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GuruFocus has detected 6 Warning Signs with Tesla Inc $TSLA.
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Tesla Inc (NAS:TSLA)
Gross Profit
$1,599 Mil (TTM As of Dec. 2016)

Tesla Inc's gross profit for the three months ended in Dec. 2016 was $435 Mil. Tesla Inc's gross profit for the trailing twelve months (TTM) ended in Dec. 2016 was $1,599 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Tesla Inc's gross profit for the three months ended in Dec. 2016 was $435 Mil. Tesla Inc's revenue for the three months ended in Dec. 2016 was $2,285 Mil. Therefore, Tesla Inc's Gross Margin for the quarter that ended in Dec. 2016 was 19.05%.

Tesla Inc had a gross margin of 19.05% for the quarter that ended in Dec. 2016 => No sustainable competitive advantage

During the past 10 years, the highest Gross Margin of Tesla Inc was 87.67%. The lowest was -7.74%. And the median was 22.84%.


Definition

Gross Profit is the different between the sale prices and the cost of buying or producing the goods.

Tesla Inc's Gross Profit for the fiscal year that ended in Dec. 2016 is calculated as

Gross Profit (A: Dec. 2016 )=Revenue - Cost of Goods Sold
=7000.132 - 5400.875
=1,599

Tesla Inc's Gross Profit for the quarter that ended in Dec. 2016 is calculated as

Gross Profit (Q: Dec. 2016 )=Revenue - Cost of Goods Sold
=2284.631 - 1849.353
=435

Tesla Inc Gross Profit for the trailing twelve months (TTM) ended in Dec. 2016 was 252.468 (Mar. 2016 ) + 274.776 (Jun. 2016 ) + 636.735 (Sep. 2016 ) + 435.278 (Dec. 2016 ) = $1,599 Mil.

Gross Profit is the numerator in the calculation of Gross Margin:

Tesla Inc's Gross Margin for the quarter that ended in Dec. 2016 is calculated as

Gross Margin (Q: Dec. 2016 )=Gross Profit (Q: Dec. 2016 ) / Revenue (Q: Dec. 2016 )
=(Revenue - Cost of Goods Sold) / Revenue
=435 / 2284.631
=19.05 %

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.


Explanation

Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.

Durable competitive advantage creates a high Gross Margin because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin

1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key

Tesla Inc had a gross margin of 19.05% for the quarter that ended in Dec. 2016 => No sustainable competitive advantage


Related Terms

Cost of Goods Sold, Gross Margin, Revenue


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Tesla Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
Gross_Profit 0-1103162304568829241,599

Tesla Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
Gross_Profit 252262260213231219252275637435
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