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Comment by zaroth | Hacker News Reader

$143M GAAP / $342M Non-GAAP Net Income. $371M free cash flow.

GAAP Gross Margin 18.9%. That is before G3 comes online which will, I believe, have an upward case for margins. That is the big news here today. And that is really great news for Tesla.

Over $5.3B cash on hand. TSLA is in an amazing position going into Q4 and 2020.

Highly confident of exceeding 360k deliveries for 2019.

Just an amazing run up to the end of the quarter.

For added inspiration, check out a flyover video of G3 with the loading docks starting to fill up:

https://youtu.be/bI-My94Ig5k

Full Disclosure: Long TSLA. No plans to sell in the next 9 years. I told my kids either the shares will pay for their college, or they may need some scholarships.

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I don't mean to lecture or suggest your decision is unsound, but note that the expected opportunity cost of investing in any given stock vs. an index ETF over 9 years is about an 85% return.

why did you pick 9 years? When you use an arbitrary number like that, it looks like cherry picking.

The OP mentioned 9 years.

imho was still a fair question, no need to downvote. Not arguing with the index argument, but I've had finance "experts" trying to pull similar tricks on me by using weird years, etc.

There's a big difference between "these specific 9 years" and "the average 9 year span". It's a lot harder to make cherry picking arguments with the latter.

Flip the bozo bit xor conman bit on anyone using the former.

How is this calculated? Simply by taking the average of every stock you could possibly invest in? On NASDAQ + NYSE?

most individual stocks lag the index . the odds of choosing a stock that beats or meets the index are low.

Basically the median stock is worse than the index. Diversification is good.

>I told my kids either the shares will pay for their college, or they may need some scholarships.

Assuming they are teens and old enough to think for themselves. I wonder if they felt safe and happily going out to play or working their ass off trying to get Scholarships.

I vaguely remember Tesla discussion on HN not long ago of it being cash strapped and was on the verge of bankrupt. ( Or something similar ). It is truly amazing how they managed to crush all naysayers and sceptics.

My kids are going to work for scholarships if college is in their future. I should have but didn't because my parents didn't understand the game and nobody told me otherwise. There is a balance to this though but I will provide all of the supports I can to help them be the individuals they are.

Please don't xplain the game you are referring to. I had scholarships but I don't get the game.

If you apply to enough scholarships you will get some. Anyone paying for their full cost of education is a chump.

I hate that can't edit my comment up above, shouldn't type on the bus. I was trying to say "Please explain the game".

I disagree that college is a scam. I went many years ago when it wasn't that expensive, I had a job and also scholarships, was able to pay as I went with some parental help. But it was nothing like today, where it costs 30k a year at a reasonable state school. My generation has not met our responsibilities to maintain our countries infrastructure including educational infrastructure. It doesn't help that much that I have argued and voted against the direction of making education ever more expensive (in part because of lack of state funding).

>I vaguely remember Tesla discussion on HN not long ago of it being cash strapped and was on the verge of bankrupt.

That is called fud. They omitted the part about Tesla being able to raise capital very cheaply and easily and about how Tesla is cash-flow positive. I think his kids will be fine. If Tesla were truly in dire straits as the media said it was, the stock price would have reflected that (single digits or low double-digits instead of $200-300/share) and Tesla would not have been able to raise money on such favorable terms.

I remember that stuff. Passing look at the financials would tell you it was all bullshit. Tesla had enough cash to keep eating their losses for another two years. Making money on unit sales. And had a couple hundred thousand preorders.

They also have enormous debts, negative working capital, and their CapEx hasn't come close to depreciation for a few quarters.

Are the days of cheap capital still here? Tesla's last capital raise wasn't exactly pretty, and with the implosion of WeWork and some other cash intensive startups where profits were lacking it isn't immediately obvious what terms they would raise capital at.

> I told my kids either the shares will pay for their college, or they may need some scholarships.

Probably not the best strategy to put essential money into a growth stock during an unprecedented bull run and expect the growth to continue for another 9 years. The likes of TSLA being at a higher price than today in 20-30 years are decent, but in 9 years? Very uncertain. See: every growth stock that hit a peak in 2000, and what happened in the following 9 years.

At the very least, it's probably not the best idea to tell your kids that this is what you're doing.

Highly confident of exceeding 360k deliveries for 2019.

Musk got in trouble for tweeting that he’d hit 500,000 this year.

