Loup Ventures

About the Author Loup Ventures

At Loup Ventures, research is in our blood. The spirit of our team has always lived on the curiosity to discover new insights that yield investment opportunities. For years we did this on Wall Street, focused on public tech companies. Now we invest in private frontier tech companies, but public companies like Tesla, Nvidia, and others are also meaningful innovators in frontier tech. These public companies are shaping the emergence of AI, robotics, autonomous vehicles, and AR/VR just as much as early stage startups. As a result, we’ve always kept a watchful eye on public market participants to inform our private investment strategy. Gene Munster is a managing partner and co-founder at Loup Ventures. Prior to Loup Ventures, Gene was a managing director and senior research analyst at Piper Jaffray where he covered technology companies including Apple, Amazon, Google and Facebook. During his 21-year tenure, Gene received many acknowledgements including: Top Stock Picker from Forbes, Best on the Street from The Wall Street Journal, and was widely recognized for his work on Apple. Gene holds a bachelor’s degree in finance and entrepreneurship from University of St. Thomas.

Tesla (TSLA) Earnings: The Good, the Bad and the Ugly


By Gene Munster

Earlier this month, Tesla (TSLA) released production and delivery numbers well ahead of expectations and reiterated its target for 360k-400k deliveries in 2019, ahead of analysts expecting 345k. That good news was tempered with today’s Q2 results, which revealed a greater than expected loss, a slight miss on automotive gross margin, and the departure of CTO JB Straubel. While the quarter had both gives and takes, we remain confident that the company is turning the corner in its ability to capitalize on the trends of electric vehicles and autonomy.

  • Positive – Tesla produced and delivered a record amount of vehicles this quarter. This points to healthy demand and the absence of manufacturing issues. The company also reiterated its guidance for 360k-400k deliveries in 2019, implying an average of just over 100k deliveries in both of the next two quarters.
  • Positive – At $5B, Tesla’s cash position is stronger than ever at a critical time ahead of bringing Gigafactory Shanghai online and tooling Fremont for Model Y production, which will begin next year.
  • Neutral – Most will view the slight miss on automotive gross margins as a negative. However, 18.9% vs expectations of 20%-21% is a small miss, especially considering the headwind of selling lower-optioned vehicles. We anticipate rising margins to come from more revenue recognition as Autopilot features expand, tailwinds from selling higher-optioned vehicles in new markets, and the theoretically more profitable Model Y (once at scale).
  • Negative – A net loss of $408M was well ahead of expectations, primarily due to spending on Gigafactory Shanghai and Model Y production preparations. The loss was extended by a one-time restructuring charge of $117M.
  • Negative – Tesla CTO JB Straubel announced that he is transitioning to an advisory role and will be replaced by VP of Engineering, Drew Baglino. On a long list of executive departures, this is the worst one yet. JB has been at Tesla for 16 years, predating Musk, and was largely credited for recruiting Elon in his early days. This is a different caliber than many of the previous departures we have seen, and will undoubtedly be felt throughout the company.
  • See Tesla’s price targets and analyst ratings on TipRanks

 

Disclaimer: We actively write about the themes in which we invest or may invest: virtual reality, augmented reality, artificial intelligence, and robotics. From time to time, we may write about companies that are in our portfolio. As managers of the portfolio, we may earn carried interest, management fees or other compensation from such portfolio. 

 

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