Morningstar

Strong Demand, More Cash Burn in Tesla's 2nd Quarter

Our fair value estimate remains in place, but we are lowering our 2017 delivery expectations.

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Tesla Inc
(TSLA)

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Second-quarter adjusted EPS was a loss of $1.33, the same as first quarter and better than consensus loss of $1.80. Revenue increased by 120% year over year and by 3.5% sequentially to $2.79 billion, beating consensus of $2.55 billion. Model S and X deliveries increased by 53% year over year but declined 12% from first quarter. Management gave less detailed guidance than in the past by saying Model S and X deliveries in the second half of 2017 will exceed the first-half total of 47,077. We have long been interested to see 2017 full-year capital spending plans which in the first half totaled $1.5 billion and second half is guided to about $2 billion. We calculate Tesla’s cash burn after including cash inflows for sales to third-party lease providers at $1.009 billion for second quarter versus a $436.1 million burn in first quarter. Total cash on hand is about $3 billion and we expect many more debt and equity offerings over time.

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About the Author

David Whiston, CFA, CPA, CFE

Strategist
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David Whiston, CFA, CPA, CFE, is a strategist, AM Industrials, for Morningstar*. He covers stocks in the automotive industry, including dealerships, parts manufacturers, and automakers. He has covered the automotive industry since joining Morningstar in 2007. He writes stock reports, ad hoc reports, stock analyst notes, and builds discounted cash flow models for each company covered. He also assesses their economic moat and makes frequent television and print media appearances in local, national, and international news outlets. Key stocks covered include GM, Ford, CarMax, and all six publicly traded franchise auto dealers, such as AutoNation and Penske Automotive Group.

Before joining Morningstar in 2007, Whiston spent four years in PricewaterhouseCoopers’ New York real estate audit practice and one year in its Chicago office working on real estate acquisition due diligence, gaining experience around assessing an asset’s cash flow.

Whiston holds a bachelor’s degree in business administration with a concentration in accounting from the University of Richmond’s Robins School of Business. He also holds a master’s degree in business administration with concentrations in finance, economics, and organizational behavior from the University of Chicago Booth School of Business. He holds the Chartered Financial Analyst® designation, and he is a Certified Public Accountant and a Certified Fraud Examiner.

In 2012, he ranked first in the specialty retailers and services industry in The Wall Street Journal’s annual “Best on the Street” analysts survey. He ranked first in the same industry in 2011 .

* Morningstar Research Services LLC (“Morningstar”) is a wholly owned subsidiary of Morningstar, Inc

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