Bizarrely, the financial media has chosen to focus on the fact that TSLA slightly beat analyst estimates and on the inexplicable fact that the stock rose 3% in after-hours trading following the report. (Sample rosy headlines include "Tesla reports smaller loss than expected, beats on revenues" and "Tesla Inc. Earnings: Sales Soar, and Model 3 Is Coming".) They're also salivating over Musk's promise to release the all-electric Model 3 on schedule this summer. (Fat chance.)
The media sycophants are completely ignoring the actual numbers, of course.
I've painstakingly gone through TSLA's financials, and here's what I've found…
Ignore These Bogus Gains – and Look at These Very Real Losses
TSLA may prove to be the company that best represents the current market bubble just as large LBOs such as Caesars Entertainment represented the 2007-08 credit bubble and Internet companies like Pets.com epitomized the Internet Bubble that blew up in 2000. TSLA comes fully equipped with a larger-than-life CEO who the media seems to love despite the fact that he lies to it constantly and plays it like a fiddle, a sexy and politically correct product, and a stock price that bears so little resemblance to economic reality as to put the most ridiculous stocks of the Internet era to shame. As I've written elsewhere, TSLA is not a stock, it is a cult, and trying to reason with someone who owns the stock is like trying to reason with someone about the existence of God. But sooner or later, TSLA stock will collapse under its own weight. It may take the patience of Job to ride it out, but in the end God rewarded Job for being a righteous man and he will reward those who avoid owning TSLA and those who are able to prudently short the stock.
If you cut through the numbers that TSLA reported, the company had a $266.7 million operating loss for the quarter while missing its target of 25,000 vehicle deliveries (it hit 22,252). (TSLA has not yet released its 4Q16 Form 10Q, so this analysis is based on its shareholder letter dated Feb. 22, 2017.) Automotive revenue was $1.994 billion for the quarter, down from $2.148 billion in the third quarter as the company delivered 2,569 fewer vehicles. It reported a net loss of only $121.3 million, or -$0.78 per share, but this number is nonsense. It reduced its operating loss by a non-cash $121.3 million gain on its merger with money-losing SolarCity. If you ignore this bogus gain, it lost $1.72 per share.
But its cash flow was much worse, as you would expect for a company that loses money on every vehicle it sells and every solar panel it sells while spending billions of dollars ramping up production of even more money-losing products. The company burned through $448.2 million of cash in operations and anoth…
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Prominent money manager. Has built top-ranked credit and hedge funds, managed billions for institutional and high-net-worth clients. 29-year career.