I think there are two primary issues dragging down the stock, not counting the ongoing short wars\TSLAQult thing. Hyperchange and dual mandate: The pace of change the the dual mission of driving the transition to renewable energy fast as possible, and staying marginally profitable to avoid a return to markets for funding and hyperchange, like the store closing and move to online sales, the daily continual improvement in the manufacturing process and car design, changes to supply chain and logistics. Tesla is doing all of these things on an agile basis, while the rest of the industry is using legacy change processes that may take a year or two of planning to make minor logistics or supply changes, or update vehicle components mid-year, or making constant production line changes for processes that would be static for Ford and GM. Change is perceived as risk, until the opportunity is captured in results. Constant change is constant risk and
Regarding the store closures, Elon says Model 3 rollout was the last bet the company move, but it is not the last bet the quarter move he'll make. If it doesn't work out, they will adjust strategy and continue forward. This pace of change is just more than the market can comprehend and so it identifies the change as risk. This is very much like Netflix' move to streaming and I recall Netflix falling about 50% after the change.
Net present value is the risk adjusted value of future earnings, so adding risk subtracts from present value. This is true even if the change will create more future value until the future value add can be understood. This is not the way our mind works perhaps, because we are confident that there is demand for the cars and we believe Elon's stats that 80% of cars are already bought online. I think there will be tweaking of this strategy, but confident they'll have time to adjust before any hit to sales that would result in having to slow production or add significantly to inventory.
Today's tizzy about the Model Y comes on the heels of the 3 rollout just hitting stride and is part of Tesla's long term strategy, but is part of the plan to continue to grow 50-75%, which is not possible by industry standards. We've known and Elon has targeted March reveal since they went pencils down on the design. The fact that the street thinks this is a sign of weakness, when it was announced last year that the announcement would be mid-March is another sign of willful ignorance, or Tesla PR not doing a good enough job of signaling change. I'm not sure if they should do more public relations on the work they are doing to drive efficiencies? The new Grohmann production systems at GF1 were required to do the SR, both technically to build the new pack and financially to build the pack efficiently enough for the 35,000 price. Wall Street may choose ignorance, which seems to be thematic of most Tesla coverage, but Tesla could do 8-K's providing forward guidance to highlight target dates. Phil Lebeau and Tom Randall try to be objective on the media side, the rest of the industry seems to parrot a lot of TSLAQult inspired concerns.
The important question is if there is something Tesla can do to reduce perceived risk by the investment community. Long term this may not matter, but I think the doubt spreading may affect short term sales to some degree and certainly is a significant source of negative press.
- Shorts have made 8-K's a big deal. Does Tesla legal need to be more aggressive and use the 8-k to signal upcoming plans? This would give Elon more twitter freedom as well. It could be seen as a negative, giving the competition more insight into future plans, but they have had 8 years advance warning and done very little in response.
- More press tours of the GF1, Fremont and Shanghai. Maybe the Willy Wonka thing is better, maintaining mystery about production and Tesla-Magic, but shining light on this new machine that is changing the world is needed? This is a big short theme, that they doubt Tesla has any secret sauce, they don't out innovate, they just cheat somehow. I have not seen any press articles on the new Grohmann line behind the new SR pack.
- A more activist legal stand against libel? I'm not sure this is practical and you would not want to do anything that would take Elon's time. Can they hire a social media and legal team to go after scurrilous and false claims on the Internet. Should they dox people working for other companies, if they exist, or lobbyists using twitter to spread false narratives? Regardless of whether shorts are colluding, they are working together to create a negative echo chamber. These channels become insulated over time as groups mute each other out and can become powerful. Twitter and facebook may not be able to solve this themselves, public people like Elon and Tesla will need to learn how to fight these fires. They won't just go away.
- Public service advertising. Not products, but marketing the Tesla mission. They don't have to swoon over environmentalism, but can target ads on channels like Pubic Television, sponsoring News Hour. I'd start there and maybe work outwards. Never touting products, but touting Tesla's mission to drive the transition to renewable energy. Make America Green Again. A lot of well informed people don't know how much cleaner an EV is versus ICE.
