Two questions: 1. Would you invest in this company? 2. Why is this company losing money?pic.twitter.com/gRwnZU3oZo
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So if you short Tesla it should be because you don't think the model 3 will work out. If you short it because they're spending a lot of money make sure you understand what they're investing it in.
Worth pointing out that Tesla's direct sales model doesn't quite make this an apples to apples comparison.
Why not? They make up for the margin in different ways, and don't rely on third party distributors. That's a win.
Their model is superior for sure. But it's difficult to compare gross margin because Tesla's gross margin doesn't include the cost to operate their stores and service centers. This is included in other companies gross margin bc they sell cars at a discount to dealers.
Austen, you need to look at cogs and what it does and does not include. Then redo analysis. It's not pretty
Look at it isolated to Model X and Model S. It's pretty.
Yes, but compared to other maufacturers Tesla includes a lot in their SGA, which almost would consider COGS. So their GMs ade artificially inflated compared to competitors. What might be a better analysis would be look at net income, with RnD added back in etc
case: R&D expenses of competitors are still higher than Tesla in absolute terms, so not really "insane". Tesla doesn't finance R&D by foregoing (net) profits, it has roughly no net income left after SG&A + interest expenses are taken into account to begin with.pic.twitter.com/9Gt9c6sI1i
SG&A expenses have historically scaled with revenue, and with almost no income to finance R&D/expansion, will inevitably incur more debt. Interest expenses get higher, debt will fuel rev. growth, but SG&A expenses will grow too (given past performance). How are they Amazon again?
I had a feeling this would be Tesla
. Great analysis and excellent twitter thread, one of the rare good ones. @elonmusk you looking at this?
It worked very well for Amazon.
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