Tesla Q1 2018 Earnings Call

Tesla released earnings Wednesday and the stock fell in after-hours trading in the wake of a record loss of almost 785 million dollars on the earnings call Elon Musk expressed irritation with the media ignoring a question from an RBC analyst and decided to mix things up take a listen we're gonna go to YouTube sorry these questions are so dry they're killing me thank you our next question is from Galileo wrestle with hyper change hey great quarter thanks for having me on the call to represent retail investors I was wondering with way Moe's plans to launch an autonomous taxi service in limited markets this year if you could give us an update on the tesla network and any details surrounding the launch date or geographic rollout thanks sure so I mean that's

thank you thank you for an interesting question all right joining us now is Ross Rubin columnist at ZDNet and the reporter of the YouTube Reporter on that call Galileo Russell founder of hyper change TV but great to have you both here with us today Galileo let's start with you you spoke with him for about 25 minutes did he say anything that surprised you in that conversation shocking or surprising but a lot of great insight in terms of the future of let's say the semi truck with platooning and making that more cost competitive with rail more details on the Tesla Network and how they think about you know rolling that out so I think we got a ton of awesome clarity on the call that long-term investors are really valuing and let's go to you as well cross

pulling you in here on some of the numbers so Tessa of course reporting it's the biggest loss while also beating on the on the revenue side so I do think investors should be weighing all the information they got yesterday rush they really be feeling about Tesla at this point well this is really the cause for concern on the investor side the cause for the questions about the the fundamental the technical fundamentals and it's must saying that they're going to turn it around they're going to start being profitable in the next few quarters and that's really what investors are trying to get at in terms of nailing him down on that okay Galloway I want to come back to you this you know in in spite of some of the fandom that has spurred and swirled around Tesla

for so long you've been a very big supporter of Tesla you've got to admit that this Elon that we saw last night was an off the rails Elon it was much far from his traditional or the traditional manner of an exec on a call like this yeah I mean Elon and Tesla are innovative and disruptive and I think that's just what we saw in the earnings call like they realized that the quality of the questions from the analysts and the analysts incentives to ask good questions that long-term investors care about just isn't there and retail investors need a voice and there's a ton of questions that need to be asked and I've gotten like hundreds of tweets and hundreds of emails from shareholders saying that this was the best and most informative conference called I've

ever heard from Tesla so I think that validates it and I want to bring up one thing on the profitability everyone likes to point at Tesla's losses but doesn't actually look at where they're spending the money Tesla always loses significant capital right before a vehicle launch a right during a vehicle launch because they have to invest in capex Tesla's cash balance only fell 700 million this quarter and they spent 655 million on cap the operating business is actually not that capital intensive and we've literally this is Tesla's business model like it's not that I believe in Elon I believe that history repeats itself and every single time they launch a vehicle it goes cashflow positive the entire company two to three quarters later and then they say okay

we proved it now let's ramp up and spend on the next vehicle and that's just what we're waiting to see what the hollow Creek a moment to reflect as well on sort of how the earnings call panned out do you agree with Galileo here in that you know it was one of the most informative earnings call that they've had so far and how do you sort of taking on Musk's demeanor during the call well sure you know must clearly an ideas guy has positioned Tesla and many of his other ventures as long-term plays and there was a comment earlier about not Tesla perhaps not being the vehicle for you no pun intended if you are concerned about a volatile business I mean that's the kind of statement that companies make on their s ones but but it's true and you know they're they're

still ramping up the portfolio they're entering the model 3 model 3 coming to market at a time when when other automakers are retreating from the sedan market so you know obviously just a different stage in the business and they're they're going to be really building out the portfolio and trying to reach a more mainstream consumer market over over the next few years Galileo tests the stock down today about six point six percent seven percent at the open so tape it off with just a bit when we look at that are you buying more Tesla here today we've talked about your bullish sentiment oh yeah I mean I'm all in on Tesla I have no money or free capital or otherwise I would definitely be buying Tesla right now I think a big reason the stock is taking a hit

is because analysts are really frustrated that they sort of got out stood on the conference call like even Adam Jonas is no almost seem to be taking it personally and attacking musk in the company because of that and I think they realized that Tesla really doesn't need to raise capital going forward so their banks are gonna miss out on those fees to raise capital and I think that's really what we're seeing happen there's anybody from Tesla reached out to you since the call took place not after the call I'm sure they're really busy actually that although Elon did retweet my video that recap the conference call yesterday and that was sort of the coverage on the auto pilot and the accident there so he was very angry at the way that it was handled by the

media in saying that you know there are fewer accidents and injuries when someone's using auto pilot versus not so give me comments on on some of his reactions about sure I mean this is going to be a really challenging space in terms of the development of self-driving cars and autonomy there's going to unfortunately be accidents there's going to continue to be deaths and the trade-off is that over the long term we're going to wind up with a safer road environment than we have today but you know unfortunately there's there's still going to be collisions and we just have to keep that in mind as the technology keeps developing to avoid this sort of I guess backlash against these sort of events when it comes to autopilot and continuing to test new technologies

I think transparency is important for example after the the uber collision in Arizona you know the company certainly stopped trials immediately and moved to sharing as much information as they could about the investigation which by the way I thought was a you know pretty pretty nice turnaround for uber in terms of how they often handle these kinds of controversies really really the same for Tesla you know as as they continue to develop the technology as they continue to get data on on what's working and where the faults in the system are it's just important to share that with the public I think that's something that musk understands in terms of the the SpaceX work that has a you know a high degree of risk involved with it as well I'm gala you had a response

yeah I think this is an extremely important question and that's why I asked about it on the conference call Elon Musk in response to my question so that they would be releasing quarterly data to make it more transparent on sort of the status of this progress so I think it's a really interesting angle to see the evidence of like these are the things that are being discussed now in the media is evolving Tesla's story and those stem from the questions that ask from the call Galileo Russell joining us here on set he's the founder of hyper change TV and Ross Rubin joining us as well via Skype columnist at ZDNet thank you both for joining us here today