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Tesla’s Lemonade Stand vs. Ford’s Popsicle Stand in Q3 2018

Today, Tesla and Ford both had their 3rd quarter 2018 financial calls. Upstart, diversified auto/energy company vs. established, focused auto company. Electric vehicles vs. fossil fuel vehicles. How does the competition look?

Today, Tesla and Ford both had their 3rd quarter 2018 financial calls. Upstart, diversified auto/energy company vs. established, focused auto company. Electric vehicles vs. fossil fuel vehicles. How does the competition look?

CleanTechnica is not a financial site. That’s not our strength. We’re into clean tech. Tesla is the biggest company in clean tech. The financial calls provide us with a wealth of information on how Tesla is doing, which we already explored as it related to cars, energy storage tech, and all across the smorgasbord. Let’s just say Tesla’s results were like a BFR launching after people had been expecting small fireworks. I’ll have more to say on the deep details in another article.

I had one challenge from Zach. Explain the numbers in a way a retail investor like Zach could understand. Challenge accepted! (He only told me to tackle this for Tesla, but I thought it would be a fun thing to compare the results to Ford’s as well.)

I present to you Tesla’s Lemonade Stand versus Ford’s Popsicle Stand. This makes the numbers much more relatable compared to boring financial terminology, right? Charts are not comparable between Tesla and Ford due to different axis sizes. The timeframes are the same quarter a year before, the prior quarter, and the current quarter (well, last quarter). Why pink and blue, you may ask? My youngest daughter likes pink, my eldest likes blue. It’s that simple. Plus, pink lemonade and blue popsicles. I have labeled each chart in a way that is relatable if a child were to run a lemonade stand.

Figure 1 – Tesla’s Revenue by Quarter

Figure 2 – Tesla’s Cost of Goods Sold by Quarter

Figure 3: Tesla’s Operating Expenditure by Quarter

Note: Paying your older sibling to help is analogous to Selling, General, and Administrative expenses

Finding the best corner involves research, and is similar to Research & Development expenses.

Figure 4: Tesla’s Net Profit by Quarter

Figure 5: Tesla’s Earnings Per Share by Quarter

“Earnings Per Share” is on a diluted share basis.

Figure 6: Tesla’s Cash and Cash Equivalents by Quarter

Figure 7: Tesla’s Operating Cash Flow by Quarter

Note: Tips in this case are all the other items used to calculate Operating Cash Flow, excluding profits. They are the something extra added to your bank account, above and beyond profits.

Figure 8: Tesla’s Operating Cash Flow minus Investing Cash Flow by Quarter

Note: Financial Analysts uses Capital Expenditures instead of Investing Cash Flow to calculate Free Cash Flow.

That’s the correct way to do it. The Cost of Lemonade Stand represents Investing Cash Flow, used primarily for purchasing Plant, Property, and Equipment.

On to Ford …

Figure 9: Ford’s Revenue by Quarter

Figure 10: Ford’s Cost of Goods Sold by Quarter

Figure 11: Ford’s Operating Expenditure by Quarter

Note: Paying your older sibling to help is analogous to Selling, General, and Administrative expenses

Finding the best corner involves research, and is similar to Research & Development expenses

Figure 12: Ford’s Net Profit by Quarter

Figure 13: Ford’s Earnings Per Share by Quarter

Earnings Per Share is on a diluted share basis.

Note: The absolute value of the EPS is misleading. Ford has a much higher share count than Tesla. It is the trend that matters, and the size of the EPS relative to the share price.

Figure 14: Ford’s Cash and Cash Equivalents by Quarter

Figure 15: Ford’s Operating Cash Flow by Quarter

Note: Tips in this case are all the other items used to calculate Operating Cash Flow, excluding profits. They are the something extra added to your bank account, above and beyond profits.

Figure 16: Ford’s Operating Cash Flow minus Investing Cash Flow by Quarter

Note: Financial Analysts uses Capital Expenditures instead of Investing Cash Flow to calculate Free Cash Flow.

That’s the correct way to do it. The Cost of Popsicle Stand represents Investing Cash Flow, used primarily for purchasing Plant, Property, and Equipment.

Some highlights: Ford’s profit in the latest quarter is lower than the prior quarter or the previous year’s 3rd quarter. Tesla’s profit is much higher in the latest quarter versus the prior quarter or previous year’s 3rd quarter.

Ford is a much larger company than Tesla in terms of Revenue, Cash Balance, or Profits. We are talking about revenue that is 5× to 6× more compared to Tesla. However, the Free Cash Flow is only 2× Tesla’s (Figures 8 and 16) in the latest quarter. Stated another way, if Tesla had the same revenue as Ford, Tesla would have 3× more Free Cash Flow than Ford.

Which would you rather own — the Lemonade stand or the Popsicle stand?

Which is capturing the attention of people worldwide — electric vehicles or fossil fuel vehicles?

Which excites you more — clean tech or dirty tech?

Given a choice to buy the company outright, Tesla or Ford?

Also perhaps worth noting: Tesla’s market cap was $49.22 billion at market close (it is sure to be much higher tomorrow morning), whereas Ford’s market cap was $32.6 billion at market close (it will probably be up tomorrow morning as well).

The above references an opinion and is for information purposes only.  It is not intended to be investment advice. Seek a duly licensed professional for investment advice.

I am currently long Tesla shares and net long Tesla stock options. I do not plan to make any investment or divestment related to Tesla in the next 48 hours from the publish date of this article. If I did, they may be shares or options.

 
 
 
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Written By

Vijay Govindan is a Cleantechnica writer part-time. Through his writing Vijay seeks to elevate the realized potential of humankind. Against human trafficking. Tesla Model 3 LR owner. His claim to fame is Tesla and Elon have commented, liked or re-tweeted an article he wrote with the Tesla community. Just once. ;) https://cleantechnica.com/2019/06/23/our-new-tesla-myths-page/ #WeChooseTesla, #RenewableEnergy and #YangGang supporter. Long Tesla shares. Has a healthy skepticism of the Q branch of the Tesla investment community. Made it to one $tslaq block list. If you read this far, wow, 👏🏽 and 🙏🏽.

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