Sales are up nicely but earnings hurt by price cuts balanced by cost cuts. Beat the analysts expectations.
“reported income rose 20% to $2.7 billion”
’ While Tesla’s delivery of new vehicles rose 83% in the April-through-June period, revenue didn’t grow as strongly, rising 47% to $24.9 billion. Still, that revenue figure beat expectations of analysts surveyed by FactSet, who on average, predicted $24.2 billion."
Not a bad quarter at all but GM down 100 basis points, Operating margins down 180 basis points. Car sales up 49.37 percent, Sequential Revenue up 7 percent YoY revenue up 47.20 percent. Automotive Credits and Leasing down, Energy storage up 74.25 percent which is really nice but off a small base. Service up 46.66 percent. Cash up Debt down sitting at 24 billion cash (rounded up) and 2.3 billion debt (rounded down). One billion dollars in FCF and the FCF margin was 7 percent (calculated YoY) Sales per share sits at 27.04 now. Tesla is turning into a cash cow. Margins are lower but still impressive.
Tesla strategy is really increasing market share at the expense of profitability. Then layer on multiple services to get people to “stick” to Tesla… I can think of autonomous self-driving as a key feature, after we get over the “trust” hurdle. And maybe use Dojo to plan an efficient route to your destination or as a PA…
lol. I used to do a series I called “spin cycle”, highlighting members of the “wise” who issued upgrades, and downgrades, on the same stock, on the same day.
I lightened my position on Tesla a couple weeks ago. Might add a bit, in a bit, for a bit. It will be interesting to watch Tesla cutting prices, while the general trend in the industry is to jack up prices and take ever more from their customers.
When looked at like a car company Tesla bears are focusing on shrinking margins. When looked at as a diversified conglomerate a different picture emerges.
Tesla’s pricing strategy is to sell as many cars are they can produce and with their ongoing expansion and production efficiency it makes it all the more difficult for the competition to catch up. While auto margins are shrinking they are still way higher than the competition and the storage sector is growing much faster than the auto sector. Musk has said that the energy sector will outpace the EV sector. I believe the Optimist robot will outpace the energy sector but that is at least 5 to 10 years in the future.
Y/Y EPS was up 20%. In principle share price should track EPS. Would you be happy if your portfolio grew by 20% per year? Cash flow was even better. Take a look at the P&L report…
Trying to out-trade the market is very difficult. TSLA is best on a buy and forget basis.
Well Musk can always use SpaceX “reserves” to fund an EV land grab, like how TWTR was bought with TSLA shares. The temptation to buy and hold TSLA is high but I wouldn’t put all my eggs in a basket. As a trader myself, I still prefer to trade the market. Such volatility is lovely for traders. Anyway, TSLA is aggressively building giga factories around the world… lower costs on all fronts.
Well Musk can always use SpaceX “reserves” to fund an EV land grab, like how TWTR was bought with TSLA shares.
What do you mean by this exactly? Are you saying that Musk can sell his shares of SpaceX, and then take the cash and give it to Tesla to fund an EV land grab? Also, what do you mean by “reserves” exactly?
Are you sure there is no advertising? The media chatters about Tesla constantly. Is that really “news”, or paid advertising, dressed up as “news”, like the media hype for the latest Apple product, or a new bistro in a fashionable neighborhood?
Are you really suggesting Tesla is paying the media to talk about the company?!? I guess that’s possible in some parallel universe somewhere but I think it is far more likely in our reality that all the media attention is because Tesla is doing stuff no one thought was possible.
Did anyone believe back in 2018 that a $55K electric car was ever going to outsell $25K Corollas? Or that Tesla in 2023 would be the only western car company preventing Chinese domination of the electric vehicle industry? Or that Toyota would call Model Y engineering a work of art and start copying Tesla manufacturing practices? Or that Tesla would have operating margins multiples better than any other car manufacturer?
Tesla gets a lot of free press, but that’s because Tesla is one of the more remarkable companies of our generation and is disrupting one of the world’s largest industries. We are fortunate that Tesla is a U.S. company.
The price cuts are probably about maintaining market leadership. I think Amazon pioneered the idea that on the internet being a market leader is very important as customers can go to anyone. Essentially all vendors are equal. So if you are the leading name that they think of first, that is a major advantage.
And its put pressure on the start-up that are still building manufacturing. It makes it more expensive for them. Takes deeper pockets. And more gullible investors to fund it.
Market share leadership also gets you FREE space in the media.
It’s price management aimed at maximum revenue while selling all they can produce. Tesla keeps expanding production capacity and lowering production costs. In passengers vehicles they are developing lower cost models which will be made in purpose built factories like the one to be built in Monterrey, Nuevo Leon, Mexico.
Tesla’s roadmap has been clear from the beginning, start with the Roadster, continue with luxury priced models, and work down market with less expensive models as supply, production, and the market allows. The 20 million goal clearly cannot be fulfilled with luxury models, it has to have a large component of mid-sized ones.
Free cashflow is more important than net profit in the overall picture. Tesla needs the cash to fund their continued growth and the development of related products and services. This sets up a clash between short term P/E ratios favored by market analysts and self funded growth favored by long term investors.
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At a personal level, once I transitioned from ‘investing’ to ‘income’ via covered calls, TSLA has become a buy and forget stock quite separate from income generating covered calls. With Tesla I only look at how well the several long range projects are developing.