from the Don't-you-worry-about-blank.-Let-me-worry-about-blank dept.
Tesla's stock dropped despite "better than expected" quarterly numbers, probably due to either the company posting its worst quarterly loss ever, or a conference call in which Elon Musk complained about "boring, bonehead questions" and much more:
Tesla Inc. Chief Executive Elon Musk held a long, odd earnings conference call Wednesday in which he insulted analysts, the media, federal regulators and people who died behind the wheel of his cars, and then told anyone concerned about volatility not to invest in his company. Unsurprisingly, volatility ensued, as Tesla shares dropped quickly during an increasingly bizarre call with the very analysts and media whom Musk attacked.
Tesla on Wednesday disclosed the largest quarterly loss in the history of a company known far and wide for losing vast sums of money, with a net loss of almost $785 million. The numbers still managed to beat expectations that have been repeatedly lowered for more than a year, which led Musk to take a victory lap on Twitter after losing more than three quarters of a billion dollars in three months.
It only got weirder from there. In his conference-call introduction, Musk confused per-week and per-day production figures, described a "super complicated" robot Tesla designed and built before realizing it could not perform its unnecessary function, then mentioned offhandedly that he planned to restructure the company this month — a disclosure he never revisited to provide more information.
When the question-and-answer session started, Musk turned vitriolic, and not even his fellow executives were safe. After Chief Financial Officer Deepak Ahuja referred to Tesla as "best in class" for batteries while responding to an analyst query, he was interrupted by Musk. "The best. It is not a class," Musk interjected. "Yes, we're the best. Sorry," Ahuja replied. "The best in a class of one," Musk made sure to point out.
The company's Nevada "Gigafactory" is now producing vehicular battery packs at a rate of 3,000 per week.
See also: Opinion: Why I'll keep shorting Tesla's stock, and not just because of that earnings call
Tesla to Report Q1 2018 Earnings Amid Doubts About the Company's Future
Tesla will report its first quarter earnings at the end of the day on May 2. The company needs some good news:
The company that Elon Musk built to usher in the electric-car future might not have enough cash to make it through the calendar year. The anxieties that lurk beneath the tremendous ambition of Tesla Inc. moved into the forefront in recent weeks. The company again fell far short of its own production targets for the mass-market Model 3 sedan, another person died in a crash involving its assisted-driving feature and Musk entered into a public dispute with federal safety regulators. Tesla's once high-flying stock, buffeted by a downgrade from credit analysts, has dropped 24 percent from its peak in September.
There's a good reason to worry: No one has raised or spent money the way Elon Musk has. Nor has any other chief executive officer of a public company made a bankruptcy joke on Twitter at a time when so much seemed to be unraveling.
Tesla is going through money so fast that, without additional financing, there is now a genuine risk that the 15-year-old company could run out of cash in 2018. The company burns through more than $6,500 every minute, according to data compiled by Bloomberg. Free cash flow—the amount of cash a company generates after accounting for capital expenditures—has been negative for five consecutive quarters. That will be a key figure to watch when Tesla reports earnings May 2.
Tesla has just been sued by Nikola Motor Company for patent infringement. Tesla is accused of copying the design of Nikola's hydrogen semi trucks; Tesla says that Nikola's claims are without merit.
Elon Musk says don't worry about Tesla's burn rate—he might be right
Related: Tesla Burns More Cash, Fails to Meet Production Targets
Tesla Sued Over Alleged Racism; Deliveries Pushed Back; Semi Truck to be Unveiled
Elon Musk's Monstrous, Enormously Large Compensation Package
Original Submission #1 Original Submission #2 Original Submission #3
Related Stories
Auto production is hard:
Having racked up its first quarter of burning through more than $1 billion of cash in the three months ending in June, Tesla topped that with $1.4 billion of negative free cash flow in the third quarter. In the past two quarters, therefore, Tesla has burned through more cash than the previous six combined. More importantly, it has burned through roughly four out of every five of the $3.2 billion dollars it has raised since late March through selling new equity and convertible debt and its debut in the high-yield bond market.
