Tesla still an unprofitable automaker

[jaysabi]

^^^^ So any idea when this chip shortage issue will be resolved? I have seen a few posts in social media, which claims that the shortfall in supply is going to persist for a few more months. Also, I have seen a statement from Taiwan Semiconductor Manufacturing Corporation (world's largest producer of chips?), which claims that they have stepped up their production. However, supply chain issues remain for the chip manufacturers in Taiwan.

IMO circumstances behind parts shortages are entirely political.

They're not a natural result of market mechanics, supply chains or any normal shortfall.

In the past when the media offered false explanations for events like this. Many immediately saw through it.

It shows the growth and evolution of how information is disseminated. Now they're offering no explanation or information at all. The few explanations I've seen offered were so horrible/laughable I think people will realize something strange is happening. If they haven't already.

Chinese Manufacturers Begin Production of Cryptocurrency Mining Dedicated SSDs As Chia Coin Gains Popularity

The rise in popularity of Chia Coin, a brand new cryptocurrency, is expected to cause major SSD & HDD shortages around the globe, as we reported yesterday.

Given the increasing demand for SSD and high-performance storage devices, Chinese manufacturers have commenced production of mining dedicated SSDs which should be hitting retail soon.

https://wccftech.com/dedicated-cryptocurrency-mining-ssds-in-production-chia-coin-rise/

In the  educated world's opinion, there's no conspiracy theory behind the parts shortage. The media has not offered false explanations, and nobody who was informed saw through it because there was no ruse to see through. The parts shortage is a result of market dynamics, and all industries that use chips are dealing with it.

[mindrust]

Tesla will be making its money from crypto trading from now on I believe. Buy low, sell high. Works for everybody. :d Why make cars when you can make a lot more money from trading crypto? It doesn't make any sense. I think It is time for Elon to close down TSLA and become a full time crypto-trader. Manufacturing stuff is so last decade. Trading crypto is where it is at now.

[jaysabi]

I honestly don't understand why people valuate Tesla at such high levels.

It virtually makes no sense. People are essentially pricing in decades worth of earnings growth into an unprofitable company. Automakers that have been making profits for decades, like BMW and Mercedes, are somehow outpriced in terms of market cap.

A 50 P/E ratio is considered to be bubble territory. Tesla currently has a four digit P/E of 1,100. Think about that.

I agree that Tesla may be a bit overvalued, but P/E may be a wrong parameter to look at. During the early days, many of the multi-trillion corporations of today (such as Microsoft, Yahoo and Amazon) had a P/E of more than 1,000. Many of these corporations had an operating loss, so in most cases there was no P/E to start with. Tesla is having an operating profit (although small) and therefore it is possible to calculate the P/E. We should be rather looking in to the yearly sales and growth percentage.

Yahoo was definitely never a trillion dollar company, but I take your point. The one thing that actual trillion dollar companies have going for them though is a huge competitive advantage and defensive moat. Amazon is an unrivaled logistics company, Microsoft is firmly entrenched in business culture, and Apple is firmly entrenched in consumer culture.  Tesla has a first-move advantage and nothing else.  In a few years, they will compete against every major auto manufacturer and there's no way they'll be able to grow market share enough to justify this valuation, which treats them like they'll be the only EV producer.

[Gyfts]

when car manufacturers are in the expansion phase they are never profitable
every penny goes into making newer bigger facilities. if they just stored the money. declared it as profit and paid tax on it. they are wasting it

no expanding business makes profit. its how they expand.
paper losses dont equal property losses

heck even trump earned hundreds of millions and only declared a couple thousand in profit (less than a minimum wage waitress would declare)

even bezos under declares his true financial state to pretend he is not making profit

Yes, but Tesla is not your ordinary car company so their business model is a bit more unique than other US car companies. They're a simply a technology company that makes cars, so all their share holders are banking on their battery technology being used to shift the world away from fossil fuels and more towards electric power batteries (presumably based on renewables). Tesla posts all their financials online available to everyone and their shareholders, it was no secret that they were hemorrhaging money. It isn't a bunch of cleaver accounting either, they were nearly broke at one point.

