Tesla Inc. (TSLA) reported total revenue of $2.696 billion, while the company reported a Non-GAAP net loss of $214.9 million or $1.33 per share. Analysts had been looking for revenue of $2.61 billion and a loss of $0.77 per share. The company reported automotive revenue of $2.289 billion, up 15% q/q, and 123% y/y.  Automotive gross margins came in at 27.4%, an improvement of 480 bp q/q, and 340 bp y/y. 

Looking ahead to the balance of the year, TSLA reiterated its guidance for first-half deliveries of 47,000 – 50,000. The company noted it would update guidance on vehicle deliveries after the start of Model 3 production in July. TSLA noted model 3 facilities are on track for production of 5,000 vehicles per week at some point in 2017, and 10,000 per week in 2018. (For more, see also: Can Tesla Do the Impossible?)

In plain English, we learned nothing new from these quarterly results. Some interesting things stand out when you look through the income statement. First let's start with its GAAP income statement, on the statement, we see the company reports R&D of approximately $332 million, which is an increase from $182 million y/y. The company also said Selling, General & Administrative expenses rose to about $603 million from $318 million y/y. The company reported a net loss of $397 million, most of Tesla's losses at this point are coming from R&D and SG&A, of which a footnote shows $103 million is due to stock compensation expense.

When you look at TSLA's cash flow statement, you can see the company spent nearly $553 million on capital expenditures. Ford Motors Co (F) had capital spending according to its 10-Q for the most recent quarter of $1.5 billion, General Motors (GM) shows Capital Expenditures of $2.0 billion in its most recent quarterly 10-Q.  TSLA had revenue of $2.7 billion, with cap-ex representing about 20% of TSLA revenue for the quarter. GM had total revenue of $41.2 billion, which means Cap-ex represents about 5% of revenue, and Ford had revenue of $37.7 billion, with Cap-ex making up about 4% of revenue. 

AMZN Capital Expenditures (TTM) Chart

AMZN Capital Expenditures (TTM) data by YCharts

Simply put, TSLA is spending a tremendous amount of money building facilities and investing in the future, which is causing it to lose money. If TSLA decides at some point to stop making investments and investing in the future, what happens to be profitable? The model sounds eerily similar to that of Amazon.com Inc. (AMZN) for many years. 

AMZN Net Income (TTM) Chart

AMZN Net Income (TTM) data by YCharts

Then, of course, you can look at TSLA margins and compare those to Ford and GM as well. 

AMZN Gross Profit Margin (TTM) Chart

AMZN Gross Profit Margin (TTM) data by YCharts

One can make what they want out of the most recent TSLA numbers, but we learned nothing new. Shares of the stock are trading relatively unchanged at $308 in after-hours tradings. Bull or Bear Tesla has an enormous challenge ahead of it, and it is safe to say we can likely all agree on that. The main difference is do you believe they will or will not be able to pull it off. (For more, see also: Tesla Makes Risky Moves in Model 3 Production.)

Michael Kramer and the Clients of Mott Capital Management, LLC own shares of TSLA. Michael Kramer is the founder of Mott Capital Management LLC, a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future performance.

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