Dear Reader,
Today I want to talk about Tesla’s (SYM: TSLA) earnings.
There are two things I think are worth pointing out and discussing after listening to Tesla’s earnings call.
Because they really tie into bigger themes we’ve been talking about here for some time.
First, let’s discuss the earnings.
Sales came in at $28 billion for the quarter - a revenue record.
Profit, on the other hand, was lower, at $1.4 billion down from $2.2 billion, down 37% from the year before.
Free cash flow was $4 billion, which is a record for the company.
Free cash flow is cash flow after capital expenses. Cash flow after the amount of money it takes to upgrade your plant and equipment.
Think of free cash flow as if you bought a house and were renting it out, this is the cash available to the owner after you pay for the roof, the upgrades, the maintenance, anything you have to do in any 3-month period.
It’s a very important measure.
The numbers were decent, propelled by the expiring $7,500 tax credit - so you had a lot of people rushing in to buy these cars before the credit ended.
Side-note - I didn’t “listen” to the earnings call - I read the transcript; I listened to these things for years but now the transcripts are available so quickly…
And pro-tip: you can actually skip the transcript and go right down to the Q&A session at the end, because those are Wall Street banks and investors actually asking the penetrating questions that matter for investors.
Anyway, two things stood out in the call I thought were very interesting…
One, CEO Elon Musk’s pay package will be voted on next month.
This pay package could be worth as much as a trillion dollars.
It would reward him with an additional 12% stake in the company over 10 years.
And here’s the very interesting thing:
Musk says, and I quote:
“My fundamental concern with how much voting control I have at Tesla is if I build this enormous robot army, can I just be ousted in the future?
“I don’t feel comfortable building that robot army if I don’t at least have influence over it.”
Robot army.
What an interesting turn of phrase.
And it’s interesting because we’ve talked here a lot about robotics - we put out a whole documentary and report about it.
This is the natural evolution of AI - moving off the screen and into the real world.
It was inevitable, and it’s coming faster than anyone thinks. Most people don’t realize, it’s already here.
Musk’s, Tesla’s version is the Optimus humanoid robot, and Tesla’s robotaxis.
If you want to know how our world will look in the future, read the transcripts of the Mag 7 conference calls.
The CEOs will tell you where the money’s going, and that is the future.
During the call Musk emphasized Tesla’s progress on its full self-driving software, saying robotaxis are going to be the thing - cyber cabs, autonomously driven two-seaters without steering wheels or pedals.
Musk says on the call that this car will feel like it’s a living creature.
That’s how good the AI will get.
Musk wonders out loud how much intelligence you should have in a car - musing it may get bored.
Creepy - we’re looking at real intelligence on wheels.
And this “robot army” of Optimus humanoids is coming.
If you own Tesla stock because you’re excited about the EV story, you can see that side is being de-emphasized.
Now Musk is focused on the robot/intelligence side.
That is where we’ve focused some very solid investments as well - go here for the tickers>>>
We put out this report because we’ve been reading these transcripts quarter after quarter, and this is where the future is headed.
It’s the first time Musk has been so publicly focused on “E.I.”...
The first time he’s spent a lot of the conference call talking about it.
This company is going to look a lot different 10 years from now than it does today.
That’s what I have for you today. Have a wonderful Tuesday and I’ll see you tomorrow.
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