Wednesday, July 24th.
The day Tesla releases Financial Report for the second quarter of fiscal 2019.
At four o'clock in the afternoon Eastern Time, the NASDAQ closing bell rang.
Tesla closed at about 264 US Dollar that day, and the market maintained a cautious calm before the release of Financial Report.
These few dozen minutes before the start of after-hours trading are the most delicate moments in each Financial Report quarter.
In front of Bloomberg Terminal's screen sat all Wall Street analysts,
The coffee in the coffee cup is still steaming, and Model has been opened, waiting to fill in the numbers that will pop up.
Zhao Chen was sitting in Suite of New York hotel. Su Wantang had flown back to New York from China the day before.
She put a cup of freshly brewed Pu'er on the coffee table in his hand without saying a word.
I just sat down next to him and sorted the printouts scattered on the coffee table by date--
The top copy is the Nvidia Schedule 13D Amendment Filing draft that Lin Shicheng sent yesterday.
She pressed the corners of the paper with a tea cup to prevent them from being blown away by the air conditioning wind.
Chen Xi is sitting opposite with his laptop, and Zhang Qingxue is leaning on the armrest of the sofa, holding a freshly printed memo of the Henglong Legal Department in his hand.
On the TV, the host of CNBC was connecting with an analyst who has been following Tesla for a long time.
Discussing the market's expectations for Q2 deliveries--the analyst's original words were "91,000 vehicles."
The host added an ambiguous comment next to it.
In fact, the market's expectations for this Financial Report are not high.
Throughout the first half of the year, the stock price of Tesla saw back and forth between the Short Sellers siege, liquidity crisis and SEC investigation.
Although the stock price rebounded by more than 200 points from the bottom of 178 US Dollar after the collapse of Short Sellers in May and June,
However, financial victory cannot replace Fundamentals's inspection. The traders of Wall Street can calculate this account more clearly than anyone else.
"They plan to deliver 91,000 vehicles."
Chen Xi brings out the consensus market expectations on Bloomberg Terminal,
"If this number can be exceeded, the logic of the last Short Selling of Short Sellers at the Fundamentals level will be broken.
If it is lower than this number, they will take the opportunity to counterattack in public opinion."
Zhao Chen didn't answer. He tapped his fingers lightly on the armrest of the sofa in a leisurely pace.
The after-hours trading window on Bloomberg Terminal has been opened,
There is a small clock icon flashing next to the code Tesla on the screen.
It means that the company is preparing to issue press release Financial Report.
What he is waiting for is not only Financial Report itself, but also the two numbers hidden deep in the profit and loss statement in Financial Report that are intertwined with each other--
Automobile Gross Margin and free cash flow.
In the past few months, Tesla has experienced several price cuts. Some analysts believe that Gross Margin will continue to decline, and free cash flow may also turn negative;
But Zhao Chen judged very early on that the scale effect of Model 3 was making price cuts no longer at the expense of profits.
"Here we come." Chen Xi's voice suddenly dropped.
A line of news popped up on Bloomberg Terminal--
Tesla 2019Q2 Financial Report:
Revenue was 6.35 billion US Dollar, slightly lower than the expected 6.41 billion US Dollar;
The automotive business Gross Margin 18.9%, GAAP net loss was 408 million US Dollar.
The second piece of news that followed was--
Deliveries in Q2 reached 95,200 vehicles, a record high.
Among them, 77,634 Model 3 vehicles were delivered.
A total of 17,566 Model S and Model X vehicles were delivered.
Previously, Tesla had proactively announced delivery data in early July.
Market sentiment has digested some optimistic expectations in advance,
But when Financial Report officially re-pinned this data into the SEC file,
All analysts still can't help but double-check the details of the car Gross Margin.
"95200 vehicles,"
When Chen Xi reported the numbers, there was a kind of excitement unique to data researchers in his voice.
"About 4,200 vehicles exceeded expectations."
Su Wantang turned his head and glanced at the screen, then turned back to look at Zhao Chen.
She noticed that Zhao Chen's expression hardly changed,
But his rhythm of tapping on the armrest stopped, his fingers were hanging in the air, and then he slowly lowered them.
Zhao Chen picked up the teacup, took a sip, and put it down.
