Tesla Misses, Burns Nearly Half A Billion, Warns It Has Hit Bank "Funding Limit": Stock Rises

Tyler Durden's picture

Following several repeat, and loud, warnings that sales are slowing down, moments ago Elon Musk did not disappoint and reported results that missed substantially on both the top and the bottom line, with non-GAAP EPS of (1.02) nearly twice as bad as what consensus expected.

Q2 results missed on both the top and bottom line:

  • Revenue $1.56B vs. $1.63B est
  • EPS ($1.02) vs. ($0.56) est

But while the adjusted, non-GAAP financials (even revenue)  have never mattered for this most hyped stock ever, the reason why the stock is up in the after hours, is because  TSLA announced Q2 deliveries of 14,402 which were just fractionally better than what Musk had warned a month ago, when he guided down to 14,370. So TSLA basically beat the downward revised guidance.

This is how Musk explained the poor Q2 output:

We delivered fewer cars in Q2 than originally planned as a result of our steep production ramp, which resulted in almost half of Q2 production occurring in the final four weeks of the quarter. Given inflection points in the production ramp and firm shipping cutoffs, shifting production by even a short period of time had a disproportionate impact on the number of cars that were delivered by quarter end

So... Tesla delivered fewer cars because it was producing more cars? Got it.

The company also announced that "production and demand on track to support 50,000 deliveries in 2H 2016", although that is far from suggesting there is demand to fill that supply.

Something else notable: while Model S prices rose modestly, the average Model X price is now declining:

Model S average prices increased 3% sequentially, due to higher option take rates and the modest price increase associated with the Model S refresh. Model X average prices were more than 15% higher than for Model S, despite declining sequentially as mix shifted away from Signature Series variants.

Here is the visual breakdown of the results:

From the report:

In Q2, we delivered 14,402 new vehicles consisting of 9,764 Model S and
4,638 Model X, which was slightly higher than what we stated in our July announcement. Model S remains the market share leader in North America and Europe among all comparably priced four-door sedans, and Model X is quickly gaining ground against similarly priced SUVs in all regions.

An interesting highlight in the outlook, in which Tesla notes that it has reached its funding limit with a banking partner:

We anticipate that direct leasing will rise from 8% of deliveries in Q2 to about 15% of deliveries in Q3, as we have reached our funding limit with a banking partner. We anticipate adding new partners that will allow us to fund our planned growth in the future. We recognize revenue on directly leased deliveries as cash is received over the lease term of typically three years, on both a GAAP and non-GAAP basis.

Why is that a problem? Because as Tesla admitted, as part of its operating cash flow, it commingled receipts from deposits for the Model 3, which have been estimated to be around $300 million.

Our GAAP cash flow from operations during the quarter was $150 million, which included the receipt of Model 3 deposits. After adding $143 million of cash inflows from vehicle sales to our bank leasing partners, our cash flow from core operations was nearly $293 million.

If one nets out the $300 million in one time deposit receipts from the reported $150 million in cash from operations and subtacts $295 million in Capex, the result is another quarter in which TSLA burned nearly half a billion dollars.

 

Despite having $3.3 billion in cash as of June 30 (after the most recent $1.7 billion capital raise) we expect Musk to come asking for another $1-2 billion shortly. After all he has insane growth "projects" to fund.

Despite the disciplined pace of capital spending in the first half of this year, we still expect to invest about $2.25 billion in capital expenditures in 2016, in support of our accelerated production plan for Model 3.

Finally, expect cash burn to really pick up going forward because as the company warns, "total non-GAAP operating expenses should increase sequentially in Q3 and Q4, and we now expect full year 2016 total non-GAAP operating expenses to increase by about 30%. The increases come from engineering, design, and testing expenses related to Model 3 supplier contracts, and higher sales and service costs associated with expanding our geographic presence."