Consequently, debt has soared. Even just using debt with recourse to the company, on a net basis it has almost tripled since the start of the year to $3.36 billion.This would matter less if the primary objective of sucking in most of that external funding -- mass production of the Model 3 -- was fast approaching. Instead, it has receded further.
When Musk first talked about production targets for the Model 3 in 2016, they implied Tesla would be producing roughly 3,800 to 7,600 a week in the second half of 2017. By July of this year, Musk was guiding toward production hitting about 5,000 a week by the end of December. I estimated at the time that this implied a second-half average of maybe 1,400 a week.
Now, Musk estimates production might hit 5,000 a week by the end of the first quarter of 2018. As for this year, it might be in "the thousands" by the time New Year's Eve rolls around. He refused to say what the current run rate was. But I would estimate Tesla will be lucky to produce 10,000 Model 3 vehicles in total this year, or an average of 400 a week for the second half -- roughly 5 to 10 percent of the original guidance. As for the earlier target of 10,000 a week in 2018 ...
Also at NYT and MarketWatch.
Previously: Tesla Adds Lots of Certified Pre-Owned Model S Vehicles for Under $40,000 with New Warranty
Time to Bash Tesla Model 3
Tesla Reportedly Teaming Up With AMD for Custom AI Chip
Tesla Fires Hundreds of Employees
Tesla has been sued by an employee for alleged racist harassment and termination for complaining:
Tesla Inc.'s production floor is a "hotbed for racist behavior," an African-American employee claimed in a lawsuit in which he alleged black workers at the electric carmaker suffer severe and pervasive harassment. The employee says he's one of more than 100 African-American Tesla workers affected and is seeking permission from a judge to sue on behalf of the group. He's seeking unspecified general and punitive monetary damages as well as an order for Tesla to implement policies to prevent and correct harassment.
[...] The lawsuit was filed on behalf of Marcus Vaughn, who worked in the Fremont factory from April 23 to Oct. 31. Vaughn alleged that employees and supervisors regularly used the "N word" around him and other black colleagues. Vaughn said he complained in writing to human resources and Musk and was terminated in late October for "not having a positive attitude."
Although customers who have reserved a Tesla Model 3 (at a cost of $1000) have seen their delivery dates pushed back, they apparently remain loyal to the company:
Even as the company led by Elon Musk struggles with manufacturing bottlenecks and pushes back production targets by at least a quarter, many reservation holders aren't budging. Bloomberg News contacted 20 consumers who paid deposits for the Model 3 and none had canceled their orders. Regardless of the concerns raised by slower output and an uncertain future for U.S. electric-car tax credits, Nomura analyst Romit Shah predicts the affinity for Tesla Inc. products will prevail. "We believe there is a real passion for the brand," Shah wrote in a report to clients that reiterated a $500 price target for Tesla shares, the highest on Wall Street. "It is bigger than loyalty because much of the enthusiasm comes from people who have never owned a Tesla. The only comparable we see is the iPhone."
Finally, Elon Musk says that the Tesla Semi Truck will be unveiled during a live webcast at 8 PM on Thursday, and that it will "blow your mind clear out of your skull and into an alternate dimension".
Previously: Elon Musk Says Tesla Pickup and Semi-Trucks Are Coming
Time to Bash Tesla Model 3
Tesla Discussing Autonomous Semi Truck Testing in Nevada
Tesla Fires Hundreds of Employees
Tesla Burns More Cash, Fails to Meet Production Targets
If Elon Musk can increase Tesla's market value 12-fold in the next 10 years, he may be entitled to a maximum of $56 billion in stock awards (likely lower if more shares are sold to the public). This, along with the ballooning of Musk's existing $12 billion share in his company, and his stake in SpaceX and other companies, could help Musk become a Kardashev I trillionaire alongside Jeff Bezos:
A new payment plan for the CEO was approved by Tesla (TSLA) shareholders Wednesday, a spokesperson confirmed. The incentive-based package essentially states that if Musk hits a series of performance milestones between now and January 2028, and he drives his electric car company's market value 12 times higher — taking it from $54 billion to $650 billion — he'll become astronomically rich.
