Well welcome back to Tesla Earnings. This is gonna be pretty epic. It's been a whole, well three months since we've had test learnings and now we're back to Tesla Earnings again. And everybody wants to know how the hell is Tesla gonna have any kind of pricing, power, or margin left given that they've reduced the price of one of their most, uh, popular Vehicles the Model Y like I Don't know how many times I don't know.

five times 27 since the beginning of the year. It's absolutely insane. Nobody knows what the heck is gonna happen, but uh, we're pretty excited to see what it is. Uh so um, yeah, fingers crossed this uh, this gives us a little bit of a action here on the stock.

When are we gonna get another one of those 20-day stock rallies? 21 day stock rallies for Tesla is, uh, the earnings set today going to lead to an explosion I Don't know. Expectations are that Tesla is going to move about 6.5 in either directions. We've got IBM as well, but who cares about IBM What's that when you could talk about Tesla So we're gonna be looking at both of these though. Uh, we'll see what happens as the earnings cross.

We're about three minutes away from earnings here. Sometimes they drop a couple minutes early though. I Want you to, uh, write down some of the expectations that we have for Tesla as well so that you're prepared for them as much as possible. So let's get the expectations and earnings estimates up.

Let's make sure we're not also missing, uh, the actual data coming through. No, we're not. Okay, good. So we're on standby now for that data coming through.

We've also got a 420 flash sale Guaranteed Will be the lowest price possible going forward for our courses on building your wealth linked down below. Uh oh. Actually, it looks like we might be getting the Tesla letter a couple minutes early. Let's see here: Update letter on investor relations webpage might be coming through.

Uh. adjusted. EPS Misses by one penny 85 cents versus 80 cents Expected. We've got.

Uh, we're waiting to get the updated letter to actually populate on the website. Here There we go. Press release: Nope. Uh.

waiting for those earnings. It's waiting for Q1 earnings not actually up yet on their website, but uh. Bloomberg's starting to send it through the wire. Over here, we've got Tesla expects to remain ahead of the long term.

50 on, uh, compounded annual growth on production. Okay, good. Still missed by about a penny there. and that is again on adjusted.

EPS Waiting again for the actual Uh Q1 earnings there. We do not have that Shareholder Deck just yet. Okay, uh. production.

Fiscal year production now estimated to be 1.8 million? Vehicles That's down from 1.84 Press Release: Uh, did we get it? Is it? Yeah. Shareholder Deck just populated. Okay, here we go and a revenue comes in at a teeny tiny Miss Basically add expectations here. that is Q1 revenue 23.33 versus 23.35 Uh, that does.

that's this is all pretty much in line. Honestly, with estimates, this is pretty dang in line, it looks like we've got the statement now as well. Here we go. Okay, so what is that? margin? margin? Margin margin on those? Vehicles Let's go right over here.

Oh, there it is. We hit sub 20. That's not what we're looking for. Sub 20 on that vehicle margin.

In Q1, it's still good. Zach Told us we weren't going to see something less than 20 that we were going to Trend up, Uh, maybe down to a 20 percent and then up from there long-term goals getting back to thirty percent. That's a big hit right there. That did.

Those discounts are definitely showing through down to 11.4 percent in operating margin. You've got some big minuses over here. Uh, unfortunately. in, uh, in some of these, uh, in some of these margin numbers, these margins definitely getting hit here.

Uh, so this is. uh, let's see here. What do we got? Uh, let's look at some of the other details. Uh, keep in mind right now, Tesla's only actually down about one percent and after hours I Think this isn't like terribly.

Uh, surprising. but who knows, it could end up falling more. It's pretty early again, markets expecting a six percent move in either direction. Current macro environment we see this year is unique.

