Lets not get fooled into thinking this dip is a macro dip like Feb 2016. The FUD about M3 delivery, bankruptcy, etc are all target at Tesla. Shorts just used the macro to amplify the effect, along with the Uber autonomous accident and Tesla HW101 fatal crash timing. As Tesla approaches M3 mass volume production and financial "escape velocity", I think Tesla opponents know this is one of the last chances they may have to derail Tesla's missions. Their effort will only grow more desperate. Investors need to hold on and let Tesla deliver.
The desperation they are fighting with can certainly be felt, it’s a smart move on their part. Bravo to them for taking control of this conversation. As a veteran long-term investor, I can say I expected a dip (based on the missed projected ramp), but I certainly did not foresee such a massive one based on such uneventful storylines within the press (what else can we expect from them—Tesla doesn’t use their advertising channels..).
The amount of doom and gloom reports that have been trending is almost comical (who trusts Moody’s anymore? Since they were one of the orchestrators of the last recession). Consider this dip a gift if you have money sitting on the sidelines, all my dry powder will certainly be deployed after numbers are released, that is when the market will start to understand the bigger picture.
Overall Tesla remains healthy, steadily making progress towards a ramp that will cement their place in the automotive industry—profitability. All else considered, if Tesla stops expanding today, they will be profitable, but that isn’t their goal. Tesla’s goal is to dominate the EV industry much in the way that the iPhone has... you can tell by the endless software updates and engineering breakthroughs from batteries to AP, navigation, maps, TE, solar, Semi, Roadster, 0-60 in 1.9 seconds, Greece engineering plant, etc. These are all signs of a healthy growing company (they’ve even had 2 acquisitions in robotics lately—think Grohman...). It’s when you stop seeing these advances that will generally be signs of a contracting company (think Fisker, all talk but no walk).
For those who are worried due to the recent misses in production, Tesla’s comment on profitability has been quite consistent—5,000/ week will get them there. They are, theoretically one quarter away from that. Their balance sheets are getting better by the Q due to the M3 ramp, not worse, albeit slower than we’d like. Like most of you, I am waiting for April 1st-4th as a re-entry point. At that point I would expect a lot of the Fudsters arguements to be less effective as a ramp of 1,500-2,000 will be about 2-3x better than last Q. If they can replicate this for next Q, they will be at 3,000-4,500 (give or take 2 weeks) for Q2 production. This is where the bear arguments will start to show signs of fallacy, a steady clip of 5,000 M3 units in Q3 will likely shoot us to the moon as it’ll guarantees Tesla’s survival.
Lastly, Tesla has over $3 billion in cash, even if they burn through $500m-$1b the next 2 Q they’ll have plenty of reserves left (which is why Deepak/Elon has stated “Zero” capital raise needed). What they’ll need the capital raise for is further expansion into China for another GF.. make no mistake about it, they’re waiting for the best timing to get the best bang, that time is when they turn a profit somewhere in Q3. Profits are coming whether the shorts spread FUD or not. Make no mistake about it, shorts! Elon is coming for you.
