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Tesla: Are Profits Really Coming?

May 04, 2018 1:35 PM ETTesla, Inc. (TSLA)558 Comments
Bill Maurer profile picture
Bill Maurer


  • Elon Musk doubles down on conference call craziness.
  • How have past cash flow and profit statements fared?
  • Let's take a look at street estimates moving forward.

This week, a lot of headlines were made after Tesla (NASDAQ:TSLA) reported Q1 results, as Elon Musk led a bizarre conference call where he cut off multiple analysts. Management continues to try to paint a rosy picture of the company's situation, where things are not going well, by again hoping for profits and positive cash flow in the second half of this year. Unfortunately, the history of this company shows us why this likely won't happen, and it is clear the street doesn't think profits are coming anytime soon.

GAAP profits and positive cash flow:

There was a lot of excitement from Tesla bulls last month when Elon Musk talked about profits and positive cash flow in the second half of this year. As a result of this, he said there's no reason for the company to raise money through debt or equity, but there are many who are quite skeptical of this. Over the years, I've compiled a list of Tesla's many guidance failures, so here are just a few examples of similar statements that turned out quite badly:

2014 Q1 letter:

20. Expect to be slightly free cash flow negative for a year before considering equity required for leasing (yearly free cash flow was negative $1.03 billion).

2014 Q4 letter (includes full-year guidance):

26. Expect a significantly higher level of non-GAAP profitability (actually lost $2.30 per share).

2015 Q4 letter (includes full-year guidance):

33. Expect to generate positive net cash flow (actual was negative $1.4 billion).

34. Expect to achieve non-GAAP profitability for year (actual was a $2.87 per share loss).

Those are just the main points I've detailed regarding cash flow and profitability. My list compiled above also includes dozens of related items, like failures to meet gross margin targets, operating expense levels, etc. With all of this being said, I wanted

This article was written by

Bill Maurer profile picture
I am a market enthusiast and part-time trader. I started writing for Seeking Alpha in 2011, and it has been a tremendous opportunity and learning experience. I have been interested in the markets since elementary school, and hope to pursue a career in the investment management industry. I have been active in the markets for several years, and am primarily focused on long/short equities. I hold a Bachelor of Science Degree from Lehigh University, where I double majored in Finance and Accounting, with a minor in History. My major track focused on Investments and Financial Analysis. While at Lehigh, I was the Head Portfolio Manager of the Investment Management Group, a student group that manages three portfolios, one long/short and two long only. I have had two internships, one a summer internship at a large bank, and another helping to manage the Lehigh University Endowment for nearly a year. Disclaimer: Bill reminds investors to always do their own due diligence on any investment, and to consult their own financial adviser or representative when necessary. Any material provided is intended as general information only, and should not be considered or relied upon as a formal investment recommendation.

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