I don't like stocks that don't pay dividends in general, but I'll admit that I'm seriously thinking about it right now.
Apparently, there was an internal memo released last week that they were expecting to average 300+ cars per day and they shut down S and X lines because they were substantially over on their sales already and gave those employees the option to go help on the 3 line or something (which I don't quite understand, but hey, whatever). If the average for Q4 was 100 Model 3's per week, the difference in revenue would be $93,100,000 per week, or $1.21 billion in sales per quarter increased.
If Tesla is turning a 20% margin as expected on the 3, that is $242,060,000 minimally.
Last quarter, Tesla lost $277 million. If you offset these two numbers, we're just a little under $35 million apart from profitable.
Now, a few quick caveats:
1) They didn't get production that high until the end of this quarter. It was supposedly around 500 / week before that point. These numbers will not be repeated this quarter.
2) Tesla spent less money than expected last quarter. I expect them to do the same this quarter. They said on the last call that the new battery line was up and being tested in Germany, and it's now up and working here from what I can tell by the increase in capacity. That was already paid for. They are still investing in infrastructure, but I bet that this quarter will be below last.
...and, to counteract the negative recent press...
There are a lot of articles about how few people have configured their cars just yet. Those articles are questioning the demand and saying see, there is no demand for the 3, only 30% of people are configuring! What they forget is...
- The majority of people who got the configuration chance so far are current owners. If you are a current owner, you already own a Tesla, and it's likely you are either wanting to get a performance version of the 3 which isn't out yet, or the short range version because you already have a long range one.
- I would guess the majority of people who got in line right away wanted the short range version, either for price or because they just don't need the long range. In fact, for most first time Tesla owners, I would expect they aren't electric car owners already, and that means they will probably use the 3 as their around town car first until they get comfortable with it.
Oh, and as I think I've mentioned, I totally think they are playing with when they deliver things to ensure they don't hit their 200,000 US delivery until July. I think that is why the Model S and X have hit substantial delivery delays in the US recently. They'll hit it on or about July 1st, the tax credit will remain until the end of the year, and then they will announce a cheaper price (my guess, $32,000) for the basic trim level of the Model 3. I hope to take delivery of mine at the end of the year, preferably with dual motors, which I assume we're going to learn more about on or immediately following the earnings call in a month.
Point is, while I don't usually invest in companies without a dividend structure in place, and while Tesla definitely has more risk built in that most of the others right now, I think this is a solid time to potentially buy. If everything plays out like it should, I expect it will double from current rates by year end.