> They had one prior profitable quarter which happened to be Q3 2018

Both Q3 and Q4 2018 were profitable, and so was Q3 2016, and Q1 2013.

Damn I should have known that. You hear so many deride Tesla over and over I internalized the “they were profitable for one damn quarter” and took it as fact.

  March,     2013 - $ 11.5M
  September, 2016 - $ 21.88M
  September, 2018 - $311M
  December,  2018 - $139M
  September, 2019 - $143M

In terms of being profitable or not a quarter, can't you use accounting techniques to twist this? I know that you can play off assets that still need to be paid as income. Or is the meaning always precise?

For example, the first two don't say much; the third is much more significant and probably difficult to fake.

Personally, I think the most important is whether they can follow their game plan: make a lot of debt for car n, pay all off plus make a little; restart for car n+1. Also, n+1 should sell more units than n.

>can't you use accounting techniques to twist this?

Yes. Elon literally said, "Profits from here on out!" the last time they made profits. Then, Tesla proceeeded to lose 700MM the next quarter.

It's very interesting to read back over their 2018 Q4 report. They knew that starting up international deliveries would have a significant impact on recognizing revenue on all the vehicles they were able to build, whereas selling locally they can count on selling them pretty much as they came off the line;

> While the number of Model 3 vehicles produced should increase sequentially in Q1, deliveries in North America during Q1 will be lower than the prior quarter as we start delivering cars in Europe and China for the first time. As a result of the start of Model 3 expansion into Europe and China, deliveries will be lower than production by about 10,000 units due to vehicle transit times to these markets.

What actually happened was that production rate fell by ~10,000 from 86.5k to 77.1k and they also had deliveries fall behind production by 15,000 instead of their expected 10k;

> In Q4 2018, Tesla produced a total of 86,555 vehicles, and delivered 90,700 vehicles. In Q1 2019, Tesla produced 77,100 vehicles and delivered 63,000 .

I'd have to research the cause of the production drop, but that combined with a larger than expected delivery lag (compared to the prior quarter where they actually over-delivered vs. their production rate) is why they had such a tremendous loss. On top of all that I'm pretty sure gross margins also fell, and the S/X/3 mix became significantly more 3 dominant as the tax credit dropped.

So while I would not dispute that there are tricks that can be pulled, mostly in this case that would come down to the level of CapEx, which for Tesla is now below their depreciation. That's a metric which typically shows a slowing growth company, but in the case of Tesla could just be more reflective of how wasteful their spending actually was in the past (e.g. trying to fully automate production al la "alien dreadnought" and failing).

But in the case of Q4 2018 vs. Q1 2019 really what happened is they had significant issues with production, deliveries, and margins all at once driving down revenue well past anything they could correct by controlling spending.

Not to carry on about it, but any company can decide how much they want to invest in future growth, and if they will raise money to finance that, or if they will constrain their expenses based on their revenue and margins. That's not financial engineering or an accounting trick, that's just basic risk management and calibrating your spending based on your growth opportunity versus your cost of capital.

What we've seen in 2019, I think, is a focus on aligning the company for profit before the next push. I would not expect Tesla to have increasingly large profits each quarter, because it would be strange for them to sit on an increasing cash hoard ($5B+) when they have so many good ideas on how to spend it. Namely, building more factories for Model 3 & Y, getting into battery cell production, and whole new lines needed for the upcoming truck, and Semi production.

You sounds fairly informed about the financials, and that's appreciated. Still:

>What we've seen in 2019, I think, is a focus on aligning the company for profit before the next push.

They are not profitable. They achieved profitability this quarter, but have lost money every year for their entire existence. Is this different from Q3'18?

>because it would be strange for them to sit on an increasing cash hoard ($5B+)

I'm not sure they have a "cash hoard" for any longer than the 10 minutes of their quarterly report. Drawing on debt debt to increase cash balance doesn't affect the balance sheet.

>Namely, building more factories for Model 3 & Y

Where did building more factories, and staffing them, show up in the financial reports? How can all of the labour and capital expenses stay the same (or fall) while this occurs? It's confusing that a company can essentially double its productive capacity without it being seen in the numbers. Can you shed light on that?

Despite what some of the conspiracy theorists on this site say, I may be...anti-Tesla? But only because I think it's such a compelling story. I don't short it (I don't short anything), and I don't talk about it outside of this site (where I talk about it too much). I really don't get it: the financials are a mess, Elon is, imho, a jerk, and yet...

And keep in mind profit is not actually that relevant in many ways; notoriously, AMD has been operating at a loss for most of its existence (iirc).

>AMD has been operating at a loss for most of its existence

And this makes profit irrelevant how exactly?

well, all you need to know is if they beat Street expectations for EPS and FCF...which they did...massively...which is why the stock is up 20% after hours.

Still, a stock valued for massive growth with a revenue decline is definitely something that should leave you with a bad taste in your mouth.

It's not really that surprising. The growth expectations are taking into account that there are still several new markets to enter (Model Y, pickup, semi, etc.) and that continued reductions in manufacturing costs should allow lower prices which lead to higher sales volumes.

But last year there were more tax credits, which front-loaded a lot of sales into a year ago, and they haven't released a new model this year. So this YoY decline wasn't that this quarter was unusually bad, it was that this quarter a year ago was unusually good.

People seem to act like the Model Y will just be an entirely additive thing to Tesla sales. How many Model 3's will be cannibalized by Tesla announcing a cheaper crossover? The demand for each of their vehicles is very interrelated, as seen by what the Model 3 has done to S/X sales in every country it has entered.

What I see with the revenue decline, and if you look at sales patterns by the countries they have entered is a company whose number one vehicle, the Model 3, has peaked in demand. I don't see many levers for them to really increase that, and many of the company releases, like the Model Y, will only cannibalize more of that demand.

Having the Model 3 take sales from Model S or X wasn't great because it costs less. The Model Y is priced above the Model 3. People buying it instead would only increase their revenue.

Yes, but how many Model 3s will they sell when they start selling Model Ys? If they're selling 300,000 Model 3s a year, I would expect that number to decrease when the Y is released.

Suppose they don't compete with each other at all, so they continue to sell 300,000 Model 3s and then sell 200,000 Model Ys. Suppose they do, so in that case they drop to 200,000 Model 3s but sell 300,000 Model Ys. Isn't the second case better for them, since they get more for the Model Y than the Model 3?

Won't being locally built diminish its attractiveness?

A lot of European carmakers already assemble in China, partnered with local companies via joint ventures due to regulations. Tesla's G3 is the first major 100% foreign owned car factory in China IIRC.

Brands aren't usually valued by where they are manufactured. People don't care that Foxconn assembles their iPhones.