Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[Artful Dodger]

What would they be recognizing revenue for?

All of those people already had the FSD Beta, and I don't think any new functionality was added in V11. So, I wouldn't expect any additional revenue to be recognized from the V11 release in Q1.

Undelivered features, wider release. The intent to recognize revenue is stated in the 2022 10-K. I expect Tesla to smooth the revenue over the course of 2023, until finally 100% of revenue is recognized at time of sale, with none deferred.

Cheers!

 

[MP3Mike]

Undelivered features, wider release.

But V11 didn't go wider in 23Q1 than FSD Beta already was in 22Q4. And I don't think it delivered any new features/capabilities. (Do you have a list of new features you think they would be recognizing revenue for?)

 

[wipster]

I’m thinking he has something in store sometime soon. He wasn’t joking around about the burnt shorts the first time and he replied to that tweet. He says they are working on burnt hair and it has to be just right. I’m actually thinking the timing has to be just right of when they release the product. I think the release will coincide or just be right before shorts get burnt again. Just like what happened last time.

Let that sink in...

 

[Ogre]

I sure hope it doesn't smell like burnt hair though... especially when you get it wet. Horrible smell.

I think the point it it sits on your mantle next to your nearly pointless Cyber Whistle (isn’t a very good whistle for $50).

I’m thinking he has something in store sometime soon. He wasn’t joking around about the burnt shorts the first time and he replied to that tweet. He says they are working on burnt hair and it has to be just right. I’m actually thinking the timing has to be just right of when they release the product. I think the release will coincide or just be right before shorts get burnt again. Just like what happened last time.

I would sure love for this to be the case. He certainly seems to be playing this up quite a bit more than it it were in fact just another bit of merch.

 

[replicant]

Elon Musk Buys Thousands of GPUs for Twitter's Generative AI Project

Twitter is reportedly building a ChatGPT rival.

www.tomshardware.com

Dang, I was hoping Tesla would do this LLM development instead of Twitter. Anyways, I do think Twitter will be the first external customer for dojo. And likewise these LLM models would definitely feedback into Optimus.

Just hope they'll be state of art by then.

Not surprised Elon prefers to do LLM development at Twitter. The company is still searching its business model (not easy to get the public to pay subscription and Elon don't want to rely on ads either) and it has the data to trained models on. Also, Elon owns most of Twitter and have full control over the business (private too, contrary to Tesla) so all the extra value ends up to be his own. And IA is deeply involved with politics, which Elon seems to be more and more interested into and more fit for a social network than a manufacturing company.

 

[replicant]

I’m thinking he has something in store sometime soon. He wasn’t joking around about the burnt shorts the first time and he replied to that tweet. He says they are working on burnt hair and it has to be just right. I’m actually thinking the timing has to be just right of when they release the product. I think the release will coincide or just be right before shorts get burnt again. Just like what happened last time.

Burnt Hair is a Boring co product, as far as I know. Shorts shorts were Tesla's.
What does Boring Co, a private company, have to do with short sellers?

 

[AndrewZ]

Undelivered features, wider release. The intent to recognize revenue is stated in the 2022 10-K. I expect Tesla to smooth the revenue over the course of 2023, until finally 100% of revenue is recognized at time of sale, with none deferred.

Cheers!

I understood this to be further revenue to recognize by rolling FSD out to other areas like Europe and China. Aside from new FSD purchases and subscription revenue since last quarter, I don't think there's anything left to recognize in the US and maybe Canada.

