Whitney Tilson: Tesla Will Never Report Another Profitable Quarter – Ever!

Whitney Tilson’s email to investors discussing Tesla’s 1Q19 earnings.

Here’s my quick take on Tesla‘s 1Q19 earnings. I’d welcome all thoughts and comments!

tesla's 1q19 earnings

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Q1 hedge fund letters, conference, scoops etc


Tesla (TSLA) reported a hideous $702 million loss in the first quarter – more than double consensus expectations – and guided for another loss in the second quarter.

The cash flow statement was equally bad, as the company had negative $640 million in cash flow from operations plus spent $280 million in cap ex, for a $920 million total cash burn.

Quite a contrast from last quarter (Q4 ’18), when the company reported $210 million in profit and generated positive $1.235 billion in operating cash flow, which led CEO Elon Musk to say on the call: “I am optimistic about being profitable in Q1 and all quarters going forward.”

Ooops…

So why is the stock flat after hours?

Partly because cash, at $2.2 billion, was better than some bears predicted (myself included). But mostly because Musk promised huge growth and a return to profitability in the second half of the year.

Yet when asked on the call for evidence of the demand that will be needed to drive this growth, he could cite no evidence.

Why anyone believes his rosy forecast is beyond me, especially in light of his terrible forecasting track record and the many data points to the contrary.

I think it’s quite possible that Tesla will never report another profitable quarter – ever!




About the Author

Jacob Wolinsky
Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Prior to ValueWalk, Jacob was VP of Business Development at SumZero. Prior to SumZero, Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver