Hello and welcome to the Thursday July 25th

2019 edition of Tesla Daily on Official Tesla Podcast.

My name is Rob Maower.

Today we're talking all about why Tesla was not profitable in Q2,

despite record deliveries.

Tesla stock on the day today did continue to fall,

even from the after hour session yesterday

finishing down 13.61% to 22882 that compared to the NASDAQ which was down

1% even. Today I just wanted to go through a question that I've seen in various places on

Reddit, on Twitter, etc. On why Tesla was not able to post a profit in Q2 even though

they had record deliveries in the quarter. Responses to this question have been a little

bit vague so I think it might be helpful to just run through quickly how everything is

really breaking down. If you want to follow along an hour or later I'm literally

just looking at the sixth page of the earnings report.

Tesla's condensed consolidated statement of operations.

On that page you can see that Tesla's total revenues were $6.35 billion.

It cost Tesla $5.43 billion to produce and deliver the products and services that generated those revenues.

So when you subtract the cost of revenues from the total revenue line, you are left with a gross profit of $921 million. From there you have to take out operating expenses.

The biggest operating expense for Tesla is selling general and administrative costs.

Tesla controlled those well during the quarter. They were down 8% quarter

over quarter despite revenue being up 40%. That's a really good sign of improving

operating leverage. After you take those selling general and administrative costs out of

...