*Run rate of 500,000

From their 2018 Q4 report;

“Barring unexpected challenges with Gigafactory Shanghai, we are targeting annualized Model 3 output in excess of 500,000 units sometime between Q4 of 2019 and Q2 of 2020.”

Musk later tweeted he thought it would come in at the earlier Q4 side of the guidance.

500k annualized is 9,600/wk. They past 7k/wk with Fremont and want to be at 3k/wk in GF3 by the end of the year.

I think they will guide a range of 600-750k units in 2020. It depends how quickly they can get GF3 up to 5k/wk and how much additional capacity they will bring on for Model Y in Summer 2020.

Why would they produce 500,000 if they only are delivering 360,000.

just goes to show how media narratives are often wrong. everyone for the past 2 years has been saying tesla is dead due to losses and Elon Musk's supposed "erratic behavior" (that is what the media labels you if you are successful but fail to comply with what they deem to be conventional social etiquette ), yet Tesla has consistently shown an ability to prove naysayers wrong. Tesla generates tons of cash flow from business operations, similar to Amazon despite large one-time losses and not needing to advertise. This is analogous to opening a Subway or McDonald's franchise and initially taking on a lot of debt, but the business of selling burgers is profitable. Analogous to a flipping a light switch, as soon as Tesla stops spending on cap-ex for expansion, Tesla will instantly go from losing a lot of money each quarter to making a lot of profit.

Also,Tesla can raise debt so cheaply and so easily, that its stock actually went up when it did a secondary offer. Let that sink in: Tesla stock went up despite diluting itself, which virtually never happens. That’s like being paid to borrow money, which give you an idea of how advantageous of a position Tesla is in. Tesla is possibly the only company in existence that gains value when it takes on debt. Just goes to show how media keeps being wrong about Tesla running out money being a concern. In theory they can raise as much money as they want and the price won’t go down.

Ford and GM need to spend billion on adverting a year to make people aware their new models exist, let alone want to buy them. Tesla gets free PR though its spokesperson and CEO , Elon Musk, and his Twitter account and its captive audience of millions of followers, which is way better than some crappy, million-dollar TV ad that 99.999% of viewers will fast-forward, forget, or ignore. And then the media is glued to Musk's twitter account, so anything Musk tweets out is amplified, all for free.

Tesla is going to go much higher. I think $1000 share within 4 years is easily doable.

My friend is long TSLA because he hopes it will pay for his Tesla.

That sounds pretty weird when you talk about it. Like I'm long Aetna because I hope it will pay for my colonoscopy.

It's not weird actually. Peter Lynch would walk around shopping malls and see what people were wearing and buying. The next thing HN downvoters are going to say is that a good business is not necessarily a good investment. However, it's investing in what you know - which is another Peter Lynch idea.

A number of investors, Peter Lynch and Warren Buffett, especially act as if their process is less sophisticated than it is. Sure, maybe Peter Lynch had a few ideas cued up by walking through shopping malls, but the guy could also read a balance sheet.

Not sure why people think long term Tesla is in an amazing position.

Their market share can only go down. All of the car companies have or are releasing cars this year/next and are significantly more capitalised. Some of these cars are superior to Tesla e.g. Porsche Taycan and their ability to share platforms between brands helps to amortise costs.

As we've seen with Summon their FSD program does not look like coming out anytime soon and their inability to be profitable means they can't invest in it or even fundamentals like product refreshes.

Market share can go down while market size for electric vehicles increases with a positive profit growth for Tesla.

But I agree that, as an investment, Tesla stock prices are something the company has to grow into not something that is reflective of in hand performance - and there is always risk there.

> Some of these cars are superior to Tesla e.g. Porsche Taycan

Depends on your metrics. IMO, the Model 3 Performance is the superior car. Half the price, quicker, longer range, and has access to the largest fast-charging network in the country.

You didn't even mention efficiency, which means generally slower charging time/km/kW for Taycan.

On the other hand Porshe is still luxury brand, so I can imagine the interior being more elegant.

Slow, heavy Volkswagen is my take.

I think the hope is the Porsche Taycan will be a legitimate track car. Teslas are still known to overheat, and I have yet to find a single example of someone tracking a Tesla for even 5 laps in a row (I am aware of the Model 3 Track mode, but either nobody is using it or it doesn't work).

EDIT: Found this article:

https://insideevs.com/news/367599/video-tesla-model-3-track-...

So it is doing significantly better than what I originally stated, although apparently you're only going to get about 30 minutes of driving before you have to recharge. That takes a few minutes with gasoline, and a few hours with electric (at 80% you won't even last the 30 minutes).

