I judge Tesla on the totality of my years of extensive research that began after my first Roadster test drive, which was the day in 2011 that I fell in love with what Tesla has created. I also enjoy high risk investments, not index funds, as I want to roll the dice in exchange for high returns. That said, as much as Tesla fans loved Elon giving Wall Street the finger yesterday, it wasn't beneficial for long-term investors and owners of Tesla...because Elon MAY need to raise equity later this year IF his optimistic plans of finally becoming profitable don't pan out. Tesla's debt is very expensive and trading at a discount. If you've studied the numbers of Tesla as I have, there's a very real possibility that the high cash burn will force the need for more capital to be raised in the next 6-12 months, even though Elon doesn't WANT to go there. That's the job of a CFO - to warn the CEO well in advance of all scenarios. But if Elon feels invincible because of his ego (that most every billionaire has), perhaps he's ignoring the warning signs. But I have noticed key CUSTOMER warning signs, like trying to buy a $100k solar roof that Tesla promoted, but couldn't yet sell. So I paid $50k to their competition. I tried to buy the PW1 since day 1, but it was not for sale in the midwest and was replaced by PW2. I tried to buy a couple of those for 18 months; nope! I sold my S in January with plans for the 3; then saw first-hand the poor quality rolling off the line due to lacking quality control. When demand for a product is busting at the seams, but supply is this constrained...one should listen extra close to things like an earnings call. 25% margins on a $35k car were predicated on massive advancements in the machine building the machine (at a rate of 10,000 per week). Now CapEx is being reduced (at GF1, which is less than one-fourth complete; and the high automation is being replaced at Fremont with yet-to-be-hired third shift workers...raising OpEx). The only result of all this is much lower margins than the 3-5% haircut that was mentioned. Then add in a "major restructuring" Elon mentioned for the near future, and that never helps employee morale and productivity. When you put all those pieces together, it creates a negative outlook on Tesla's cash position that's quickly falling. I was hoping to hear a more solid plan to address the current cash burn and looming cash crunch now that hyper-automation at Fremont was an admitted overreach (watch Elon's recent CBS interview). I still have deposits on PW2 and M3, so the last thing I want is a bankruptcy where I never see my Tesla products. But as someone who was ready to also buy TSLA stock, I certainly didn't like what I heard and read in yesterday's earnings release. A solid and detailed plan forward that could have been shared by Tesla's CFO would have been better for all.
Elon is a brilliant person who thinks differently than 99% of the population. He doesn't accept failure once he has an idea (e.g., producing 10k M3s per week in 2018 via Alien Dreadnaught Fremont line). Yet sometimes reality is different, which requires an adjustment in the master plan for capital and operations...and the numbers that go with those new realities. Yesterday's call didn't address in any clear way the new reality of being at only 2k per week...and new hopes to be at 250% improvement (5k/week) in less than two months. So if the Plan B doesn't work out in the next two months, Q3 won't be profitable and cash will run out. So a responsible CEO and CFO of a PUBLICLY-TRADED COMPANY (emphasis added) must plan for and share said Plan B. It's fine for Elon to be Elon at SpaceX, as that's his private company. But things change when you run a $50B public company.
