENTION OF RIGHT HAND DRIVE!! How disappointing! They are starting off in China, but those of us who have been reservation holders and shareholders since early 2011, (and before) not a single mention. Are they planning to actually go with right hand drive at all? Yes, they announced late 2013 in England when they announced the start of European sales, but our rep here in Australia was terminated as there were no plans to further promote sales here.
Tesla needs to be more upfront with us and perhaps allow us the opportunity to reclaim our reservation moneys! Yes, i know those of you in the USA waited up to 3 years and perhaps a bit more, but at least you knew they were definitely coming. None of your reps were laid off.
@sayldreddy - they produced 3100 cars for the year, so it was just getting the paperwork completed with buyers and getting them out the door that was the problem -- I know in my case, it was a very last-minute affair (got notice on Saturday 12/29, wired the money on 12/31, it was on the truck on 12/31).
@email@example.com Yeah, I saw the 3100 prodution number and agree that its a good number, but I was really hoping for something more like 3000 deliveries and 3700-3800 production for 2012. Overall, though, it really doesn't matter that much and maybe those expectations were a little too optimistic.
The conference call ended. The big picture is that the Model S is a great car and on its way to 20,000 annual units even with the high price. The other point is 26m shares are short and do not believe in the car or the company in spite of the success of Model S.
However, the stock is down big because delivery of 2400 came in shy of the projected 2500-3000, expenses were high, and on the call there were some statements perceived as less than totally confident. Finally, this forum was helpful in seeing the gross orders for the quarter at well over 6000, but the forum missed the large number of cancellations. The people who cancel probably don't post.
How high were the cancelations? I never heard a concrete number of percentage. I must say that I am not surprised about it - when you see 12,xxx reservations getting 5,xxx VINs something had to be up.
PS: I should get my Model S tomorrow - not sure I'll be able to sleep tonight. Never been so excited about a car - ever.
To know the precise cancellation, you need to know 2 out of the three following: gross reservations, cancellations, and net reservations.
Tesla only gives us partial rounded data, so we have to guess. End of Q3 net reservation at 13,200, end of Q4 net reservation of over 15,000. Delivery was 2400.
13,200 + 6000? - 2400 - cancellations = 15,000?
Cancellation about 1800 in December Quarter.
They referenced that cancellations increased as expected when old reservations got called to finalize. Good news is that new reservation holders won't cancel- when you order car and finalize right away presumably you are aware of pricing, options, etc, which res holders from pre 2012 could not see yet.
It is interesting to note that no one is really focused on number of cars delivered. The focus was on revenue and losses. Revenue is the most important. As Q1 comes to a close, the big story will be the loses dropping significantly.
And as for confidence in responses, I think that is due to Elon's speaking style. He stammers and repeats words, just the way he is... we all know that.
This quarter was about the rubber meeting the road burning off the hype I think. We know where things are now and Q1 expectations are clear.
I look forward to how the European res. numbers go up after marketing happens. Hopefully we can get some visibility before the end of Q1 to help people see demand is still growing strong after the price hike.
I am reservation 16,635 and can't wait to get my car. Of course I am getting it about 6-9 months earlier than expected. I am curious if I am getting mine and new reservations are being delivered in April, what is tesla going to do to fill its order book in May, June and onward. We may all have to get out there and help sell.
The orderbook for 2013 seem to be close to full and Elon said they would fill it even if they closed all stores today...
Elon stated in second to last question of conference call that Model X likely to be 70% of Model S demand, and exceed it in some countries...
This is helpful to see future revenue potential expectations, but still keeps things open to when MX production will start...
Hope to see something like a production model unveiling sometime before year end... maybe a demo in stores around the country at that time... all things that will further help build confidence (and positive news) pushing into 2014...
The NYT now has an article out on the Q4 results that mentions that focuses on cancellations:
"However, Tesla’s numbers suggest that a few thousand reservations were canceled in the fourth quarter. Many customers were in line but pulled out when it became time to make a substantial down payment in cash."
Regarding cancellations, remember that a number cancelled their earlier commitments and then immediately re-reserved for... red.