Now, if Musk does drive a 12-fold increase in Tesla's market value, that doesn't necessarily mean the price of a single share in the company will be 12 times larger. The company can do things like issue new stock that could dilute the value of existing shares. But let's assume Musk's Tesla stock would grow at least 10 times more valuable. That would mean just the shares Musk owns today would be worth $120 billion.
Plus, reaching the agreed upon milestones means Musk would get additional stock awards. According to the new compensation plan, Tesla estimates the value of the stock awards to be $2.6 billion, using accounting methods for estimating the cash value of stock options. But if Tesla's market value balloons just as the payment plan hopes, those stock awards could be worth nearly $56 billion, according to a public filing.
Also at Reuters, Fortune, and CNBC.
Related: Tesla Fires Hundreds of Employees
Tesla Burns More Cash, Fails to Meet Production Targets
Tesla Sued Over Alleged Racism; Deliveries Pushed Back; Semi Truck to be Unveiled
Tesla Semi Truck Will Have a 500+ Mile Range
Tesla Delivers on 100 MW Australian Battery Promise
Elon Musk Vows to Build Tesla Pickup Truck 'Right After' Model Y
Woz Likes his Tesla, Doesn't Trust Elon
Tesla Creating Huge Virtual Power Plant
Elon Musk Expects to Do Coast-to-Coast Autonomous Tesla Drive in 3 to 6 Months
(Score: 0) by Anonymous Coward on Thursday May 03 2018, @08:22PM
Enron Musk [businessinsider.com]
(Score: 0) by Anonymous Coward on Thursday May 03 2018, @08:23PM (4 children)
olololol
(Score: 0) by Anonymous Coward on Thursday May 03 2018, @08:37PM (3 children)
That's an actual quote. More: https://www.cnbc.com/2018/05/03/here-are-highlights-of-elon-musks-strange-tesla-earnings-call-theyre-killing-me.html [cnbc.com]
(Score: 1, Insightful) by Anonymous Coward on Thursday May 03 2018, @09:40PM (2 children)
I was listening to the call, and I quietly don't blame him. Three questions in a row asking the same thing, and he cut off guy #4 who was asking the same thing too.
The straw that broke the camel's back was the "You should raise capital when you don't need it." guy.
(Score: 4, Interesting) by takyon on Thursday May 03 2018, @09:59PM
I thought the barnacle analogy was a good one. The part about autonomous vehicles and deaths is pretty reasonable in context, although we can't just assume that autonomy will magically work. Uber has shown everyone just how crappy an implementation can get.
We'll have to see w.r.t. the Tesla Semi. It's easy to be skeptical about it.
"Please sell our stock" is consistent with what Musk has said in the past [cnbc.com].
[SIG] 10/28/2017: Soylent Upgrade v14 [soylentnews.org]
(Score: 2) by VLM on Friday May 04 2018, @01:34PM
There's a lot of groupthink in the financial media such that there's little point in having more than one journalist on those calls anymore. Its actually very much like political press conferences, if all of the media sees itself as a part of the DNC, there's really no point to press conferences anymore. Very anachronistic, like demanding financial prospectus be delivered via telegram or pony express. Its 2018 you wanna know what he thinks, google him or check his PR agent's managed twitter account. A lot of people, especially old boomers, still think of Walter Cronkite as the gatekeeper of what we think, but journalists are almost as obsolete as buggy whip makers.
A very 2010s era aspect of contemporary propaganda is passive aggressive questioning, so thats why they had to bait him repeatedly. In politics or finance or anything else journalists seem to define good modern journalism as endless "when do you plan to stop beating your wife" type of questions into infinity, which has become tired and boring. As a side note I work out at a VERY boomer gym, and boomers really love their TV and boomers really love legacy sportsball, so the TV in the locker room is on ESPN, and one day they were literally asking some athlete when he's going to stop beating his wife because thats how black athletes live in reality, so yeah I'm not talking about athletes who literally beat their wives which is a literal serious thing, but more abstract passive aggressive questioning designed to make someone look bad in the sense that no answer looks good to a passive aggressive leading question.