Then again, since no fundamentals matter for the stock, which continues to be driven only and entirely on hype as it burns billions upon billions, we fully expect TSLA stock to surge in the afterhours on the latest algo attack and short squeeze. For now, however, the stock is unexpectedly calm.

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asteroids's picture

The boyz want you to BUY BUY BUY.

Ghost of Porky's picture

Elon is an ARTIST! He is a being of LIGHT and pure creative ENERGY!

Stop bothering him with all this talk of money.

NidStyles's picture

Fuck me, can't this shit crash already.... What in the fuck are the yids waiting for...

pods's picture

Creepy guy here at work bought one, and proceeded to take all the young girls out to lunch in it.

I guess you can't try get them drunk during work hours, so no- gamers gotta do what they have to?

pods

 

cheech_wizard's picture

Mid-life crisis - buy sports car - date loose young women. 

Standard Disclaimer: It doesn't make you any less creepy and definitely increases your odds of catching a STD. I am equally guilty but for a different reason. After my divorce, I went and bought a BMW, if for no other reason than to rub her nose in it. I already had the friends with benefits by that point in time.

Citxmech's picture

Making money on a losing deal with volume.

Works every time. . . 

cheech_wizard's picture

All too true...

Standard Karmic Disclaimer: After making my life hell for 5+ years, her new husband beat her on multiple occasions (the occasional black eyes, and visible bruises on her arms), but that really wasn't my business, was it?

 

Al Huxley's picture

Only 5 years?  You got out fast, count yourself lucky.

Userdeleted's picture

Have that crisis, not the car, not the girls thx/s

Hugh_Jass's picture

He is an artist who's preferred medium is bull$hit!

junction's picture

Alright everyone, let's spell SOLYNDRA.

ShrNfr's picture

Bullshit, lets spell Enron.

Eddie Baby's picture

It's good to have connections.

BlindMonkey's picture

Nothing can stop this party!!!

"Hey chum!  Pass that free punch bowl again.  I'm out."

booboo's picture

Righto, obvious signal for more government largess is to fall on your sword.

buzzsaw99's picture

Despite having $3.3 billion in cash as of June 30...

no, you have $3.3B worth of DEBT motherfucker.

Steeley's picture

Government GAAP - unused margin below debt limit is income.

Difference? The dominant government doesn't have a debt limit.

 

mariner22's picture

AMZN did pretty well building a business without making profits....

Buckaroo Banzai's picture

Yeah, except they sell shit that people actually WANT. Tesla can't even do that part right.

booboo's picture

no they broker what people want for free and people buy their paper at a hefty premium.

Doom Porn Star's picture

Let us not consider Amazon's razor-thin margins.   

How many decades of dividends would it take to pay for one share of Amazon common?

Cautiously Pessimistic's picture

I am soooo getting a new Tesla when they go on sale for 10k!!!!  My only dilema is what color options do I want.  Also, do they come with a built in fire suppression system??

AustrianJim's picture

"higher sales and service costs associated with expanding our geographic presence"

 

Awesome, they are finally opening that office in Venezuela.

buzzsaw99's picture

...the result is another quarter in which TSLA burned nearly half a billion dollars.

yeah, and that's just elon's bonus check bitchez.

bankonzhongguo's picture

The recent stock acquisition of Solar City was all about cross collateralizing all that other power purchase revenue - so TWO companies for the price of one.

The trifecta is Tesla landing a 200,000 unit USPS "next generation mail truck" contract.

Anyone can be a billionaire with the right connections.

Buckaroo Banzai's picture

It's gonna be YUGE when President Trump curb-stomps bullshit like that.

walküre's picture

it will take Tesla only 200 years to build those 200,000 next and nexter and nextest generation mail trucks...

by that time, the factory will probably be finished as well

Kefeer's picture

What if that factory exploded or just caught fire; perhaps it could be blamed on Putin. 