A unique opportunity. Well, yeah, you know what they're doing is they're pricing everybody else out of the market. You know there was actually a piece uh by uh, the uh car wholesaler dude and uh, he said that, uh, there are other car dealerships that are basically trying to sell the Ford Lightning and they're like nobody wants the Ford lightning anymore. It doesn't get the tax credit.

sixteen thousand dollar price increase. No reason for anybody to buy that vehicle anymore. So what? Instead could people buy the Tesla Yeah, at a lower margin. but they're basically creaming their competition right here.

We aim to leverage our position as a cost leader. Yeah, they are. That's exactly what they're doing with investments in Autonomy. Fine.

Looking to rapidly grow energy storage production at our Mega Factory in Lanthrope, as well as our Mega Factory announced for Shanghai Fine, how are we doing? Look at that free cash flow collapse here. This is what I've been warning about going into. Uh uh. going into this segment over here.

that free cash flow coming in less than half a billy. That's not great as those margins are going down. that free cash flow is falling. That's not ideal.

That was one of my biggest warnings going into the season here people keep talking about. Oh, the balance sheet is so robust. Careful that that you know, with all these new expenses and lower margin, guess what's going to suffer. Operating cash Flow.

It's not necessarily a horrible thing, it just it is what it is. What do we got here? Automotive Sales Where are credits Auto regulatory credits. You can actually see regulatory credits popped up about what 10ish percent right here. and yet we still have that margin hit across the board.

So that means our margin. uh, less. these vehicle credits is going to be even lower. Even worse, see if they give us the percentage conveniently here.

Uh, we'll find it later. That's fine. Keep going through this here. Automotive Sales Leasing Fine Energy Storage What we get for energy storage.

Nice. Pop over here on energy storage again in Uh Revenue that uh 1361 divided by 1151. That's about an 18.2 percent pop right there. I Like to see that 18.2 percent in a quarter to quarter into Q1.

Q1 is historically the week quarter folks. it's the wheat quarter that's incredible. 18 22 on Energy Services Moving up nicely. Here Are we profitable on service? Is we are profitable on Services Look at that folks.

We got uh 1.837 right here on Uh Services You know a lot of people are like oh, why is Tesla not doing a share buyback? This is why folks. Because the cash flow go down. it's not bad. Like, don't get me wrong, I'm not a hater I'm just being realistic.

but I feel like if you have realistic expectations instead of everything's always bullish? uh then then you're You're less shocked by some of these changes. Like this is. None of this is shocking. this is.

actually relatively in line I Think the one thing that's a little shocking is that margin seeing that one in the nine. It's a little bit of a psychological hit right there. And it's one point: it's 19.3 It's not great. You know, we wanted to stay over.

uh, 20. You could see that Capex increasing over here. Of course, the capex is increasing because we keep announcing more expansions. Northeast Mexico Massive Capex.

Massive Capex in Shanghai Of course these expenses are going to go up. and of course the free cash flow is going to go down. Not a prize notice though. compare Q1 of last year God Damn it.

I Don't know what it is. Compare for Q1 of Uh of 2022 Free cash flow and what you end up seeing in Q1 of 2022 Free cash flow is what? 2.28 Billies right here. 2.28 Billies. We did go down to 621 in Q2 but that was when Shanghai was shut down.

Remember Giga Shanghai Being absolutely crushed and shut down. Look at where you sit right now. you're below the Giga Shanghai in terms of free cash flow. again.

I'm not offended. This is not a surprise. A little bit hurt by the 19.3 but I can get over it. Our near-term pricing strategy considers a long-term view on per vehicle profitability given the potential lifetime value of the vehicle.

In other words, you know what they're telling you. They're going up to you and they're going bra. Listen, we want everybody to have a Tesla because when they start buying FSD Guess what? We're gonna print 10 days and they're right. They're absolutely right about that.