Could be wrong though

 

[Ogre]

The business has other tailwinds in 2023 as well:

• Tesla plans to recognise $1B in deferred revenue from FSD (w. the wide release of v.11 "Single Stack" at the end of March, I expect at least $250M of that in Q1)
• Tesla has $22B in cash, that's likely earning net interest of about 0.5% for Q1 (2%/yr), so call that > $100M in interest income
• Tesla is now earning IRA production credits for its battery manufacturing:
  • 50% of 2170 credits // Panasonic at Giga Nevada (0.5*9million*$45=$200M)
  • 100% of 4680 credits // Giga Texas (Q2 est'd ~$40M & inc ea. Qtr)
• that's ~$400M in Q1 in extra revenue (equivalent to +$1,000 for each car delivered)
• economies of scale due to increased factory utilization are another cost saving, and decreased raw materials costs will also improve veh. gross margins over time
• @The Accountant first brought up the issue of Tesla's "Deferred Tax Credits / Valuation allowance here years ago: (I think Tesla began claiming some in 2022Q4... this may continue in Q1. Paging @mongo)

Path to S&P Inclusion - valuation allowance - "Net Operating Loss Carryforward" $1.8 B

TL;dr Tesla isn't your father's Oldsmobile...

Cheers!

All good points. I wonder if any of that would truly move the needle though in today’s environment? Quite a bit of that (not all I know) would be written off by analysts as one time events.

If they are going to cause a big short burning moment, I think it would need to be pretty significant. I’m thinking something to move the SP $100 or more.

 

[Artful Dodger]

But V11 didn't go wider in 23Q1 than FSD Beta already was in 22Q4. And I don't think it delivered any new features/capabilities. (Do you have a list of new features you think they would be recognizing revenue for?)

This is what the Tesla 2022 10-K has to say about FSD revenue recognition:

• "Revenue related to FSD is recognized when functionality is delivered to the customer and the portion related to software updates is recognized over time."
• "Further, during the fourth quarter of 2022, we recognized $324 million in revenue related to the general FSD feature release in North America."
• "Of the total deferred revenue balance as of December 31, 2022, we expect to recognize $639 million of revenue in the next 12 months."

Tesla deferred revenue includes FSD features, internet connectivity, free Supercharging programs and over-the-air software updates, so it's not all just in FSD. But I think its quite reasonable that Tesla would have detailed internal accounting milestones for what features have been released, and how widely they have been deployed. They're working toward "feature complete" which we have not heard announced yet.

Overall, I do expect some FSD deferred revenue recognition for Q1. The Autopilot team has been shipping deliverables, that's how you recognize revenue. But of course I don't know the details, I can only make my outsider's best estimate...

Cheers!

 

[Rammstein]

Burnt Hair is a Boring co product, as far as I know. Shorts shorts were Tesla's.
What does Boring Co, a private company, have to do with short sellers?

Yeah good point but they are all just Elon Musk products. Maybe the boring company needs more money. Another thing could be maybe he plans on merging the companies together and release burnt hair when that happens.

 

[AndrewZ]

Quote from Zach on the Q4 earnings call regarding the incremental revenue recognition (we call this Rules of Credit in my work)

Alex Potter -- Piper Sandler -- Analyst
OK, great. So a quick one on FSD. This is, I guess, for Zach. Obviously, you unlocked some deferred revenue in the quarter that will translate presumably into higher margins on every incremental sale going forward so long as people opt in for FSD.

But was wondering if you're able to disclose the percentage of the $15,000 price that you're not going to be able to recognize as revenue upfront rather than deferred.

Zach Kirkhorn -- Chief Financial Officer

Yes. I mean, the way that we've structured this is a full self-driving package has two components. There's enhanced autopilot, the price of which is listed on the website. We fully recognize that.

Then there's an incremental, which is for the additional features of full self-driving offers, and we've released a portion of that. And then, there's a minority of the total package that's remaining that will be released over time as software updates are there. And in our shareholder letter, in addition to disclosing the dollar amount of the deferred revenue release, we also included in there the dollar value of the balance of unreleased deferred revenue that will be released over time with future software updates.

I’m not sure what would be remaining to release in North America for the FSD portion but guess there could still be some ambiguity

 

[kbM3]

“Does not align with values”. That‘s an odd choice to give in a survey.

Also it’s quite unbelievable that nearly 40% chose “does not align with values” as a reason to not purchase an electric vehicle.

 

[wipster]

Also it’s quite unbelievable that nearly 40% chose “does not align with values” as a reason to not purchase an electric vehicle.

Figures don't lie, but liers figure...

Just depends who was surveyed and where.