(Score: 2) by takyon on Thursday May 03 2018, @08:37PM
muskold
[SIG] 10/28/2017: Soylent Upgrade v14 [soylentnews.org]
(Score: 5, Funny) by JNCF on Thursday May 03 2018, @08:38PM (2 children)
I thought Musky liked boring.
(Score: 5, Funny) by Freeman on Thursday May 03 2018, @10:41PM (1 child)
Wrong kind of boring. He did drill right through those questions, though.
Joshua 1:9 "Be strong and of a good courage; be not afraid, neither be thou dismayed: for the Lord thy God is with thee"
(Score: 2) by JoeMerchant on Friday May 04 2018, @03:08PM
If I understood the summary I read, he actually quit taking questions from Wall Street and turned over to YouTube as a source of questions to answer for the press conference. If he's not hiding something, that's a gutsy, cool, in your face move. If he is hiding something important, oh man will it hurt when it comes out.
🌻🌻 [google.com]
(Score: 2, Insightful) by Anonymous Coward on Thursday May 03 2018, @10:09PM (1 child)
They're nothing but fortune tellers that expect CEOs to crawl to them, so that they don't tell bad fortune about their companies.
(Score: 2) by arslan on Friday May 04 2018, @03:55AM
Yea, the CEOs need to start to pull a Donald Trump on analysts, "Fake News!".
(Score: 4, Insightful) by corey on Thursday May 03 2018, @10:18PM (10 children)
Didn't read TFA but the quotes provided make it appear like a biassed anti-Musk piece.
Yeah, so he doesn't speak business Bullshit Bingo all day and is realistic about his thoughts toward analysts etc. Build a bridge.
(Score: -1, Flamebait) by Anonymous Coward on Thursday May 03 2018, @10:31PM (4 children)
Aha a Trump voter...
(Score: 0, Troll) by Captival on Thursday May 03 2018, @11:55PM (3 children)
Be sure to thank us for the record high stock market, record low unemployment, enormous commitment to US manufacturing, and better growth in his first year than anything O'dipshit could manage in 8. You're welcome.
PS: we told you so about Iran.
(Score: 2, Troll) by realDonaldTrump on Friday May 04 2018, @04:35AM
Oh, are you happy you voted for me. You are so lucky that I gave you that privilege!
(Score: 0) by Anonymous Coward on Friday May 04 2018, @09:46AM (1 child)
Why is his trolling?
(Score: 0) by Anonymous Coward on Friday May 04 2018, @05:26PM
Because if it isn't, then he is truly a clueless Trumpian. All those things he says are true only because The Donald says they are true. However, like everything else The Donald says, they really aren't true. Unemployment is low because it was low when he came into office. I guess one could give Trump credit for not causing it to rise, but that's not quite the same kind of praise, is it? The market actually rose more under Obama's first year than Trump's. And there has been NO manufacturing commitment from Trump, just hot air. Even the tariffs on steel and aluminum, which is supposed to help those sectors, are going to really hurt manufacturers who use a lot of steel and aluminum; that is why so many of them signed a letter to Trump asking him to not impose the tariffs.
So the Troll mod is really giving him the benefit of the doubt because otherwise it is acknowledgement that he is one of the 30% who can't pull their heads out of Hannity's ass long enough to question themselves "is that really true?".
(Score: 2) by takyon on Thursday May 03 2018, @11:00PM (2 children)
Evading questions isn't a good look for a man who is borrowing billions of dollars and not making a profit.
[SIG] 10/28/2017: Soylent Upgrade v14 [soylentnews.org]
(Score: 5, Insightful) by MostCynical on Thursday May 03 2018, @11:44PM
Yes, but his lenders aren't necessarily his shareholders, and, if they are getting their interest payments, they won't care.
