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Seeking Alpha article:

Jim Chanos cuts 'painful' Tesla short, sticks with bear bet on IBM

"It’s whatever people want to believe Elon Musk is touting," says Chanos, noting the company's five straight quarters of profit are thanks to sales of regulatory credits, not automobiles.


https://seekingalpha.com/news/3641350-jim-chanos-cuts-painfu......

One has to wonder if fund managers ever ran an industrial business. One of the biggest problems a startup has is getting working capital, that's the whole reason for the venture capital industry. Growth needs lots of capital to fund fixed assets and inventory, the faster you grow the more capital you need. If you don't understand this you say what Chanos said above. The holy grail for a startup is cash flow to fund growth. How many years did Amazon go before turning a profit?

"Regulatory credits" are Manna from Heaven! Maybe not from Heaven but from green activists. ;)

As I recall, TTM regulatory credits funded about one third of Giga Berlin. Tesla is going to get even more during the coming quarters until the incumbent car makers get their EV act together.

Free money you don't have to return! Competitors funding your business.

Denny Schlesinger



Also posted at NPI
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No. of Recommendations: 1
And I always found the credit math by the shorts ... interesting.

"The only reason they're profitable is the credits" is spurious. The credits are <5% of their income. So, technically, sure, that 5% puts them over the top. But technically, you could pick any one of their revenue (or -expense) line items out, for the same dollar value, and say exactly the same thing.

It dismisses much larger and more important numbers:"Automotive gross margins, excluding regulatory credits, rose from 18.7% to 23.7% sequentially."

42% YOY Automotive Revenue growth to $7.6B, 47% QoQ !!

$6B - 50% increase in Cash.

There have been a number of shorters recently touting that credits meme.

$400m out of $8B? Please.
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