[jaysabi]

Despite Tesla's first quarter earnings, Tesla is still an unprofitable automobile manufacturer. Digging into the numbers, Tesla reported a $438M GAAP net income, but they had $518M in regulatory credit sales and more than $100M in profit related to bitcoin sales (they sold a total of $272M worth of bitcoin in Q1), which means the primary business of manufacturing cars is still not profitable.  Perhaps as they continue to scale this will change, but the valuation still looks insane at these levels, and electric vehicle competition is only going to get stiffer going forward.

What’s the basis of being profitable? Is there a limit for that?
As far as I understand, TESLA is still on a net profit despite of the pandemic we’re into right now and that can still be consider as profitable excluding those profit outside their real business. TESLA is growing because they continue to adopt change and they develop good things, more cars of TESLA will be sold in the coming years.

The main source of their profitability comes from selling regulatory credits the government gives them for manufacturing EVs to other other car manufacturers.  Essentially, without government support the company wouldn't be profitable at all, but this shows that they're not profitable on manufacturing cars yet.

[tbone777]

Tesla is like dogecoin, they are here only because of Elon Musk

[Karartma1]

As a company CEO, If I had to rely on selling some portion of my cash reserves, and in our case is not cash but it's BTC, I should be asking myself what is going wrong. Tesla, being an automotive firm, cannot rely on that to dilute the earnings and show the market some huge profits. It could work for a while but in the end these guys manufacture cars and they're not an exchange.

[Trechometer]

when car manufacturers are in the expansion phase they are never profitable
every penny goes into making newer bigger facilities. if they just stored the money. declared it as profit and paid tax on it. they are wasting it

no expanding business makes profit. its how they expand.
paper losses dont equal property losses

heck even trump earned hundreds of millions and only declared a couple thousand in profit (less than a minimum wage waitress would declare)

even bezos under declares his true financial state to pretend he is not making profit

Man, you are perfectly right! We are such a small humans beside this giant monsters!
And I have also a small share of Tesla and for now is very unprofitable.

[Vishnu.Reang]

Yahoo was definitely never a trillion dollar company, but I take your point. The one thing that actual trillion dollar companies have going for them though is a huge competitive advantage and defensive moat. Amazon is an unrivaled logistics company, Microsoft is firmly entrenched in business culture, and Apple is firmly entrenched in consumer culture.  Tesla has a first-move advantage and nothing else.  In a few years, they will compete against every major auto manufacturer and there's no way they'll be able to grow market share enough to justify this valuation, which treats them like they'll be the only EV producer.

During the dot com boom, the NASDAQ index was at around 1/10th of the level which it is now. And Yahoo had a peak valuation above $100 billion in 1999-2000, and the P/E was similar to what Tesla is having right now. But the bubble only lasted for a few months, and the stock prices crashed by more than 90% in 2000-01. In many parameters, Tesla resembles the dot-com stocks of 1999-2000. Their current business model using overpriced EVs is not very sustainable. But we need some more clarity on the competition. A number of other automobile corporations are ramping up their EV sector, but in terms of technology I would like to see how they fares against Tesla. The current competition (Nissan, Hyundai.etc) is noway near Tesla in terms of technology.

[mindrust]

Yahoo was definitely never a trillion dollar company, but I take your point. The one thing that actual trillion dollar companies have going for them though is a huge competitive advantage and defensive moat. Amazon is an unrivaled logistics company, Microsoft is firmly entrenched in business culture, and Apple is firmly entrenched in consumer culture.  Tesla has a first-move advantage and nothing else.  In a few years, they will compete against every major auto manufacturer and there's no way they'll be able to grow market share enough to justify this valuation, which treats them like they'll be the only EV producer.

During the dot com boom, the NASDAQ index was at around 1/10th of the level which it is now. And Yahoo had a peak valuation above $100 billion in 1999-2000, and the P/E was similar to what Tesla is having right now. But the bubble only lasted for a few months, and the stock prices crashed by more than 90% in 2000-01. In many parameters, Tesla resembles the dot-com stocks of 1999-2000. Their current business model using overpriced EVs is not very sustainable. But we need some more clarity on the competition. A number of other automobile corporations are ramping up their EV sector, but in terms of technology I would like to see how they fares against Tesla. The current competition (Nissan, Hyundai.etc) is noway near Tesla in terms of technology.