Shareholders, by and large, are *not* rational: dividends are always money taken out of a company, so shareholders' interests are not the company's..
https://www.bloomberg.com/news/articles/2017-08-09/tesla-s-alien-mothership-kept-out-of-reach-for-debut-lenders [bloomberg.com]
"I guess once you start doubting, there's no end to it." -Batou, Ghost in the Shell: Stand Alone Complex
(Score: 2) by corey on Friday May 04 2018, @03:32AM
Politicians barely ever answer any questions, and are using my tax dollars to blow on inefficient things.
(Score: 2) by All Your Lawn Are Belong To Us on Friday May 04 2018, @01:51PM (1 child)
Except that the people who make those investments have done so with certain expectations of convention and assurances that the corporation and its officers are responsible in a fiduciary sense.
Blowing off questions in an investment call, if it results in a stock drop and a devaluation of investments, might be construed as negligent or fradulent behavior. (Even more so if the speaker then manages to profit further by exercising options or similar.)
CxO 's do not just get to do whatever they want however they want. They are directly responsible to the shareholders, who have the right to take action if that individual steps out of line and the company suffers.
If there is no harm, then there's no foul. But that harm may come coincidentally and hang the person out to dry.
Not to mention antagonizing the people who have a vote in your having your job (assuming it isn't somehow strategic itself) is not a smart strategy.
This sig for rent.
(Score: 2) by All Your Lawn Are Belong To Us on Friday May 04 2018, @01:53PM
Correction... CxOs are responsible to the Board, who are responsible to the shareholders. Missed the intermediate step even though I think the meaning holds.
This sig for rent.
(Score: 1, Interesting) by Anonymous Coward on Friday May 04 2018, @01:34AM
I think everybody should sit back and wait until later in the year. Looking at the Model 3 backlog and history, I think Tesla will be fine. But, let's see what Q3/Q4 bring.
(Score: 2) by MichaelDavidCrawford on Friday May 04 2018, @03:26AM
FTFY
Yes I Have No Bananas. [gofundme.com]
(Score: 0) by Anonymous Coward on Friday May 04 2018, @03:56AM (5 children)
Whenever I read a story about Tesla, it seems like the author has been talking to a bunch of Tesla short sellers. You have to give Musk credit for the success he's achieved, and for trying new things. Beyond that, a lot of Tesla's future depends on the availability of easy money. If the Fed raises interest rates, Tesla is in big trouble. Otherwise they can keep floating on goodwill for a long time.
(Score: 2) by Phoenix666 on Friday May 04 2018, @04:15AM (4 children)
Yes, it's a well-known game. Short-sellers, or even those who want to pump-and-dump, use various forms of media to fool people into going either way. My uncle the PhD Petrochemist from Shell lost a lot of money on hot email tips like those; a testament to the truism that it's possible to be very smart and a complete idiot at the same time. He is also a die-hard creationist, so where that places him on the scale I'll leave as an exercise for the reader.
Washington DC delenda est.
(Score: 3, Insightful) by jelizondo on Friday May 04 2018, @06:41AM (3 children)
Sorry in advance for any perceived insults, they are unintended. How can your uncle be a petro-chemist and a creationist? Exactly where do your uncle thinks oil comes from? Six thousand year old dinosaur remains? Geez… On the other hand, I would love to hear exactly where oil comes from according to Uncle the Chemist.
(Score: 0) by Anonymous Coward on Friday May 04 2018, @09:51AM
Does it really matter where oil come from if your job is to extract kerosene from it?
(Score: 3, Insightful) by Phoenix666 on Friday May 04 2018, @01:54PM (1 child)
Yes, it is perplexing.
Washington DC delenda est.
(Score: 2) by toddestan on Saturday May 05 2018, @04:17AM
I'm sure the answer is that God himself put that oil in the ground. To be more specific, he put it in the ground for us humans to use and benefit from. It then follows that there can't possibly be any negative consequences of pumping all that oil out of the ground and burning it.
Yes, I know people who think that way, and it's perplexing and a bit scary.