NOG Reports 4Q17 And 2017 Full Year Results; Tesla -- A "Going Concern"? -- February 15, 2018

From a press release, no link, easily found.

• daily production in the fourth quarter exceeded prior guidance, increasing 9.3% sequentially and 22.3% year over year to average 16,742 barrels of oil equivalen per day, for a total of 1,540,237 boe
• Northern beat its prior expense guidance with lower production expenses, production taxes, and general and administrative expenses on a per boe basis
• fourth quarter oil differential was $3.51 per barrel, an improvement of $2.71 per barrel compared to the third quarter
• Northern added 7.1 net wells to production during the fourth quarter, bringing year-to-date well additions to 16.9 net wells

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Tesla By The Numbers

Link here.

Cash burn rate:

• 4Q17: $915.2 million (yes, just short of one billion dollars)
• 3Q17: 1.251 billion (yes, well over one billion dollars)
• 4Q16: $461.4 million (only half a billion dollars)
• burn rate: "frighteningly large"
• auditor: should have serious concerns calling Tesla a "viable enterprise"

Debt, long-term debt and capital leases:

• $9.46 billion, end of year, 2017 (almost double from year earlier)
• $5.97 billion, end of year, 2016
• assuming a profit margin of $10,000 / car, just to cover the current debt, one million cars must be sold

Sales, Model S shipments -- Tesla's best bet for cash flow being sacrificed for ramping up the Model 3

• 4Q17: 15,200
• 3Q17: 14,065
• 3Q16: 15,300
• Tesla shipped fewer Model S's in 4Q17 than it did in 3Q16 (4Q16 not used for comparison purposes because Tesla had production problems in 4Q16
• the Model S, Tesla's cash cow, is being sacrificed for the Model 3

Profit margins, automotive gross margin:

• 13.8% in 4Q17
• 18.7% in 3Q17
• 22.2% in 4Q16
• Elon has thrown out a target figure of 25% for AGM in the past, but at just over half that rate, Tesla cannot possibly be profitable
• gross profit, 4Q17, $438 million, was less than half its combined R&D and operating expense spend of $1.04 billion
• a company that produces that much red ink is not sustainable
• auditor: needs to use "going concern" language in the auditor's statement

Disclaimer: this is not an investment site. Do not make any relationship, job, travel, investment, or financial decisions based on what you read here or think you may have read here. If this is important to you, go to the source.

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Tesla's Gigafactory Problem

Link here.

Key data point at the link: Tesla apologists obfuscate "battery designation" with "numerical designations" that mean nothing

• "old" batteries: "the old form factor"; #18650; supplier: Panasonic; likely contracted for minimum number of batteries to be sold
• "new" batteries: "the new form factor"; #2170

From Tesla:

• [our cash cows], the Model S and Model X, will be "supply-limited"; hence, Tesla expects to deliver only 100,000 units (Model S and Model X) in 2018 -- again, these are the cash cows for the company
• Q: you could deliver more than 100,000 units (S, X) but you are constrained by the "old" battery; is that correct? A: yes; we felt that expanding that supply of "old" batteries with Panasonic was "worth the risk"

Comment: it seems that it would be easier for Panasonic to increase/extend production of the "old" batteries to allow more cash cows (Models S and X) to be sold; but for some reason, Tesla felt that was a "risk they did not want to take" -- why?

• Tesla avoided answering the "why", instead answering: "Tesla is keeping the course on Model 3"; that's "where the majority of the effort is"
• author at the link opines that even if profit were not an in issue, Tesla may be capacity-constrained because of "old" battery shortages/constraints

On profits:

• "deep discounting has eroded the gross margins significantly"; margins have reached "an abysmal 13.8% -- this is identical to the other article posted above some days ago; "this gross margin is a far cry from corporate goal of 30%+ margins
• "we argue that Tesla's Model S and Model X combined sales may appear stagnated for at least six quarters but, in reality, they would have declined substantially if not for the aggressive discounting"

Look at the profits (actually the ever worsening deficits):

Then this:

As we have pointed out in a recent article, demand indicators are suggesting that Tesla may see a 20% drop in shipments in Q1. As a result, we are hard-pressed to see Tesla selling even 80K units in 2018 if the company were to shoot for respectable gross margins around 25% level. In our view, 18650 battery capacity for 100K cars is not a limitation for Tesla.

More:

• the "old" battery; Panasonic may not want to make any more than originally contracted; no one will want the "old" technology; the only buyer would be Tesla
• the "new" battery is already being produced at the Gigafactory; not interested in expanding "old" battery production

The writer:

In an ideal world, Tesla would have liked to transition the Model S and Model X to the 2170 format sooner to get to the cost and performance benefits touted by Tesla. However, we believe Tesla was unable to do so because of preexisting volume purchase commitment agreements with Panasonic. Panasonic needed those commitments to get a reasonable ROI on the existing 18650 capacity.

Which brings us to this:

• writer predicts that Tesla will post its first $1-billion-loss quarter in 1Q18 or 2Q18

Much, much more at the link.

Bottom line for the consumer: if one has put down $1,000 for a Tesla Model S or Model X, will one get the "old battery" or the "new" battery? I think the answer is fairly obvious.