There are some interesting comments on that article, someone calculates the car will only last about 15 minutes on a really demanding track.

I will definitely concede that Tesla's cooling is insufficient for track use.

Track mode pre-cools the batteries when you enable it (among other things), which allows you to go for longer, but it only delays the inevitable.

I'm interested to see if the Model S Plaid edition and Roadster 2.0 have better cooling to make them better on a track.

I think it's just really hard to keep their batteries where they need to be. In order to get better performance/range, Tesla chose NCA batteries.

https://batteryuniversity.com/learn/article/types_of_lithium...

The problem with NCA is it is more volatile, and if it overheats it literally explodes violently. I am not saying this is insurmountable, but looking at the progress Tesla is making versus the reality of how long you can drive the cars hard, I think Teslas might never be great track vehicles.

Although every EV car will have this problem to some extent, so it's not limited to Tesla. If Porsche can't figure out how to cool an EV well, then it's a long way away because they are famous for their engine cooling technology.

What’s the importance of trac performance in this context?

The Tuscan also quickly runs out of charge at top speed and then be forced into a car or battery swap.

PS: At the extreme Indy cars average 1.92 MPG, batteries are just a poor fit for any kind of endurance racing.

> What’s the importance of trac performance in this context?

OP said the Model 3 was a superior vehicle, I was stating why it might not be.

> The Tuscan also quickly runs out of charge at top speed and then be forced into a car or battery swap.

The meat of my comment was about batteries overheating, not being drained. We have no idea how well Porsche will cool their batteries in their car until someone has had a chance to test it.

> PS: At the extreme Indy cars average 1.92 MPG, batteries are just a poor fit for any kind of endurance racing.

This is a disingenuous comparison. We are talking about street vehicles you or I can buy and drive on public roads, not track-only vehicles that cost more than a house anywhere but the Bay Area.

I also think it's disingenuous to call a half hour of racing an endurance run. I think it's more accurate to say batteries are a poor fit for racing with the exception of drag races.

Hill climb races tend to be a few minutes and would work just fine with electric vehicles. EX: https://en.m.wikipedia.org/wiki/Pikes_Peak_International_Hil...

I concede, it would be really awesome to watch EV cars attempt Pike's Peak. I'm actually surprised how well it seems to cater towards their capabilities.

You can: https://www.youtube.com/watch?v=QnH15dejp0s

(the Volkswagen 2018 full drive)

bronson beat me to it, EVs have now set the Pike's Peak record, and ironically it's a VW (just not one they put into production). Here is another video of the VW, the first result for "EV pikes peak":

https://youtu.be/kAJaGAMWjHM

> I think the hope is the Porsche Taycan will be a legitimate track car.

No, that is definitely not the hope. The Taycan weighs over 5000 pounds. It will not be a track car.

The hope is that the build quality will be typical Porsche. Whereas the build quality and ergonomics of a Tesla, well hasn't been seen for 30 or even 40 years, at least not in the West.

Not an owner or shareholder. I encourage you to read up a bit more on their competitive strengths, including their battery, charging infrastructure, and autonomous driving tech. In that regard they are WAY ahead of the competition. I am stoked that VW is serious about playing the EV game, and you are correct that they are significantly more capitalized; however they are still WAY behind Tesla in the critical areas mentioned above. IMO, they are going to gain a lot more market share, for a long time to come.

The Porsche Taycan is not superior on any metric.

Also, they just turned a profit. Did you write this comment before they reported?

On any metric? The car reviews disagree. There's a general consensus that Porsche did a great job with a sporty car that appeals to its client base, and benefits from the luxury and build quality experience of the brand.

Style is subjective. Everywhere else it under performs a Model S and costs twice as much.

> Everywhere else it under performs a Model S

That isn't the practical reality:

https://www.thedrive.com/news/30467/watch-a-porsche-taycan-t...

https://www.thedrive.com/news/29946/porsche-taycan-laps-brok...

A Nissan Leaf can also hunt down the Model S on track:

https://insideevs.com/news/359903/video-nissan-leaf-beats-te...

> A Nissan Leaf can also hunt down the Model S on track:

A modified, race prepped, brand new 2019 Leaf beat an old, stock Model S of unspecified mileage. Given how quickly TSLA has been advancing their powertrain and battery tech, leaving those details out is misleading at best.

> A modified, race prepped, brand new 2019 Leaf

What were the magic modifications that made the Leaf such a monster on track?

