Tesla 2Q numbers

Tesla shares sank over 8 percent last evening as the company indicated (after the session prior to yesterday) that they would miss their annual target of delivering 55 thousand motor vehicles for the year. Instead, it would be between 50 and 55 thousand. For a share price that is primed for perfection, this is obviously not the best news in the world. Musk has a plan though, as a shareholder there is going to have to be many lengths of patience during which you are going to feel underwhelmed by the present or the short term outlook. Having read the book about Musk, you get a sense that he thinks as long term as Jeff Bezos of Amazon.

He (Musk and Bezos for that matter) will sacrifice short term shareholder returns for excellence and execution on his masterplan, which is quite simply to rid humanity on their reliance on fossil fuels. Both SolarCity and Tesla will enable us to do exactly this. You have to start somewhere. As such, when you buy either company, you will not see positive returns, let alone dividends for years. Both these companies were on their knees a number of years ago, about to go out of business. It makes the business very hard to judge as an outsider, let alone value. To put that into perspective, just the Ford F Pick up truck series has sold 423 thousand units this year so far in the US. The July number was 66 thousand. One pickup truck sells more in one month than Tesla will sell all year. In fairness to Tesla, for the moment it is one car, a specialised and niche car and definitely in the luxury category.

Whilst the company makes progress with all sorts of things like the Gigafactory, the Model X delay (the SUV with the swing doors) it is definitely weighing profits down. Elon Musk is large and in charge, that is part of what you are buying here when you own the company. If you read the shareholder letter, you will see that the Model S is only three years old. They are selling nearly 50 percent more cars than last year, all pre paid. No dealerships. The Roadster before that was quite frankly not the best looking car. The car is growing quickly in both the US and Europe. They continue to roll out the charging network: ".. drivers in California are on average never more than 42 miles away from a Supercharger, while drivers in Germany are on average never more than 33 miles away from a Supercharger."

Quarterly revenues are only one million Dollars for Tesla, GM has annual revenues of 156 billion Dollars. Ferrari in their recent IPO for comparisons sake, are pushing to sell 9000 vehicles a year in a couple of years time, Tesla are going to struggle to get to 55 thousand this year. The company still makes a loss, a narrower one each quarter, they made a net loss of 184 million Dollars. The company is slowly changing, and as they point out, in the coming months there will be more than just the car, the battery too. The so called Powerwall. The products are designed to be beautiful, not too dissimilar to another workaholic and neatness freak who pioneered amazing devices with his design team, one Steve Jobs. It is a company that you have to own, there may be however long leads and lags between the results around share price performance relative to the results. Buy the stock, forget where it trades in the next three years, this is bound to be a long term success, from which point it is hard to say!