, 9 tweets, 4 min read Read on Twitter
1) While $TSLA rips upwards due to a short-squeeze on leaked @elonmusk emails re: a "possible record quarter", $TSLAQ members like myself are evaluating our Q2 estimates based on data available. We are, for the next 2 weeks, in "no-man's land" b/4 Q2 delivery #'s. A few thoughts.
2) Q2 sales estimates range from 78K (@CoverDrive12) to 85K~87K (@TroyTeslike & me) w/ a high of 91K (@Andreas_Hopf). Pricing is the toughest piece of the puzzle, but the most important. I'm hearing 60% of US mix is SR+, as are the 10K they're dumping in Canada. This kills mix.
3) While EU & China should see the best Model 3 prices ($58K), N.America should be lowest at $44K. Models S/X should only see 15K globally, but I'm told it's closer to 12.8K by @btsparks. I'll use his estimates.
4) Despite near record sales, the Models S/X -43% YoY plunge in Q2 will cause a -$1.3bn YoY drag on Q2 gross profits, while the Mode 3 only sees a +$393m gain YoY. S/X are more important than the Model 3, as they had 26% gross margins in Q2 2018 & now are at 8%. Total carnage!
5) While I've got $250m in Q2 ZEV/GHG credit sales boosting profits, it'll be more than wiped out by "Service & Others" losses of -$273m. The more the Model 3 sells, the deeper these losses become as they're paying for all the M3 quality issues. See this chart for proof.
6) W/out going into details, my delivery and revenue estimates are largely in-line w/ consensus & @Andreas_Hopf (for now), but I'm seeing 4x the net losses they're estimating at -$892m, due mostly to a more severe view of gross margin deterioration on Models S/X.
7) Keep in mind that it's "positive FCF" that Musk promised for Q2, while admitting $TSLA would still have net losses. Capex has to rise & I see potential for inventories to increase QoQ, while accounts payable could be flat to down. That's NEGATIVE FCF.
8) So $TSLAQ members actively taking the pain of being short right now should just keep in mind, you can get out during this 2-week "no man's land" ahead of Q2 delivery #'s, or just stay put: negative FCF is likely, and that's a miss of Musk's target. Also, last key point:
9) Even if 90K+ record deliveries are reached, $TSLA will be in the red vs profits in Q3 & Q4 of 2018. This means selling 120% more cars YoY leads to losses. Why? Avg prices have plunged by -35% YoY & things heading lower in Q3 & Q4, where revenues will likely fall. $TSLAQ
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