mmarshall

Although this is not a brand-new video, and was made some time ago, it gives an interesting explanation, IMO, of some of the issues we have discussed and debated, in Car Chat, about Tesla''s finances, company policies, and why it continues to stay afloat despite losing significant amounts of money each quarter. In a nutshell, investors keep holding up the firm......even with big-money losses, their incoming money keeps replacing what is lost. The video is just under ten minutes, so it won't take you all night to listen to it, though the narrator's voice is rather boring and sounds almost computer-generated.

FrankReynoldsCPA

That's how startups work. Investors funnel in money even while losses are being incurred based on the perceived likeliness of a return on their investment down the road.

Time will tell how this pays off for the Tesla investors.

mmarshall

Yes...I have a very high opinion of Bob Lutz (always have), but I have to admit that this was something that he may (?) have missed when he talked, a couple of years ago, about Tesla's money loss and a high likelihood of bankruptcy.

EZZ

The video is a little out of date. The cash flows from operations are neutral as of last quarter and Tesla has said that only new product introductions will change that. The current losses are from the heavy investment into all the factories which I've said multiples times. Tesla stock is highly speculative so most investors should stay away as the valuation is still a huge gamble.

Freds430

Tesla is hardly a start-up. They have been in business for 16 years. They have never been close to profitable for any year. Their worst three losses have been the last three years. In 2017 they lost 1.9 billion and in 2018 $1.1 billion. The first quarter of this year, they lost 702 million and 408 million in the second quarter. July sales have plummeted. They are on course for their worst year. The tax credit is gone 1/1//2020 and competition is coming hard. As far as investors Tesla stock is down ytd -33.2% while the S&P is up +16.6%. That is a spread of 50% difference. They will either me sold within two years or become the next Solyndra.

situman

Cash flow is king! All those deposits that they took on the Model 3 and for future models is keeping the lights on. And a little bit of cash management like delay payments to vendors.

peteharvey

Good summary.
Thanks for letting us know.
So now we know as Situman says that the deposits are helping to keep them afloat.
I don't know what will happen in future, but commonsense says that it is not looking good....

jrmckinley

"Tesla stock is down -33.2% while S&P is up 16.6%" -Not relevant. You're literally singling out one stock and comparing it to an incredibly diversified index with large cap stocks across 11 verticals. The only way your comment is relevant is if someone put 100% of their money into TSLA and nothing else. The S&P is full of individual awful performers this year (Mylan and The Gap were the two worst of Q2 - down 32.8% and 30.7% respectively). It's easy to pick on one stock and saying it isn't doing as well as a balanced portfolio. That's the point of diversification. Since you hate Tesla so much, I assume you've bet 100% of your income, retirement, and liquidated all of your assets so you can short the stock? Or are you diversified?

"Competition is coming hard" - yes, everyone talks about the next "Tesla killer" upon announcements and debut at an auto show. And then they go into production and no one buys them. Why aren't you pointing out the abysmal sales of the Jaguar I-Pace or the Audi E-Tron (1,522 cars and 2,513 respectively)? Why aren't you talking about how the Chevy Bolt was a complete bomb and was supposed to pick up some low end EV buyers that didn't want to spend the cash on a model 3?
Source for Audi and Jaguar stats- article that just hit my Apple stock app on TSLA today from Business Insider: https://www.businessinsider.com/tesl...-e-tron-2019-8

Tesla has 1,600 superchargers that only work on their cars. Audi has plans to have 480 in the US by the end of this year (optimistic) and has the lowest range. Not a good combo. Musk has more followers on Twitter alone than Audi has on Twitter, Facebook and Instagram combined.

For what it's worth, I'd buy a Tesla now with the intention of keeping it 2-3 years in the HOPES that the upcoming Audi e-Tron GT is everything I think it will be. If it is, based on styling in & out, that would be my EV of choice. I also love what Rivian is doing, so I am not blindly following Tesla. With how far superior they are to any other EV on the market and how they're literally moving the market to EV's, it's hard for me to understand how someone can only see the negative.

riredale

I admire the technology built into Tesla vehicles much as I appreciate the clever engineering behind my RX hybrid. While I applaud Tesla's creativity I also suspect that Porsche (and eventually others) are going to steal customers at an accelerating pace. I also think Autopilot deaths will result in significant litigation losses and wouldn't be surprised if the Model3's panel display is eventually banned as overly distracting to the driver when compared to a conventional control layout.

If the stock continues to slide I wouldn't be too surprised to see someone like Apple get involved.

Toys4RJill

How come you suggest Apple would get involved? Tesla makes no money

EZZ

Apple wants to buy Tesla. Prior negotiations fell apart because valuation was too rich. If Tesla falls low enough, Apple may pick them up because they are interested in the EV space.

Hoovey689

iTrader: (16)

VW has been speculated to have interest in investing in Tesla. But just a rumor right now

https://www.cnbc.com/2019/08/22/volk...-in-tesla.html

Toys4RJill

It will stay just a rumor IMO. Toyota had a $50 million stake in Tesla at one point, their Rav4 EV used the Tesla motors, same with MB, all the exact same motor, I think they got out for the fear of losing money. Tesla was the perfect test-bed for the big manufacturers. Let Tesla do the market research, now the established players will find ways to actually make money.

peteharvey

Okay, so apart from deposits, Tesla also has the Supercharger trick.

If I had to make a bet on it, I suspect that given some time, the major players will not only release bigger battery packs, but also release more superchargers too.
Given some more time, even 3rd Party Superchargers will begin to appear at gas stations.
A person who really wants to frequently drive long range is more likely to purchase: diesels, gasoline, or even gasoline-electric hybrids - rather than purchase an EV anyway - thus Teslas superchargers can't be that critical a factor.


That is very true.

EZZ

Its fruitless arguing about it at this point. Operationally, they won't be profitable until they've finished their factory buildout and the Model Y is introduced. Cash flows was net neutral from an operational perspective. As long as their valuation is supported by the stock market, they will always have capital. Their demise is greatly exaggerated in the short term. If you believe in their long term vision, you buy their stock. Right now though, they have the brand strength, technology, and customer mindshare to outsell all of their competitors by over 100%...not surprising as they have the best product out in the marketplace. We'll see whether the big boys catch up in time to kill them or they stabilize and eat away at the share of the other OEMs.

There could be a possibility of a bid on Tesla if Apple starts seriously bidding on Tesla. None of the auto guys want someone like Apple in there. You think Toyota's net income of $17B allows them flexibility in auto world but imagine Apples net income of $60B a year supporting Tesla. That would be complete nightmare for any auto manufacturer