Good analysis. I also think similar. Everything (crypto included) is in a bubble except a few assets maybe. The question is, is this time different? Will the markets go up forever this time without a correction? What if we don't get a dotcom like crash and climb without any market correction?

As far as the EV's go... I am not really a EV believer. I will buy a petro-car as long as they let me buy it. Not really a fan of batteries.

[jaysabi]

Yahoo was definitely never a trillion dollar company, but I take your point. The one thing that actual trillion dollar companies have going for them though is a huge competitive advantage and defensive moat. Amazon is an unrivaled logistics company, Microsoft is firmly entrenched in business culture, and Apple is firmly entrenched in consumer culture.  Tesla has a first-move advantage and nothing else.  In a few years, they will compete against every major auto manufacturer and there's no way they'll be able to grow market share enough to justify this valuation, which treats them like they'll be the only EV producer.

During the dot com boom, the NASDAQ index was at around 1/10th of the level which it is now. And Yahoo had a peak valuation above $100 billion in 1999-2000, and the P/E was similar to what Tesla is having right now. But the bubble only lasted for a few months, and the stock prices crashed by more than 90% in 2000-01. In many parameters, Tesla resembles the dot-com stocks of 1999-2000. Their current business model using overpriced EVs is not very sustainable. But we need some more clarity on the competition. A number of other automobile corporations are ramping up their EV sector, but in terms of technology I would like to see how they fares against Tesla. The current competition (Nissan, Hyundai.etc) is noway near Tesla in terms of technology.

Good analysis. I also think similar. Everything (crypto included) is in a bubble except a few assets maybe. The question is, is this time different? Will the markets go up forever this time without a correction? What if we don't get a dotcom like crash and climb without any market correction?

As far as the EV's go... I am not really a EV believer. I will buy a petro-car as long as they let me buy it. Not really a fan of batteries.

No market will ever go up forever without a correction.  Large market corrections are actually pretty common.  The stock market suffers a 10% correction on average less than every two years, and a 20% correction on average every 3.5 years.  So such large drops are by no means rare or unexpected.  Even over the last 10 years when we've had the greatest bull market in history there were periods where the market had flash crashes; they just recovered quickly and so people tend not to remember.

[int03h]

Tesla's value comes from thinking that everyone should use electric vehicles and solar power equipment. Their technology is the pioneer and the future of mankind. So the value of Tesla is the value of belief.
They are paying dividends to investors through the solar cell business and Bitcoin trading. This is not very good. The electric car industry should have been a profitable industry for them.

[mindrust]

Tesla's value comes from thinking that everyone should use electric vehicles and solar power equipment. Their technology is the pioneer and the future of mankind. So the value of Tesla is the value of belief.
They are paying dividends to investors through the solar cell business and Bitcoin trading. This is not very good. The electric car industry should have been a profitable industry for them.

That too... Tesla's main business is making cars, not crypto trading. They may make money from crypto trading but that's not their main expertise. Why would anybody buy any TSLA just because they are making money from trading but not making cars is beyond me.

I'd rather invest in JP Morgan or Goldman if I wanted to invest in an investment bank.

[bocyaj]

Despite Tesla's first quarter earnings, Tesla is still an unprofitable automobile manufacturer. Digging into the numbers, Tesla reported a $438M GAAP net income, but they had $518M in regulatory credit sales and more than $100M in profit related to bitcoin sales (they sold a total of $272M worth of bitcoin in Q1), which means the primary business of manufacturing cars is still not profitable.  Perhaps as they continue to scale this will change, but the valuation still looks insane at these levels, and electric vehicle competition is only going to get stiffer going forward.

Tesla now holding a huge bitcoin and they joined the whale club now.The large amount of bitcoin holders are whale in the market and the decided the flow of bitcoin and in reverse change the price of bitcoin with the demand of the coin.When the tesla made a electric vehicle with the acceptance of bitcoin of payment will double the bitcoin price.

