This is clearly not a forgotten little company, so the analysis done elsewhere and on this board can probably fill a couple of rooms. Still, I thought to put the key numbers together “cold”, to gauge the fundamentals of the business.
This is their estimated market share of all commercial light vehicles, per region:
That’s mind-bending stuff, really; this is not EV’s but the whole market. They are taking - and continue to take - significant market share in all large markets, globally.
|Revenue $m||Q1||Q2||Q3||Q4||QoQ Q1||Q2||Q3||Q4||YoY Q1||Q2||Q3||Q4||Yr|
Ok. Run-rate revenues of $100bn, growing 7%qoq and 47% yoy. Not too shabby…only a handful of companies I follow - and none of the SaaS ones - beat that. These ones in my portfolio did: ELF, CELH, NVDA, GLBE, DLO, TMDX. And no company at all afaik at this scale.
YoY growth last year was 51% and the year before 71%. Clearly there is some slow-down visible this year and the business progression is not smooth quarter to quarter, there are some bumps in the numbers. Still, Q2 revenue went from $6bn to $25bn in 3 years.
They split their business into 3 parts: Auto, Energy and Services. The bulk of the revenue is from Auto - $21.3bn, with energy at $1.5bn and services and other at $2.2bn.
The energy business showed similar growth trends to Enphase, with a slowdown these last quarters. However it actually grew significantly faster than Enphase over this period. Enphase went from $441m in revenue to $771m in the last 6 quarters. Tesla went from $616m to $1.5bn in the same timeframe. This is Tesla’s Energy revenues and qoq growth:
|Energy $m||Q1||Q2||Q3||Q4||QoQ Q1||Q2||Q3||Q4|
Services & other
Here is another big business, in hyper-growth. It grew 47% yoy, and here is the history:
|Serv $m||Q1||Q2||Q3||Q4||QoQ Q1||Q2||Q3||Q4|
Look at that sequential growth in the last quarter: 17% QoQ! I’m assuming some AI stuff goes in there. We don’t have more history, so I don’t know if this is a trend, but that 17% qoq would annualise to 87% yoy if it holds.
Margins are not great compared to sofware businesses, but pretty decent when you look at how much of it makes it to the bottom line. The CFO stated that they target around 20% gross margins on all products in time. I don’t know what the services margin is, but even though it’s a big business standalone, it’s still only 10% of the auto business, so probably not that relevant to the overall picture.
GM% has come down of late, and this has been by design as they cut prices to improve affordability in this higher interest rate environment:
I would think that these margins will tend up again once/if interest rates go down at some point.
Operating profit margins have shown quite a bit of leverage over the course of the last three years or so. In Q2 2020 it was 16%pts lower than gross margins; this last Q2 quarter it was 8%pts lower, quite an improvement:
Non-gaap net margin
This comes in at a very decent level - very close to operating margins:
Free cash flow margin
This is quite a bit more variable. Given the significant capex build-outs currently in process (which requires a different write-up and risks becoming too big of a topic, I’m just focusing on the key P&L numbers for this one), this is to be expected.
→ So just looking at the income statement and cash flows I see a very solid business, run profitably and cash-flow positively while still growing at hyper-growth at a very large scale.
I’m just going to look at one number here, inventory turn, to get a sense of how efficiently they manage their inventory.
|Inventory turn (times pa)||Q1||Q2||Q3||Q4|
This is just outstanding stuff for a very capital intensive company growing at this scale imo. Something around 2-4 times is pretty good, 5 to 6 like they are doing is just outstanding.
Tesla trades at a RR revenue multiple of 7.6x, and a RR PE of 79. It’s not cheap. But it is probably the only large-scale hyper-growth, AI and EV story. And I liked this quote from the CEO who has been guilty of over-promising on FSD (yes, I know everyone calls him “Elon” like they go to a braai with him every week I don’t.) Still, this quote sounded grounded (vs just calling out a target) to me:
Well, obviously, as people have sort of made fun of me and perhaps quite fairly have made fun of me, my predictions about achieving full self-driving have been optimistic in the past. The reason I’ve been optimistic is – it tends to look like is the – we’ll make rapid progress with a new version of FSD, but then it will curve over logarithmically.
Now, I’m the boy who cried FSD, but I think we’ll be better than human by the end of this year. That’s not to say we’re approved by regulators. And I’m saying that would be in the U.S. because we’ve got to focus on one market first. But I think we’ll be better than human by the end of this year. I’ve been wrong in the past, I may be wrong this time.
And the price of FSD – so the great thing is the price of FSD is actually very low, it’s not high. When you go back to what I said earlier, the value of the car increases dramatically if it is actually autonomous.