Uh, and in the meantime, what are people not gonna buy Rivians Lucids and they're not gonna buy, uh, afford? Lightnings And these companies are going to complete continue to lose money? Uh, like everybody's going through this recessionary markdown period. It's just what is the best. What has the most pricing power of everything slipping? Uh, IBM actually comes in. It looks like with a revenue Miss but a little bit of an EPS Uh, actually.

yeah. IBM Revenue Misses Lamb Research Revenue beats, but whatever we gotta talk about Tesla Tesla Sees ongoing cost reduction of our vehicles Tesla Attributes this quarter over quarter slow down to volatile weather and other factors we've wondered. Uh, let's see. he oh because of California regarding rooftop solar.

so it looks like our energy deployments would have then. Fallen especially with all that rain we've had in California It's very difficult to build in this sort of environment. A Reduced average selling price per vehicle. What is our average selling price per vehicle right now? So let's get the automotive revenues 19.963 And then we're going to divide that by what we have from the Uh Deliveries, production and delivery statement, which is right here.

We're going to divide that by 422875 and what we end up with is about 47 196. Uh, that's starting to get close to our 45 000, right? Our 45 000 numbers where I do my 2025 analysis for Tesla So right now we're sitting at 47 196 average selling price per vehicle. so we're starting to see that decline here. but again, to be expected.

Uh, let's see here: Tesla Model y was top selling vehicle in Europe during the first quarter of 2023. In the US it was the best selling vehicle excluding the pickup category. Uh, that'll change when the Cyber truck comes one day. Negative: Foreign Exchange Impact still getting hit by FX that will end up becoming a Tailwind when you go into guess what folks, the dollar falling more When the dollar Falls more that will end up becoming a Tailwind It's going to be beautiful.

Uh, Cost of production Ramping the 4680s. This is why they're profitable. their cash flows down. Of course, ramping the 4680s, we're ramping new facilities.

None of this a surprise doesn't make me nervous. again. A little bit disappointed on the margin, but it's going to be even worse after the next two. price.

Cuts I Hate to say it unless they could scale faster and and butter out some of that that uh, Opex look at. look at what we have over here. Although even gross profit margin, right? we want to butter out the gross profit. What do we got over here? Solar deployed? Look at that collapse and Solar deployment here.

Quarter over quarter. Uh, we have not seen this kind of a low quarter since Q1 of 2022. Again, probably because of the weather. But holy crap, let's go look at that.

storage. Deployed people are underestimating how much money uh, solar? uh, like the storage is going to create for Tesla Massive underestimate in my opinion for this. Uh, that is a huge growth. Holy crap, How do you deliver that many more batteries? That that's actually really impressive.

3889 divided by two, four, six, two. That puts you at a 58 growth on batteries quarter over quarter. Holy crap. that's very, very impressive.

Keep in mind, in the last quarter, they started selling their batteries for homes online separate from solar. So you can actually now get uh, the battery instead of just solar. Look at that still blowing up in the superchargers. Still got growth over here.

A little less than 10 percent growth? Fine. What else do we have here? Okay, some notes. Shanghai Running near full capacity for uh, uh. many weeks over here and several months, we do not expect a meaningful increase of weekly production? Fine.

What about Texas Production rate continue to improve sequentially. See that's going to actually help your margins is when you start seeing Texas take up right model Y production in Germany Uh Germany blah blah blah. We gotta see. So in order to see margin go up, we need to see Texas And Berlin really tick up over here.

that's going to be pretty important. Uh, do keep in mind in the aftermarket: Tesla did just break the 175 support level sitting at about 173 and falling right now down about four percent Market was expecting a six and a half percent move autopilot. Uh, what did we take FSD revenues here? Let me see if we have that broken out I'd like to see if we have any FSD revenues attributed I Would suspect we have some uh Automotive Sales it's not something I see clearly broken out on these statements, but it may end up being broken out by comment later. Fine, see what we have over here level data collection is unprecedented of course I mean nobody's investing in Tesla Uh, doubting really in in the future of uh FSD Well, the various uh Vehicles provide a different range acceleration, vehicle size Okay blah blah blah homegrown entertainment, this whatever, all right recruitment thing whatever.

battery powertrain manufacturing nowhere near finished announce the transition to a higher voltage architecture fine energy storage. This was impressive. Highest level of Employments that we've achieved due to the ongoing Mega Factory ramp. That's something Wall Street is not.