 

Put this address into Google Maps and check it out.  Electric Ave, Sparks, NV 89434

Locate the Gigafactory, then look at the three building directly NE of it.  Note the outline of a fourth & fifth building that doesn't show on the map.   Also, note that those buildings are not marked by Google as are the distribution center for Walmart and the other notable buildings around there.  And you cannot go to street view.  Weird; I wonder what is housed in those building and if there are underground tunnels as well.  Where is Jesse Ventura when you need him; probably playing with Howard Stern. (sic)

Anopheles's picture

For an order that size for USPS, ALL the car companies around the world will be competing. 

It's interesting that right now, the best selling EV/Plug In Hybrid in the US is the Chevy Volt.

Doom Porn Star's picture

"We anticipate that direct leasing will rise from 8% of deliveries in Q2 to about 15% of deliveries in Q3, as we have reached our funding limit with a banking partner. "

 

Translation: we require billions in new borrowing or parts of this organization are going to have to stop expanding and spending money that isn't coming in from sales..

 

Each and every sale of these rich-man's toys in the US are still being heavily subsidized by the Taxpayers.

Taxpayers lose money even while Musk and his cronies sequester hundreds of millions for themselves...

hnaparst's picture

You cannot "net out" the Model 3 deposits from the cash flow.  Cash receipts from customers must be included in the cash flow statement.  Tesla had a huge positive cash flow from core operations, even if the bears on Zerohedge grasp for things to subtract until they get a negative.

Buckaroo Banzai's picture

Lol, "core operations". Tesla's "core operations" is transferring shareholder cash into Elon Musk's pockets.

Anopheles's picture

HAHAHAHahhahahaha.................. "core operations"

But how can they actually PRODUCE and SELL cars if they ONLY have "core operations" and not the supporting infrastructure? 

That's like saying your business is profitable if you DON'T INCLUDE EXPENSES and COSTS.  

You just proved you don't know the difference between REVENUE and PROFITS.   Or in Tesla's case, lack of profits. 

Consuelo's picture

 

 

 So the inferior metallurgical issue in the A-arms, the inherent Li-Ion battery pack volatility and the runaway auto pilot thingy - those are all addressed and corrected?

They are, right...?

wobblie's picture

Hopefully Elon Musk takes a long ride in one of his self-driving cars.

Elon Musk

Userdeleted's picture

And then the autopilot wants to kiss a tree. Green on green. what's there not to like

Barney08's picture

I think Russ Hannaman taught Elon everything he know about business. You know ROI.

Buckaroo Banzai's picture

"Return on Investment"?

"NO. Radio. On. Internet."

https://youtu.be/BzAdXyPYKQo

moonmac's picture

I always see black people carrying empty gas cans down the road after running out of gas. That’s one segment of the population that won’t be buying EV’s anytime soon.

Anopheles's picture

Depends if they give them a $199/month lease with no money down......

 

Big Whoop's picture

They'll be getting Obamacars. Obamacars will be electric, of course. The government will save a fortune by only giving them a base model for the first couple of years.

wmbz's picture

Ah, the smell of Musk is in the air.

More taxpayer dollars on the way. The set up is so simple.

Elon's coming hide your wallet!

cheech_wizard's picture

Well, he did have 5 kids with his first wife.

Justine Musk is an author that is known mostly as the first wife of billionaire entrepreneur and inventor Elon Musk. When they got divorced in 2008, Justine received from Elon $2 million in cash money, $80,000 of monthly alimony, additional child support for following 17 years and also Tesla roadster as a divorce settlement. As of 2016, Justine Musk’s total net worth is estimated to be $1.5 million.

Standard Disclaimer: Because this shit is always on-line... and apparently she likes to spend that alimony money like water judging by her net worth if the above is true...

MickV's picture

Can you get nailed for drunk driving on auto pilot?

Pumpkin's picture

Does auto pilot know when a cop is behind you?  I'd say no.

MickV's picture

But you were not in control of the car on auto pilot. You were only riding in it like a passenger.