[dezoel]

I believe corrections and crashes are a bit different. Crash is what happened in last years march, and what happened in 2008, these are of course stock markets (for crypto look at 2015 and 2018) and those are different from corrections, in 2017 or 2018 there was a correction for stock market as well, a 10% drop is nothing, that happens even 2 years like mentioned and that's fine, I am fine with that but having some sort of situation where 40% or so drop is a crash and not a correction. Will tesla have a correction or a crash? Well, it depends on how they move forward, they are selling a lot of cars and there is still so much they could sell to as well, people literally just put their order in and wait until they get it, think about a world where you can just buy it and go home, at that moment it will be great.

However the price is already like they are at that level whereas they are not, if the price doesn't go up too much from now to future 2 years, just 10-20% yearly, then it may have a correction, but if it keeps going up like this that will turn into a crash one day.

[Rehan Zakir]

Tesla is a very big company in the world of car making companies. Tesla is also a very popular company that manufactures electric cars and export in the whole world. Tesla spend a lot of money in buying bitcoin. But this company is still making a huge money through cars.

[Silberman]

It is entirely possible that Tesla will become profitable not because of their car sales business but as holders of bitcoin, also we must understand that even if Tesla is not profitable now the value of something not only depends on its past and present it also depends on its future, and stockholders are looking at the future of Tesla and they think there is a lot of potential there and they do not want to miss it, in the worst case scenario they earn some money and drop the stock in the future, but in the best case scenario they are holding the next Microsoft or Apple and they become insanely rich because of it.

Just because Bitcoin added $100 million plus to the Tesla balance sheet for this quarter, I don't expect this to happen every time. Right now Bitcoin is going through a bullish phase and Tesla is also benefitting from it. But my question is what will happen once the bullish phase ends and a correction occurs. Instead of a net gain from Bitcoin sales, Tesla will be showing a net loss. And this may be unpalatable for many Tesla investors.

That is the big question, we all know that holding your coins is the easiest thing to do in the world when the market is going up but when the market is going down it is also the hardest, we must also remember that even if Elon is still managing Tesla and his other companies if he retires then he will need to leave command of his businesses to other people and if they are not as ardent believers in bitcoin as he is then most likely they will sell any bitcoin they have crashing the market in the process.

[wiss19]

Despite Tesla's first quarter earnings, Tesla is still an unprofitable automobile manufacturer. Digging into the numbers, Tesla reported a $438M GAAP net income, but they had $518M in regulatory credit sales and more than $100M in profit related to bitcoin sales (they sold a total of $272M worth of bitcoin in Q1), which means the primary business of manufacturing cars is still not profitable.  Perhaps as they continue to scale this will change, but the valuation still looks insane at these levels, and electric vehicle competition is only going to get stiffer going forward.

Tesla is still growing and they have a really huge fan base which is definitely going to grow with time, unless they happen to mess it up themselves, which I know for sure that they wouldn’t like to try such a thing, so they are going to do their best to keep their followers and as well grow their business, they already have good marketers. So, let’s see where they will be heading to in the future.

[Nanda Dewi277]

Is there any link to that? ANd how to determine when Tesla is no profitable automaker industry?
Do the profits only take count from how many Tesla that was sold?
Well, I am sure enough if tesla actually has enough profits. however, we don't know because we don't know the aim of the activities. And about Tesla buying Bitcoin. This may become one of the strategy before bearish down

[Hamphser]

Is there any link to that? ANd how to determine when Tesla is no profitable automaker industry?
Do the profits only take count from how many Tesla that was sold?
Well, I am sure enough if tesla actually has enough profits. however, we don't know because we don't know the aim of the activities. And about Tesla buying Bitcoin. This may become one of the strategy before bearish down

If we do just think sensible or with some common sense.If Tesla isnt a profitable company then Elon would be considered to be the richest man in the world?
People do just make out some conclusions based up on whats the current thing or event that they are seeing on what Tesla is been doing.Is profit taking into their Bitcoin stash can be considered the reason
that they arent profitable?

People should always have some reconsiderations on making out presumptions that Tesla is an unprofitable company.They wont be continuing the business if it werent profitable.