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Lots of cars are being, have been, delivered, why then
- Thread starter Darren Donovan
- Start date
There's been concerted disinformation about Tesla for a long time. There's actually a "short and distort" market manipulation scheme going on, which is well-documented, but the SEC has done nothing about it yet. A lot of traders have really false views about Tesla because of this, so it ends up very volatile.
This generally corrects when earnings reports come out.
This generally corrects when earnings reports come out.
suwaneedad
Member
I believe there's a good chance that Q4 will disappoint Wall Street because I believe there's a decent chance that deliveries are going to lag Q3 by a bit and therefore that inventory will be higher than expected with its related punishment of cash balances. It's pretty well certain that there has been no end of year production push/spike, presumably due to a lack of need for more inventory in the field. If that is all correct, combine it with the fact that there's nearly $1B of convertible debt coming due in March that only converts to stock if the stock price is $360+, and we get a tasty recipe for the shorts to feast on yet again. I do believe the stock price punishment the past few days has been driven from bad reporting around price cuts in China, so I'd be a buyer here at ~$300 if I didn't have concerns about production/delivery stats from Q4 lagging expectations. It's going to be a volatile week/month ahead for TSLA stock. A stock rebound would require strong demand from the EU for Model 3, continuing demand from the US for Model 3, and ideally a profitable $35k Model 3 pretty soon. S/X demand can be expected to begin to steadily dip as the refresh of those vehicles continues to draw closer...Model 3 needs to pick up that slack.
The news these days looks like “the best of 2018 smear headline” reruns.
Uncle Paul
Well-Known Member
The biggest news ever from Tesla is that they have delivered 3X the vehicles in 2018 as in 2017,
With all the Tesla gloom and doom headlines, they are growing much faster than any other car company on the planet.
With all the Tesla gloom and doom headlines, they are growing much faster than any other car company on the planet.
This is my most probable "worst case" scenario for Q4 numbers. I do think some Q4 optimism has been helping to drive price action these last several months, and that a drop in deliveries relative to Q3 could send the stock downward. The delivery report will be a big moment for the stock.
suwaneedad
Member
What perplexes me is Elon's resistance to sell more common stock. Just raise a few billion, take 'solvency risk' off the table, and advance the mission faster. Literally every time Tesla has raised capital the stock has gone up (whereas the finance texts would say it'd go down due to dilution) because more cash reduces insolvency risk. This frustrates me about Elon, but naturally I admit he's at least a bit smarter than I.
omgwtfbyobbq
Active Member
IIRC, the board can change the debt conversion ratio for the March bonds in certain circumstances. For production, based on Inside EVs estimates, they need to sell ~18k+ Model 3s in December to match last quarters sales, which seems plausible. They may fall short, but I don't think they need to push 20k+ cars out the door to make a significant profit again in Q4.
They may also make a lot more than people expect them to from ZEV credits. Offloading 50,000 Model 3s worth of credits at $1,500/credit would provide about $300 million in profit. Granted, it's not GAAP profit, but it'll help to settle the March bonds.
This is GAAP profit, and might be excluded from non GAAP if I remember correctly
My guess is that Elon believes in second order effects by being under pressure, being lean and not taking easy routes. Company is already growing 100% per year, if they expand workforce and commitments much faster they might end up with extra complexity and bureucracy.
Musk likes to retain control of the stock, a strong disincentive to dilute. I would guess he also thinks it's underpriced, and doesn't want to issue stock below fair value.
Tesla can pay off the March bond maturity in cash with the cash they have in the bank. Every serious analyst knows they're going to be cash-flow-positive for Q4 and Q1 so that's not a problem. Musk thinks long term, usually, and I presume he's willing to wait until April to show up the emptiness of the short-seller thesis.
Tesla can pay off the March bond maturity in cash with the cash they have in the bank. Every serious analyst knows they're going to be cash-flow-positive for Q4 and Q1 so that's not a problem. Musk thinks long term, usually, and I presume he's willing to wait until April to show up the emptiness of the short-seller thesis.
Two short term issues:
Possible bond yield crossing triggered market sell off which added to TSLA volatility.
Weak market may keep stock low and force Tesla to use more cash to pay off its debts.
Currently there is nothing that Tesla is doing that would make the stock to go down however I would like to hear more about Grohmann new battery line, EU orders and GF3 progress.
Possible bond yield crossing triggered market sell off which added to TSLA volatility.
Weak market may keep stock low and force Tesla to use more cash to pay off its debts.
Currently there is nothing that Tesla is doing that would make the stock to go down however I would like to hear more about Grohmann new battery line, EU orders and GF3 progress.
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suwaneedad
Member
"Short burn of the century!"
That wasn't exactly a long-term tweet, when issued.
Granted, we may have seen already what he meant by it...Q3 production/delivery/GM%/profit.
Elon is protecting you as a stock holder from dilution. He is also reserving any new stock for employee incentives so he can pay lower wages resulting in stronger cash flow. Elon can see cash flow into the future better than any of us. I trust he is taking the best course for Tesla and electrification.
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