Tesla Beats In Q4 With Adjusted Revenues Of $761M

Yes. It's short for "Tesla's earnings beat expectations in Q4"

I got both of my rear cheeks handed to me on earnings today. (I was long a fair number of puts on TSLA.)

I believe in the company's technology, and the Model S is quite nice (a colleague has one), but the stock is WAY, WAY ahead of itself here.

"The market can stay irrational longer than you can stay solvent." rings quite true for me today.

So the last time you valued Tesla, you stuck your head into the sand and calculated a range of "indicators"?

I mean, really, what do you expect people to respond? You are trying to smash water with a hammer.

Tesla's margins are almost double those of other manufacturers; a big part of the profit comes in from their automated highly scalable production. When they eventually release their Model E (affordable performance electric vehicle for the masses) it'll be a game-changer.

Surely your money is where your mouth is, right? You're going to make a killing guaranteed! Where can I subscribe to your newsletter?

I'm curious: why did you restrict your analysis to 5 years?

On the one hand, I'd expect Tesla to have tech-like growth for 10 to 20 years. On the other hand, competition is bound to happen eventually. How did you pick 5 years?

Tesla might be the biggest extinction threat to GM, Toyota, VW and the other big guys.

Don't you think they would pay $23B to, not only extinguish that threat, but also gain from the upside?

In my mind, if someone may be willing to pay $23B for something, it's worth $23B. That's why I think the valuation is quite fair.

EDIT: Fixed typo

Tesla is strongly positioned (effective first mover, superior execution) in a rapidly growing slice (electric vehicles) of a stagnant market filled with cut-throat competition (U.S. automobiles). The present valuation precludes a Cupertino-style citadel in the luxury market - Tesla has to burn Ford, GM, and/or Fiat's market shares into the domestic market and/or steal their growth in emerging ones, or burn their capital trying.

Do you have this analysis handy? I find valuation...yada yada yada about as convincing as the other posts citing Tesla's great prospects. Tesla's margin is about 25%, so your valuation sounds like it would be way off out the gate.

I wouldn't weigh an investment in TSLA with the same metrics you'd use for mutual funds or steady large companies.

Tesla is clearly a growth company. They're creating new categories (luxury, electric vehicles) and building infrastructure around it. They've also only released 1 sedan so they've barely penetrated the market. As a growth stock, I don't see anything alarming about a company that's worth 30x its quarterly revenues. They have a visionary, intelligent CEO in Elon Musk and the image/brand of a car company that's ahead of the game. Not to mention, they make amazing products. FB is valued at 60x quarterly revenue, TWTR is valued ~140x quarterly revenue. I would much rather bet on Tesla becoming the most valuable car company in the world (at least ~$50b in mkt cap) than the insane valuations of social media companies.

680MM estimate was non-GAAP, Tesla's actually non-GAAP revenue was $761MM

good fucking lord

Basically it just says that following one set of guidelines (the GAAP) their numbers are this, but following another set of guidelines (their own preferred accounting guidelines) their numbers are higher. It's kind of like the difference between listing your cumulative GPA and major GPA. The numbers are the same, it's just the ones you choose to include that are different.

All companies in the US are required to report GAAP numbers according to the rules. Some companies choose not to follow the rules. But this is risky, because eventually someone with an accounting background will detect the discrepancies, and notify the SEC.

Thus, it's become fashionable to report both GAAP and adjusted numbers, and highlight the adjusted numbers in your press releases. Now the SEC can't get you. You've followed the rules and reported the GAAP numbers.

During the dot-com bubble, companies used to report GAAP earnings alongside EBITDA. Earnings before Interest, Taxes, Depreciation, and Amortization. In other words, we earned all this money, if you pretend that all of these other expenses didn't cost us anything.

As Warren Buffett pointed out: "References to EBITDA make us shudder — does management think the tooth fairy pays for capital expenditures?" Charlie Munger called them "bullsh_t earnings."

EBITDA eventually got such a bad rap that companies stopped using it after the dot-com bubble. These days, companies that want to distract from the GAAP numbers will report "non-GAAP" or "adjusted" earnings. This simply means that instead of mechanically excluding ITDA, each company makes its own decisions about what to exclude.

It has to do with the leases. If you just sell the car, then you record revenue in the amount of the sale * as soon as the buyer takes possession (typically this is a dealer, and the dealer takes possession when the car leaves the factory gate).

Since Tesla is doing their own lease transactions with a guaranteed repurchase price, the GAAP rules state the lease payments must be treated similar to rental income.

In the long term, it will balance out, but Tesla is providing non-GAAP accounting because changes to the lease/buy-outright mix will cause massive swings to the GAAP numbers, but that isn't really representative of the underling health of the company. The non-GAAP numbers basically assume all cars are bought outright.

* less expected warranty cost.

I just want to know, how much are they making from cars and how much from other sources, namely credits related to pollution laws which are nothing more than handouts