Pricing in this is really impressive. Uh, they let's see here. Uh, we've got Wall Street saying Automotive gross margin were everybody was looking for this is missing for the first time in a while. Yeah, the estimate was 21.2 on Automotive gross margin and we're sitting at 19.3 It's a problem.

and the regulatory credits went up right? So uh, those? those are some big, uh, big deals here. Okay, what else do we have here? Solar deployments decline sequentially because of weather I Already talked about that. Planning to grow production volume as quickly as possible in line with the 50 growth Target So they're keeping the 50 growth Target That's fine. We're trying to remain ahead of that, trying to get one to 1.8 million vehicles.

but again, the Wall Street estimate was about 1.82 here. So slight. Miss Over here. This is why, again: No.

BuyBacks Why? Because we have sufficient liquidity to fund our product, roadmap, long-term capacity expansion plans, and other expenses. Further, we will manage the business such that we maintain a strong balance sheet during this uncertain period. Exactly. So a lot of uncertainties leading to of course No.

BuyBacks But they need the money too. All right. I Don't know how many of us really care about the pretty pictures. Okay, the guys can carrying like some kind of tank.

whatever. Cool machines. Yay! there's the T's uh, winter testing of the Cyber truck that ain't winter testing. that's a photo op.

Sorry. I'm being jaded I Don't know that thing's ever going to come. It's fine, it's fine. whatever.

So we got some pretty charts here. Okay, we've already gone through the charts. It doesn't matter. This is a big big one over here though.

The operating margin, right? Uh, operating margin. If they put the uh uh I I do think it's interesting how they purposefully try to show and this is uh uh, let's see, they're trying to show the other. They're trying to show how they're in line with the S P 500 and way ahead of the rest of the Auto industry. They're not wrong.

They make a lot more money than the rest of the Auto industry and the rest of the Auto industry is probably going to take. but uh, this is fine. This you know what this does is it gets a negative Catalyst out of the way. which is earnings I Don't think anybody was really optimistic about this.

It's nice to see this Catalyst over uh. the the numbers are a little bit worse than expected in terms of the uh. bottom line. uh and uh yeah.

I mean fractionally worse on bottom line. More importantly is that free cash flow and the margin? Not a surprise. those were the big things we were worried about. That's what we ended up getting.

So yeah, uh, there you have a Tesla now. I'm going to look at some Q A here. Do keep in mind we're doing the biggest price increase yet. Probably getting rid of a lot of the lower options for joining the programs on building your wealth link down below.

So if you want to be uh, you know, converted into making and building your wealth and then I Hope this is game. the lead in the lead. Yeah, and you want to gain the lead, then make sure to check out those programs on building your wealth link down below. especially zero to millionaire real estate.

That's the lead all right quickly here. December 22nd Twitter Space You said He was okay with Tesla having a little negative earnings in a recession to maximize growth. Uh, are they giving up their pricing power? So you have to remember that pricing Power is not solely what's going on with Top Line Price right? It's what's going on with price and margin relative to your competitors. Uh, this is a hit to Pricing Power.

You can't say that this is not a hit. The Pricing Power: This is absolutely a hit to Pricing Power. Uh, this does give a highlighter to other companies whether it might be in the chip space. Apple maybe not.

Apple though because they're having some you know PC delivery issues as well. It's definitely a hit to Pricing Power. but then again, everyone's getting hit. It's just you.

