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TeslaCharts @TeslaCharts
, 22 tweets, 8 min read Read on Twitter
1/ "Nothing matters until everything does, all at once"
This thread is for the newcomers to the $TLSA story. No SCOOP here, just a summary of recent events and a preview of things likely to come. Disclosures: not trading advice, I'm short via puts, do your own research.
2/ The $TSLAQ thesis is comprehensive. But boiled down to the three most obvious pillars, the shorts believe:
(1) $TSLA is inhibited in its ability to raise fresh capital
(2) $TSLA desperately needs to raise capital due to the balance sheet
(3) The Model 3 launch is a catastrophe
3/ There are two Elons. The one the media has created, and the one $TSLAQ sees. To the $TSLAQ world, there are two obvious 'tells'. First, the more vigorous the denial, the more likely the denial is false. Second, random word changes matter a lot. There are no coincidences. $TSLA
4/ Is $TSLA inhibited from doing a capital raise? In my opinion, the very best evidence for this hypothesis is simple: they haven't in a year. This is not a company that lacks creativity as it pertains to raising money. Here is a nice summary from The Queen's Business Review...
5/ Next, a very telling exchange from the $TSLA 2018 Q1 earnings call. An annoyed Elon cuts off one of his biggest supporters, and goes 'full alpha'. To my ear, this was a confirmatory tell. He can't raise, so he insists despite all evidence that he doesn't need to...
6/ Why might it be that $TSLA can't raise? The $TSLAQ crowd has long hypothesized that the company is unwilling to disclose damaging information, like an ongoing SEC investigation or something similar. This exchange from the last earnings call is another strong tell...
7/ Why does $TSLA need to raise so urgently? Simple. The balance sheet is a mess, they bleed cash, and they have substantial obligations coming due that they are unlikely to meet via cash flow from operations. Here's just one simple way to visualize the situation...
8/ And here's another. The quick ratio dropped to 0.31 as of June 30. A few thousand more Model 3s delivered in Q3 is unlikely to magically make everything better...
9/ Last comment on the balance sheet. Just listen to the boss himself. Suddenly, the word bankrupt is randomly inserted into his comments at the annual meeting, in various tweets, and most recently in response to a damaging WSJ article. If only there were signs of stress.. $TSLA
10/ The Model 3 was supposed to save $TSLA. It will likely sink it. First, here is the guidance given last July, which formed the basis of the last time they were able to raise money from the capital markets. Clearly, things haven't gone to plan...
11/ By the end of Q2, the new new new promise was 'we'll finally hit 5k per week production by June 30.' An interesting new turn of phrase was born - 'factory gated.' Of course $TSLAQ knew exactly what this meant. Unfortunately, most of the media blew right past it... $TSLA
12/ To $TSLAQ, 'factory gated' most likely meant 'not quite finished.' Then suddenly, thousands of Model 3s start turning up in dusty parting lots. See the great work by @Paul91701736 and others for more. Are these the 'factory gated' cars? Hmmm... $TSLA
13/ Then yesterday, more than 50 days after the $TSLA Q2 production announcement, @lopezlinette - a great reporter that isn't showing up late and claiming to SCOOP everything - broke a very damaging story about the infamous 'factory gated' production week...
14/ Two weeks ago, twitter sleuth @skabooshka broke the news that the $TSLA factory seemed to have slowed dramatically. Interesting, since a certain Bloomberg reporter is still happily reporting outstanding production numbers using his 'model.'
15/ As of yesterday, still strong indicators that $TSLA production has slowed dramatically. Something is going on for sure...
16/ An inspection of the VIN registration data for the $TSLA Model 3 gives another clue. Were the 'factory gated' cars incomplete builds of RWD models for which there is little to no demand? Did the 5k per week goal force them to make poor business decisions? Time will tell...
17/ Critically, this Model 3 fiasco is happening during signs of decreased demand for Models S and X globally. The delivery data has been anemic two quarters in a row. Mix in China tariffs and Norway service issues, and you potentially have a toxic mix brewing...
18/ Which brings us to the infamous $420 tweets. The CEO of $TSLA took to twitter mid-trading day to announce, with zero nuance and full bluster, that he had an offer to take his company private. This claim was utter nonsense. If this isn't a flagrant 10b-5 violation, what is?
19/ Key former SEC officials have been all over the financial media, in what I believe is an effort to prepare the investor community for what is about to happen. