Not sure how embed:

"Dear world. The sequential improvement in net income claimed by $TSLA tonight was $1.03B. They delivered 37,400 more Model 3s and 5,360 more S/X versus Q2. That's $24,000 in CONTRIBUTION margin per extra car delivered. If you believe these numbers, you are an idiot."

@teslacharts

[/YOUTUBE] This may sound like sour grapes but something is off

I reviewed the balalnce sheet the only thing that makes sens is the understatement of accruals


Looking forward to the 10q

The more i look at this the less these numbers make sense

I work with various LEAN industries and I echo this sentiment. This is literally impossible.

I don't have an accounting background and only a basic background in corporate finance, but I am going to state that this is fraud.

cash flow secured.

It's an accounting gimmick related to shortening the delivery duration. They don't actually have that cash and lol at not needing a raise. I was hoping for $350 tomorrow to short but after that trainwreck conference call 325-330 might be the top. Just wild.

It's just wrong to say it's "mathematically impossible."

They literally (in the literal sense of "literally") have the cash/cash equivalent instead of having it in inventory or something else.

What you want to actually say is they can't shorten days inventory forever and that they will need to raise the cash to finance the inevitable increase in inventory due to higher sales (which should keep happening) and probably higher days inventory (to accommodate overseas sales and to showroom more models if nothing else.)

Wasn’t there a tear down that said Model 3 costs 28k in labor and materials to build? The same firm that admitted to having to eat crow.

That was months ago. Tesla probably got labor even lower just due to learning curve.

i highly doubt anybody would use their labor costs at the time for this kind of theoretical calculation.

How is it "countered"? They didn't triple production or anything. They didn't even increase production from the end of Q2. At the end of Q2 they were making 7000 cars/week and at the end of Q3 they were making 6500 cars/week.

If they shorten the delivery window they get 10 days more revenue in the quarter relative to what they have to pay suppliers - more with their delivery tricks - which is over $750 million in net incoming minus outgoing cash which covers their increased FCF, no? Add in further stretching out paying suppliers and that's over a billion in free cash flow. So they basically gave a one time shot to FCF which will reverse drastically when they start shipping M3 to Europe and catch up with their supplier payments and catch up with their delivery tricks (taking payment and not delivering).

I'm not an accountant so if I'm missing something in how everything is accounted for, let me know.

This is my view as well. Bar some other miracle (think they've exhausted all options by now) Q4 will catch up with them.

Agree that all makes sense, and assuming there's no legit fraud on top of that they basically met expectations and came in a little below breakeven without the accounting tricks. But the conference call suggests there's a good chance they're hiding a lot more.

The question is how are the moron bulls going to react to this today? The 25% rally over two days is obviously completely unjustified but are they going to keep buying it up?

Just a quick recap, the bears are now dead set on accounting fraud?
So, TSLA could have tried to cook the books and make them more plausible, but instead they were so committed to committing fraud they went ahead and basically made up numbers? Certainly makes a lot of sense.

The bears are going to be right for 2019 due to the economic climate. It's game over for them afterwards.

It's pretty clear based on the conference call the numbers look a lot better than the reality. It's not clear they crossed the line into fraud but Elon and friends are doing their best to look guilty.

Agree, also the explanations didnt really add up.


Wish i could post from work but the 1b of AR is odd too, especially for a companh that requires full payment before delivery. The other side of that 1b number is a credit (benefit) to P&L


Its not the fact they did better than i expected and they did. Its the relationships like 11k less cogs per car? In 1 quarter? Sga dropping despite a 100% increase in sales, so it costs less to sell more cars during a delivery and logistics hell period? Then not a single answer on how they did it outside what was mentioned here. Want to address that too.

Not dead set on fraud, but

11k less cogs per car has to be because selling more M3, which is cheaper to produce?

AR is probably normal.

COGS is explainable by learning curve improving efficiency and fixed costs being spread out over more units. That and selling some cheaper units.

There is a big difference between fraud and "gamed" - it's clear they gamed the numbers for a blowout quarter and it's not sustainable, as they have robbed the future to post these numbers.

http://adventuresincapitalism.com/20...sults-secured/

pretty much explains it. they still need a capital raise, and depending on the terms they still might be insolvent in 2019.

That article is wrong about just everything. I am sure Tesla is gaming numbers but this guys analysis and reasoning are just wrong.

AR is fairly consistent at about 1:6 of revenues. And yes, Sunday matters because Tesla doesn’t get paid by financing bank on sundays.

Most of depreciation is straight line. Tooling is relatively insignificant.

Yes, shortening days inventory is unsustainable as a source of financing but it can also be read as Tesla maturing as a company streamlining delivery process, at least relative to where they were.

Whatever games they played on the margins to squeeze out money, bottom line is they were profitable with very significant positive FCF. Even if you discount some of the numbers, TSLA is at least extremely close to break even and positive FCF.

It's so ****ing obvious it's mostly the latter. But come on, how are you surprised by a substantial improvements in COGS (not you, but the general audience ITT)? This is not a mature company trying to substantially improve their production. This is a company that just doubled their volume in output.

Then bet on it and I bet you'll be there quicker than they are.

it's not only an unsustainable source, it's coming right back at them in another quarter.

there are these big blue things called 'oceans' and some day in the near future they will need to put their little car thingies on a boat thingy and have them stuck there for a few weeks.
gonna be fun.

It's trivially for them to finance that specific outcome (and I said they'll have to). If necessary, they could just get a line of credit secured by overseas inventory/AR. Add some "prepaid overseas delivery fee" or some such non-sense and it gets even easier.

This keeps getting better. He took a dump on uber's lunch plate.

I did ... My last dozen posts on this have all said "wait for the unsustainable earnings pump to get in short", "pop and drop like netflix" - the bear thesis hasn't changed here, if anything it's stronger by the loltastic Q3 and bizzareo-world conference call.

Netflix dropped like 25%, is this the drop you are referring to?

Your trade will be profitable just due to economic activity.