"Let's see if Gross Margin has increased with the volume or stabilized."
Chen Xi's fingers tapped quickly on the keyboard a few times, calling up the detailed data on the automobile business in Financial Report's notes.
Model 3's Gross Margin did not drop significantly after the price cut, but continued to climb.
The overall Gross Margin of the automotive business reached 18.9%, higher than market expectations of 18.2%.
This figure means that economies of scale are pushing down unit manufacturing costs.
The cost savings per unit achieved by Tesla through capacity optimization for several consecutive months are enough to offset the recent price reduction.
"Gross Margin is stable." Chen Xi raised his head,
"What the market was most worried about before was that the momentum of price cuts would eat up profits.
Now the volume has increased and the gross profit has not been lost. The scale effect has begun to be realized."
At the same time, the CNBC host was reading out the core data of Tesla Financial Report at a rapid pace,
The screen behind him switched to the after-hours stock price chart of Tesla--
The after-hours trading price hesitated slightly when the news popped up, and then began to rise steadily.
It jumped from around 264 US Dollar to above 272 US Dollar, an increase of more than 3%.
TV hosts and analysts then debated free cash flow and future production capacity online.
Analysts insist that the continued improvement in Gross Margin and the expected start of production of the Magic City factory are re-pricing the delivery capacity of Tesla;
The host tried several times to bring the topic back to "whether the current macro uncertainty affects the demand for high-end cars."
Another guest bluntly pointed out that the delivery structure of Model 3 has shown that Tesla has stabilized profits while lowering the average price -
In the last quarter, the proportion of lower-priced standard endurance versions increased, and the average price of bicycles fell slightly.
Gross Margin is almost flat, which is the signal that institutions value most.
The after-hours Time-sharing Chart on Bloomberg Terminal continued to refresh, the after-hours buying volume increased moderately, and the stock price stabilized around 272 US Dollar after several seesaws.
Su Wantang whispered something, not asking anyone, as if talking to himself:
"Those who are still in short positions - the pressure now is no longer how much they will lose, but whether they should change Model overnight before the market opens tomorrow."
She recalled that in May, when Era Vanguard was pressed below the 178 US Dollar replenishment line,
The entire Wall Street is betting that Tesla's Gross Margin will continue to collapse with price cuts, cash flow will dry up and bottom out, and Elon Musk will have to be forced to raise funds.
Now reality has gone in another direction.
Zhang Qingxue closed the legal memorandum and said to Zhao Chen, "Congratulations."
Her tone of voice was exactly the same as when she proposed risk control opinions at Board of Directors - calm, restrained, and free of unnecessary emotions.
Chen Xi comes at it from another angle.
She quickly made a brief list, listing the delivery volume,
The three latest sets of automobile Gross Margin and free cash flow figures are compared with the craziest estimate of Short Sellers half a year ago: Model:
"The underlying logic of their sell-off at the time was that demand had peaked, prices would be cut and losses would occur, and cash would be cut off.
Now all three logics have been shattered by reality.
What are they left with? Just those Short Sellers bottom positions that no longer have Fundamentals."
She turned her laptop to Zhao Chen, and the red and blue lines on the screen compared the profit forecast changes between the Short Selling range and current market expectations side by side.
Zhao Chen didn't look at the screen, his eyes fell on the Hudson River outside the window.
"Tomorrow's market, Short Sellers covering orders and chasing orders will come in together."
He said, "Elon Musk should mention the progress of the Shanghai factory during the conference call.
If he confirms that the timetable for production by the end of the year remains unchanged, the delivery volume in the fourth quarter will reach a higher level."
Zhang Qingxue received the legal memorandum from Briefcase and asked a more pragmatic question:
"After Q2 Financial Report, should we issue an internal statement?"
Zhao Chen shook his head.
"No need. Financial Report itself is the best statement."
He paused, "Pull out the part about Shanghai factory and Model 3 Gross Margin from Financial Report's note and send it to Liu Mingyu."
The stock price of Henglong will also rise tomorrow. Let him prepare a brief business update announcement on Hong Kong Stock Exchange.
There is no need to mention Era Vanguard, only the configuration logic of Henglong Capital in the New Energy industry chain."
Chen Xi noted it down.