> Given how quickly TSLA has been advancing their powertrain and battery tech

Ah. The car is "old", Tesla is advancing so fast, and the "old tech" no longer matters.

So which models and model years of Tesla vehicles are now garbage old tech and should be avoided? Everything prior to 2019?

According to their "tests" P100D did 0-100 in 2.87 seconds, slower than ordinary users in random YT clips with 5 adults in the car.

It must be a conspiracy. Here's another conspiracy:

https://www.carscoops.com/2019/10/teslas-smart-summon-doesnt...

The Taycan has been reviewed to have better performance already. It has a better drivetrain with a higher voltage which means more power, faster charging, smaller more efficient motors, cooler operating temps, along with more advanced suspension, traction control and braking system.

If anything, Tesla would win on non-performance factors like autopilot. The whole point is that Porsche made an electric car for their performance-focused clients who otherwise didn't want a Tesla.

> Their market share can only go down.

The only way that could be true is if they had 100% of the market.

Which is far from the case. Most cars in the global fleet aren't even electric yet, let alone Tesla.

I have been aware for about 20 years that on technology trends, all the car companies will release electric cars somewhere near 2020. And that once they do the agenda of manufacturers and car dealers will be at odds. Manufacturers will want to sell electric because that is the future, and car dealers will want to push gas cars to capture the future maintenance revenue. With the result that manufacturers will find that actually selling those electric cars is an uphill battle.

The fact that "near 2020" is now "this year or next" doesn't change the rest of the prediction. I would therefore be willing to take a bet that most traditional car companies will be out of the car business in not very many years. This means that there is a giant market share to be captured by new car brands.

Tesla is the best known here. But I would also suggest keeping an eye on the many Chinese brands. I consider, for example, SAIC more of a competitive threat to Telsla than Porsche.

I think this is a very salient point, about the dealership model being a hindrance. It's like Sears and Amazon, at some point the incumbent leader can't change fast enough and the new market is run by new companies.

I do think it will take a long time for the big 3 to die, they will probably go all trucks and big SUVs (as Ford has essentially done already), and leave the car market to EVs.

However, I do not think that Tesla will be the big winner. They will be much like Apple and prosper, but Nissan with the Leaf (also Renault with the Zoe in Europe) and now Kia and Hyundai with their small electric SUVs are perfectly placed. They have the big manufacturer experience and millions of miles on their solid EV platforms. They could create an EV Camry/Accord-killer tomorrow--actually, I'm surprised they haven't already.

Edited to add: this is buried in the Taycan thread, and I wanted to comment on that too. The Taycan is an awesome car and will give Tesla's model S performance a run for their money. But that's it. Porsche is a niche car-maker, and track enthusiasts a niche of that niche. I suppose that being owned by VW (or is it the other way around) just means the technology and know-how will trickle down into the mass market, but that hasn't happened yet, and Tesla is already there with the Model 3.

“They could create an EV Camry/Accord-killer tomorrow--actually, I'm surprised they haven't already.”

The fact that they haven’t tried is the root of the problem. And, I suspect, the problem that will continue to plague them for at least a few more critical years.

Most OEMs know that and redefined their dealer relationships in the last years https://www.cbtnews.com/what-does-vws-new-european-dealer-ag...

That helps in Europe, but not in the USA where laws regulate the manufacturer/dealer relationship.

Tesla was very careful to not have dealerships, and fought several legal battles over the issue. But the traditional manufacturers have no such choice.

They can significantly grow with declining market share if the market for electric cars itself grows significantly. That market is currently < 1% of all cars sold.

Consider Apple, which at one time was making more than 50% of the margin in the global market for smartphones, while holding a declining share of unit sales.

They did all right.

I’m not a huge Tesla fan, but the idea that they might become an enormously profitable company without turning into one of those conglomerates that sells cars at every price point seems reasonable, especially in an age where the margins will be in tech and services rather than in selling steel bent into the shape of a car.

All the other car manufacturers are way behind Tesla in pretty much every metric, the most important of which are energy efficiency and safety. Even the much, much more expensive Porsche Taycan S turbo has some margin only in track driving and it will be pretty much destroyed next year by the Tesla S with plaid mode (just looking at the unofficial Nurburgring times) and the new roadster will literally lap it.

