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AustenAllred's profile
Austen Allred
Austen Allred
Austen Allred
Verified account
@AustenAllred

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Austen AllredVerified account

@AustenAllred

CEO @LambdaSchool (YC S17): A CS education that's free until you get a job. I have made remarks that I do not agree with.

San Francisco, CA
lambdaschool.com
Joined December 2010

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    1. Austen Allred‏Verified account @AustenAllred 21 Nov 2017

      Two questions: 1. Would you invest in this company? 2. Why is this company losing money?pic.twitter.com/gRwnZU3oZo

      7 replies 9 retweets 28 likes
      Show this thread
    2. Austen Allred‏Verified account @AustenAllred 21 Nov 2017

      Here's what the same company is spending on CapEx and R&Dpic.twitter.com/ipeHwDpLtB

      2 replies 2 retweets 4 likes
      Show this thread
    3. Austen Allred‏Verified account @AustenAllred 21 Nov 2017

      The answer? This is Tesla. If Tesla weren't spending ridiculous amounts of money producing the Model 3 it would be wildly profitable. Why is it losing money? Because they're investing everything they bring in and then some on a market opportunity that's 10x the size of the biz

      2 replies 3 retweets 15 likes
      Show this thread
      Austen Allred‏Verified account @AustenAllred 21 Nov 2017

      For reference: Here is what Tesla's margins look like with and without capex and R&D. They're just as profitable as the other car companies, they're just investing insane amounts.pic.twitter.com/bEw1X74cHO

      3:08 PM - 21 Nov 2017
      • 8 Retweets
      • 19 Likes
      • Eric Aleman Fabian Flatz Guy Bieber Benji Klassen Veronica Ahimsa 🎄 José Pedro Dias Jasper, Ghost of Culture Wars Past basicdatadude
      6 replies 8 retweets 19 likes
        1. Austen Allred‏Verified account @AustenAllred 21 Nov 2017

          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.

          3 replies 3 retweets 18 likes
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        2. Alex Halcomb‏ @alexhalcomb 21 Nov 2017
          Replying to @AustenAllred

          Worth pointing out that Tesla's direct sales model doesn't quite make this an apples to apples comparison.

          1 reply 0 retweets 0 likes
        3. Austen Allred‏Verified account @AustenAllred 21 Nov 2017
          Replying to @alexhalcomb

          Why not? They make up for the margin in different ways, and don't rely on third party distributors. That's a win.

          2 replies 0 retweets 0 likes
        4. Alex Halcomb‏ @alexhalcomb 21 Nov 2017
          Replying to @AustenAllred

          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.

          0 replies 0 retweets 1 like
        5. End of conversation
        1. New conversation
        2. War on Zevon‏ @MarkAWoolard 21 Nov 2017
          Replying to @AustenAllred

          Austen, you need to look at cogs and what it does and does not include. Then redo analysis. It's not pretty

          1 reply 0 retweets 0 likes
        3. Austen Allred‏Verified account @AustenAllred 21 Nov 2017
          Replying to @MarkAWoolard

          Look at it isolated to Model X and Model S. It's pretty.

          1 reply 0 retweets 0 likes
        4. War on Zevon‏ @MarkAWoolard 21 Nov 2017
          Replying to @AustenAllred

          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

          0 replies 0 retweets 0 likes
        5. End of conversation
        1. New conversation
        2. Javier Torrez‏ @jactorrez 21 Nov 2017
          Replying to @AustenAllred

          🐻 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

          1 reply 0 retweets 1 like
        3. Javier Torrez‏ @jactorrez 21 Nov 2017
          Replying to @jactorrez @AustenAllred

          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?

          0 replies 0 retweets 0 likes
        4. End of conversation
        1. The Abdul  👍🏽  🇺🇸‏ @CaliAbdul 21 Nov 2017
          Replying to @AustenAllred

          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?

          0 replies 0 retweets 0 likes
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        1. Jesse Harris‏ @elforesto 21 Nov 2017
          Replying to @AustenAllred

          It worked very well for Amazon.

          0 replies 0 retweets 0 likes
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