Re <<THESE ARE THE TOP 10 WORST SHORT CALLS OF THE LAST FIVE YEARS ... 1. Tesla ...>>
TSLA has by a huge stretch, in terms of two orders of magnitude, by far my best ever relative / absolute shorts, and I hope TSLA shall continue to be every bit as successful as ever
TSLA is like vitamins, or perhaps apples, not the phone but the fruit, ala a TSLA short a day keeps the wolves at bay ...
I believe should the market breakdown, so goes TSLA, but am not willing to express my belief and happy to lob short-munition at long-range distance at the long vs short house-to-house fight by equity and near-money options. I am enjoying tossing plentiful grenades down the long staircase, and lobbing long-range munition into a house-to-house situation.
Tesla’s Third-Quarter 10-Q Is Out. Here’s the Takeaway.
Tesla’s Third-Quarter 10-Q SEC Filing Is Out. Here’s the Takeaway.
Al Root
Oct. 26, 2020 10:36 am ET
Tesla’s third-quarter warranty expense came in at $175 million, or about 2.3% of automotive sales.l
Win McNamee/Getty Images
Tesla filed its full third-quarter reportwith the Securities and Exchange Commission on Monday. The report—known as a form 10-Q—includes additional detail analysts pore over to ensure they didn’t miss anything in the company’s third-quarter earnings, reported on Oct. 21.
For Tesla (ticker: TSLA), analysts and investors usually focus on things such as warranty expenses and geographic sales—anything than could affect reported earnings, cash flow or profit margins. Small details matter because Tesla shares are highly valued. A small change in growth or profit assumptions can move shares significantly.
Tesla stock, after all, trades for almost 9 times estimated 2021 sales. General Motors (GM) shares, for comparison, trade for about 0.4 times that number. Tesla, of course, is growing rapidly and it has been more profitable than GM over recent quarters.
For the third quarter just reported, warranty expense came in at $175 million, or about 2.3% of automotive sales. That is in line with the level of recent quarters and consistent with the company’s history.
Cash spent fixing warranty claims amounted to $77 million. It makes sense that warranty expenses recognized each quarter are bigger than claims. Warranty expenses are recognized when a car is sold. Cash goes out the door when cars get serviced. Tesla is rapidly putting more cars on the road, so that pattern of recognized expenses amounting to more than cash outlay will persist for the foreseeable future.
Tesla Cumulative Cash Spent On Warranty Claims and Cumulative WarrantyExpense RecordedSource: Sentieo
Other than warranties, the growing importance of China is something for investors to watch. Sales there increased about 161% year over year in the third quarter and accounted for almost 20% of total sales.
Tesla is building more manufacturing capacity in Shanghai to make the Model Y sedan. The Model 3 Chinese factory is up and running. Tesla has two other plants under construction, in Berlin and Austin, Texas. Locations to build the Tesla semitrailer truck and Tesla roadster are listed as “to be determined.”
Tesla filings also get extra attention because the stock draws widely divergent opinions. Analyst price targets from major brokers range from roughly $80 a share to $580. The $500 bull-bear spread is more than 100% of the current stock price. The bull-bear spread for GM stock is $16, or about 44% of the current stock price.
Tesla price targets are wide partly because it is hard to keep up with the stock. Shares are up roughly 400% year to date, far better than comparable returns of traditional automotive peers, as well as the S&P 500 and Dow Jones Industrial Average.
Tesla stock was up 0.7% to $423.80 Monday morning. The S&P was down 0.9%. A recent recall of cars in China could be a factor in early trading. The recall was mentioned in the 10-Q, but only as an example of something that can be required of the company by government regulators even “without indication of actual harm,” which suggests Tesla management doesn’t believe the Chinese recall is a material event for investors.
Write to Al Root at allen.root@dowjones.com |