> it will be pretty much destroyed next year by the Tesla S with plaid mode

Why don't Tesla's current cars destroy the Taycan? I think it's fair to say that at this time Tesla's a year behind Porsche in the performance EV stakes. Here are some of the Taycan's performance test results which Tesla has so far been unable to match:

- 24 hour endurance run. 3,425 kms covered in 24 hours: https://www.youtube.com/watch?v=4jSG_10_JRg

- Onboard video of their 7:42 run at the Nurburgring: https://www.youtube.com/watch?v=8m31EgQkswg

- Acceleration and handling comparison to the Model S P100D: https://www.thedrive.com/news/30467/watch-a-porsche-taycan-t...

- Model S Plaid's Nurburgring results: https://www.thedrive.com/news/29946/porsche-taycan-laps-brok...

And no onboard video yet from any of Tesla's Nurburgring runs unfortunately. It's also disappointing that Tesla isn't bringing any of its current cars to the Nurburgring.

> the new roadster will literally lap it

That seems unlikely. To literally lap the Taycan the new Roadster will need to achieve a 3:50 lap time.

The current electric lap record is 6:05 held by the Volkswagen ID.R: https://www.youtube.com/watch?v=c3w3fVS-SgQ

And the overall record is 5:19 held by the Porsche 919 Evo: https://www.youtube.com/watch?v=PQmSUHhP3ug

You can add the moose handling test to the list: https://www.reddit.com/r/teslamotors/comments/dhsofz/tesla_m...

> Taycan

A completely unimportant toy.

None of those metrics are important to average daily use. Taycan is way more expensive and the only gain is on some dumb benchmarks. Also, I'd never buy a car of the Volkswagen Group ever. They are criminals, liars and their handling of the Diesel scandal is disgusting.

> None of those metrics are important to average daily use

The Taycan is a performance sports car. Why are you surprised that they emphasize its performance and the repeatability of that performance? It's what the car is built to do:

https://www.youtube.com/watch?v=TP9kokeyxGU

> Their market share can only go down.

When you currently hold less than 2% of the market, this is far from a certain statement. Their share is as likely to increase as their competitors, though the rate of increase is certainly open to debate.

> As we've seen with Summon their FSD program does not look like coming out anytime soon and their inability to be profitable means they can't invest in it or even fundamentals like product refreshes.

Considering that both S and X are getting a major drivetrain and battery refresh next year, I don't see how you can say that they aren't investing in product refreshes.

I do not have a positive opinion on their FSD efforts, however, I will say one positive thing about their approach. They seem to be accomplishing at least as much as some of their competitors (for example, Ford) with far less capital investment. I see no reason why that trend won't continue.

reminds of the same ppl who said in 2003-2013 that competitors to the ipod and then the iPhone have better features or are better. Tesla's value is not just in the features, price, and performance, but also the brand itself.

Other premium car manufacturers have strong brands as well. Tesla have had the field to themselves for some time, this is clearly going to change over the next couple of years.

>> Their market share can only go down

Are you going to ignore the fact that the market size can only go up?

"Their market share can only go down.", the FUDder cries while ignoring the fact Tesla created the entire market and it's exploding rapidly.

Another miracle quarter before a capital raise. If you don't think Tesla are paying fast and loose with their books, while at the same time playing games in China, I don't know what to tell you. Silicon Valley's an easy place to sucker.

It's very easy to manipulate financial results without illegally cooking the books.

It all comes down to timing when you incur/pay expenses and when you record sales. Tesla has openly engaged in this in prior quarters, which is why their stellar quarters are usually followed by abysmal quarters.

Cooking the books would involve changing the actual numbers. Not many people are alleging this.

You can play with your net income numbers, but your top line revenue, gross margin, cash flow, and cash on hand are hard to manipulate

>cash flow, and cash on hand are hard to manipulate

Cash flow and cash on hand can be easily manipulated by not paying bills.

Net Income can be manipulated one-time items.

This will all come out in the 10Q, but in the meantime, Elon realiszed that people will not lend money to cash-burning "startups", so we get another "profit".

Those items are even easier to manipulate.

When do I book this x million of parts? I could book it even we reserve the shipment (accelerate expense) or when we receive the invoice (standard) or when we pay it several months late (defer the expense).

And that's just one transaction that feeds into one line item. There are a lot more opportunities to play with the financial numbers.

>Noisy information still contains information.

I didn't use the term "cooking", but I agree, which is why I don't take the numbers at face value.

Also, why does Elon get a pass with the China stuff? Here we are in a trade war with this country, who consistently attacks our IT, economy and culture, who are commiting atrocities in their own country, and yet Musk is given kudos for building factories and raising money over there from the "save the planet" crowd. Astonishing.

We'll know better when we see the 10Q

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