You have to compare uh a Tesla to a company that has like negative pricing power like CarMax or Ally Financial. If you look at Carmax or Ally Financial you will see what negative pricing power looks like. because your Prime consumer your primary customer, you're losing the ability to raise prices on at all and you're actually then seeing them default on You consider for example, at Ally Financial 41 percent of their loans go to people with credit scores of under 659. uh, you've got CarMax that is seeing massive loan loss Reserve write Downs Basically or or you know they write up how many reserves they're taking because they're expecting write Downs Uh, and and those are companies with negative pricing power, right? Uh, I would argue that many Staples negative pricing power right now I would argue.

although L'Oreal and Johnson and Johnson did Okay, but they're certainly not pricing power stocks. Another one that I'll give you is look at uh JB Hunt Uh, a freight company. Holy crap, You want to see negative pricing Power. Look at the freight companies.

Right now. there is literal negative pricing power. So when you compare the Autos Tesla still has the biggest PP But everybody's in a little bit of a cold environment right? So everybody's shrinking. But they still got the biggest you know set of pricing power.

which is great. But you it does get to the point where you start scratching your head going. Okay, so if Tesla's PP is shrinking are they is. They're starting to shrink more than like an end phase and Nvidia Taiwan semiconductors.

And that's where the debate lay right? You could argue that, well, pricing power is falling for the chip guys too. Everybody is having some form of pricing power compression. The question is whose is falling the most right? And if if you literally you're like I will only invest in stuff that has positive pricing power right now, the only thing you're doing is buying gold. That's it because in a recessionary environment, that's that's what you're expecting, right? Good question though.

I appreciate the question. Good one. Uh, let's see, compared to something like a video Nvidia is seeing for their pricing power decline as well. You know I'm purposely trying to show you where you could see negative pricing power.

And of course businesses that are less Innovative are going to have negative pricing power, right? Uh, that's that's the point. That's that's exactly. Uh, you know, like what, what's what's happening but uh, you can see that here. For example, look for example, at Nvidia if you go to that, if you want me to look at Nvidia fine, look at Nvidia Q4 I Have it right here because we go through these sort of fundamentals in our course member live streams, right? So you get high comps in 2022, you have a 21 decline in top line revenue and you actually have cost of Revenue going up 140 basis points.

So yeah you you have a negative uh Top Line Sales number and you have decreasing uh margins. But despite that, Nvidia still has a bigger PP So yes it is shrinking, but it still has a bigger PP right? So that's the idea. Uh, I'm a big fan of believing that Asml has Uh, as pricing power I Agree. Uh, Open Door comes out I Don't know why somebody's asking about Open Door that comes out on May 4th May the 4th Be with you? Uh, Let's see here: Do keep in mind that Tesla also sells to a substantially wealthier, uh customer? uh, than uh.

And so you're you're slightly more insulated in an automotive recession than in uh, in lower, um, uh, vehicles. Uh, right. So uh, Ulta is another one. Ulta Beauty.

They've You know they've done phenomenally. Uh, they. They certainly have pricing power. Uh, but anyway.

Uh, so hopefully this is useful. Uh, and uh. look. I I The bottom line for me is this is broadly expected.

Am I nervous about this? Is it? Oh, sh9t time to flip-flop paper hand? No, not at all. Uh. I I Just sent out some more alerts to those of you in the stocks and psychology of money group. There's actually a really big play that I'm making for a particular company over the next.

uh, probably two and a half weeks here. So I'll learn more about that. uh in the courses on building your wealth link down below specifically Stocks in Sight and uh, some really big reasons we I think I basically found a a glorious cigar bot. Uh, I could be wrong about that.

But let's just put it this way: a little hint: selling for less than book? uh, its Book value should be increasing in Q1 and it just burned a bunch of convertible bondholders and cut a crap ton of expenses which is fantastic for the shareholder, so stay tuned for that. Thank you so much! Uh, for being here. look I'm not worried. uh oh.

I'm excited for the earnings call. Hopefully we end up holding 175 tomorrow. That's a pretty critical level for Tesla Uh, you do not want Tesla to break 175. see you in the next one, folks! Thank you so much for being here! Goodbye.