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"Tesla has sought to portray its latest profit as further proof of the long-term financial sustainability of its business. However, a look beneath the surface reveals a far less rosy picture." $TSLA $TSLAQ
Thread on my latest for @SeekingAlpha
1/ https://seekingalpha.com/article/4406813-tesla-another-profitable-quarter-built-on-regulatory-credit-sales
Thread on my latest for @SeekingAlpha
1/ https://seekingalpha.com/article/4406813-tesla-another-profitable-quarter-built-on-regulatory-credit-sales
Tesla’s financial health has long depended on its ability to sell loads of regulatory credits each quarter. In 1H20, credit sales accounted for all of Tesla’s positive earnings. Things were hardly any better in Q3. $TSLA $TSLAQ
R/T @TESLAcharts
2/ https://twitter.com/TESLAcharts/status/1319661868487761920?source=content_type%3Areact%7Cfirst_level_url%3Aarticle%7Csection%3Amain_content%7Cbutton%3Abody_link
R/T @TESLAcharts
2/ https://twitter.com/TESLAcharts/status/1319661868487761920?source=content_type%3Areact%7Cfirst_level_url%3Aarticle%7Csection%3Amain_content%7Cbutton%3Abody_link
Tesla managed to squeeze out a small profit from operations in Q3, though considerably less than the $333 million reported. However, such narrow profits can easily be erased in the low-margin, capital-intensive automotive industry. $TSLA $TSLAQ
3/ https://seekingalpha.com/article/4381646-tesla-q3-profit-conceals-underlying-problems
3/ https://seekingalpha.com/article/4381646-tesla-q3-profit-conceals-underlying-problems
In Q4, Tesla reported $270M in net income, as well as regulatory credit sales to the tune of $401M. Tesla’s net income actually shrank 19% while revenue from credit sales barely budged. Moreover, Tesla’s income tax provision in Q4 amounted to just $83M. $TSLA $TSLAQ
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Adding back income tax provision, we're left with EBT of $379 million – less than the $401 million brought in from credit sales. What this means is that reg credits were once again responsible for the entirety of Tesla’s profit in Q4. $TSLA $TSLAQ
5/ https://seekingalpha.com/article/4406813-tesla-another-profitable-quarter-built-on-regulatory-credit-sales
5/ https://seekingalpha.com/article/4406813-tesla-another-profitable-quarter-built-on-regulatory-credit-sales
Alas, Tesla will not be able to rely on revenues from credit sales to cover up its operational deficits forever. Indeed, the sun is already beginning to set on the regulatory credit market. $TSLA $TSLAQ
R/T @BradMunchen
6/ https://twitter.com/BradMunchen/status/1360198738191392772
R/T @BradMunchen
6/ https://twitter.com/BradMunchen/status/1360198738191392772
The basic economic force of supply and demand will erode Tesla’s credit business over time. How long it can last is not clear, but even Tesla’s management has acknowledged that the end is in sight. $TSLA $TSLAQ
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Tesla booked $1.58 billion in credit sales in 2020, but with the credit market now living on borrowed time, the clock is ticking to find another way to close the gap, like recognizing more deferred FSD revenue. $TSLA $TSLAQ
R/T @DeanSheikh1
8/ https://twitter.com/DeanSheikh1/status/1358874354369523712
R/T @DeanSheikh1
8/ https://twitter.com/DeanSheikh1/status/1358874354369523712
Recognition of FSD revenue may only provide temporary relief for Tesla’s finances, however. A number of unsettling trends in Tesla’s core automotive business may make financial sustainability even more difficult to achieve in future. $TSLA $TSLAQ
9/ https://seekingalpha.com/article/4394936-tesla-new-wave-of-competitors-threatens-ev-dominance
9/ https://seekingalpha.com/article/4394936-tesla-new-wave-of-competitors-threatens-ev-dominance
Repeated price cuts have certainly not helped matters. In Q4 2019, Tesla recorded $386 million in net income on 112k deliveries, or $3.5k per car sold. In Q4 2020, Tesla recorded $270 million in net income on 180.6k deliveries, or $1.5k per car sold. $TSLA $TSLAQ
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With a PE ratio of ~1220, compared to the industry average of 8.55, vast earnings growth is clearly priced in. Hence, Tesla's continued reliance on reg credits to plug the holes in its financials is an ominous sign for the future. $TSLA $TSLAQ
11/ https://seekingalpha.com/article/4406813-tesla-another-profitable-quarter-built-on-regulatory-credit-sales
11/ https://seekingalpha.com/article/4406813-tesla-another-profitable-quarter-built-on-regulatory-credit-sales
