Read on Twitter
1/ First of two threads based on my latest for @SeekingAlpha:
Tesla is still unable to profit from its core business, relying yet again on regulatory credit sales to show a profit. That is not a sustainable long-term strategy.
$TSLA $TSLAQ https://seekingalpha.com/article/4380656-teslas-third-quarter-results-prove-still-cant-make-profit-selling-cars
Tesla is still unable to profit from its core business, relying yet again on regulatory credit sales to show a profit. That is not a sustainable long-term strategy.
$TSLA $TSLAQ https://seekingalpha.com/article/4380656-teslas-third-quarter-results-prove-still-cant-make-profit-selling-cars
2/ Some analysts (including yours truly) were skeptical of $TSLA's ability to pull off a Q3 profit in light of the ongoing price cuts, massive payout to Elon Musk, a struggling global economy, etc. But $TSLAQ earnings are notoriously difficult to predict. https://finance.yahoo.com/news/tesla-3rd-quarter-loss-still-202852065.html
3/ At first glance, Tesla appears to have had a bumper Q3. The company reported $8.7B in revenue, beating the Wall Street consensus estimate of $8.2B by a considerable margin. A GAAP net income of $331M also surpassed expectations. $TSLA $TSLAQ https://electrek.co/2020/10/21/tesla-tsla-q3-2020-results/
4/ Based solely on the headlines, one might conclude that TSLA's turned the corner to sustainable profits at last. But the reality is quite different. To print a profit, it had to sell $397M in regulatory credits. Sans credits, it LOST $66M. $TSLA $TSLAQ https://seekingalpha.com/article/4380656-teslas-third-quarter-results-prove-still-cant-make-profit-selling-cars
5/ Tesla's latest credit firesale is a repeat of Q2 when it sold a record $428M credits to show a $104M profit. Thus, over the past two quarters, Tesla has reported a combined net income of $435M. Stripping out credit sales, that profit turns to a loss of $390M. $TSLA $TSLAQ
6/ The Q3 bonanza was surprising in light of Zach Kirkhorn's prior claim that credit sales would fall markedly from Q2. Evidently, with real profit once again out of reach, Tesla was forced to dig into its reg credit reserves to plug the gap. $TSLA $TSLAQ https://www.zerohedge.com/markets/gordon-johnson-tesla-engaged-accounting-games-make-their-q2-profit
7/ The Q3 result, while positive on its face, can't conceal the inescapable fact that $TSLA's core business, selling cars, isn't profitable. The credits sales conceal the ongoing operating losses. As @Andreas_Hopf says, $TSLAQ is GovernmentMotors™ https://twitter.com/Andreas_Hopf/status/1319037237934362624
8/ The expanding number of EV alternatives make $TSLA's strategy fundamentally unsustainable. The market for EV reg credits won't last forever. Eventually it will have to reckon with the fact that its operating business isn't working as advertised. $TSLAQ https://twitter.com/TESLAcharts/status/1286083711533015041
9/ How an automaker that can't sell cars profitably can support a $400 billion market cap is a serious question that bullish investors should ask themselves. Will they? Probably not. But that's their loss. $TSLA $TSLAQ https://seekingalpha.com/article/4380656-teslas-third-quarter-results-prove-still-cant-make-profit-selling-cars