 

[M|S|M MYP]

Undelivered features, wider release. The intent to recognize revenue is stated in the 2022 10-K. I expect Tesla to smooth the revenue over the course of 2023, until finally 100% of revenue is recognized at time of sale, with none deferred.

Cheers!

So unwinding the 'revenue wave'...got it

 

[Tony73]

Tesla has never delivered vehicles this soon in their production. Very much get the impression these are to make Pepsi happy while Tesla continues producing in small volume for internal use.

Commercial sales probably won’t start again until the volume production line is up at Giga Nevada.

They “ll probably deliver a few in Canada later this year. Maybe to Walmart Canada

 

[SO16]

Gotta love NBC nightly national news.

Just had a piece on EVs and did show Teslas but focused on GM, Mary Barra, the high cost of EVs and even ending the segment focusing on a 98k price tag. But of course no mention of Tesla lowering their prices.

For people that know nothing about EVs would be discouraged about looking into one.

If NBC news is supposedly left leaning, they sure seem to knock EVs quite a bit.

 

[Singuy]

Gotta love NBC nightly national news.

Just had a piece on EVs and did show Teslas but focused on GM, Mary Barra, the high cost of EVs and even ending the semester focusing on a 98k price tag. But of course no mention of Tesla lowering their prices.

For people that know nothing about EVs would be discouraged about looking into one.

If NBC news is supposedly left leaning, they sure to seem knock EVs quite a bit.

Well Teslas are made by Nazis, so if you want to be green then you better start eating fake meat....until those are made by the Nazis as well. Based on current trend, everything will be made by the Nazis eventually.

 

[jerry33]

Gotta love NBC nightly national news.

Just had a piece on EVs and did show Teslas but focused on GM, Mary Barra, the high cost of EVs and even ending the semester focusing on a 98k price tag. But of course no mention of Tesla lowering their prices.

For people that know nothing about EVs would be discouraged about looking into one.

If NBC news is supposedly left leaning, they sure to seem knock EVs quite a bit.

They are only left-leaning if their advertisers don't mind it.

 

[phantasms]

As long we we're going after hours with Burnt Hair theories, here's mine.

I believe it's related to a product unveiling.

Too much of a coincidence that we got the email saying that burnt hair would be delayed until May just before Investor day started. Also, possibly the big delay on investor day was them discussing, deciding, then preparing to not show whatever this new product is.

Highland launch? Maybe.
Roadster 2 green light? Would love it to be but doubtful.

Another breadcrumb is Bill Wright on Twitter. For those who don't know he's a Tesla employee who barely posts but always knows what he's talking about. One of the first people to say Model S Plaid was 18650 when most everyone was thinking 4680. [oh silly silly us to think 4680 scale deliveries well over a year ago]. His Twitter profile is very much implying a new home energy product will be released in May, when the burnt hair is expected.

My guess is Burnt Hair is related to a new product that combines Powerwall, charger, solar inverter, and mayyyybe heatpumps in some indirect manner. Heat=burnt

Another note. I know many of you may not want to hear this. I'm very doubtful that we'll get the kind of gigantic stock movements, macro crash/bounce aside, that we've gotten in the past. I do think this company gets to $10T some day for sure but I'm not expecting any ~40% up weeks anymore. Well, at least until the next bubble in 15 years or so. lol Don't use margin and be happy the stock is low so you can buy and hold more of it. IMHO Burnt Hair meaning the stock is going to shoot up is nonsense and honestly is not something I'd like to see. Give me that slow rise please.

Love you all.

 

[MC3OZ]

My guess is Burnt Hair is related to a new product that combines Powerwall, charger, solar inverter, and mayyyybe heatpumps in some indirect manner. Heat=burnt

Good guess - there were 2 energy products under white sheets in the investor day presentation.

These might be;-

1. A new Powerwall (LFP?)
2. A domestic heat pump.
3. An industrial heat storage battery?

The most likely product is a domestic heat pump.

The industrial heat storage battery fits the burnt hair slogan well, because it can provide heat at very high temps.