Singer3000
Member
I was interested in finding out what the analysts had to say after this earnings, so I found this:
Here's what every major analyst had to say about Tesla's profits: 'This quarter was different'
It turns out the vast majority seem to be in some kind of denial.
We can dismiss Spiegel et. al. as blind idiots but, you ask, why are the analysts in (partial) denial? Because analysts are just people, and they float in the same ocean of systematic disinformation as all of us.
Needham’s Rajvindra Gill - Sell
" Given the lead time data, we contend that the majority of the 455k net reservation list are for individuals who reserved for the base model"
I've never met Mr Gill but I assume he's got some smarts about him to be doing the job he is. And I've got no reason to think he has some nefarious motive. But you only have to look at this quote to see what an intellectual black hole he and so many market observers have fallen into. Tesla haven't started selling outside of North American yet and most likely at least half of early reservation holders were from overseas. So there's good reason to think that the overall options mix won't suffer too much if at all in the coming few quarters.
So what's going on? I posted this on the "Big Thread (aka Market Action)" but things get lost there.
Cognitive dissonance - Wikipedia
Tesla's stock price is battling heavily ingrained cognitive dissonance. There's hence a good chance that the short percentage and analyst recommendations barely budge for a little while. Over the coming quarters, I expect we'll see continued improvement in auto margins and unit volume, and quite dramatically reduced leverage.
Like @neroden, I think Tesla will pay down basically all of the maturing debt and if they can improve their working capital efficiency further, could conceivably be below 3x Debt/EBITDA and maybe 1.5 gross gearing by the end of Q2 2019 (dependent upon new China bank loans for Shanghai facility). These would be modest leverage ratios for a company with the growth path of Tesla.
S&P 500 and Investment Grade credit ratings are not far away and for long term investors, the stock price will eventually take care of itself. Sentiment might slowly shift before it cracks.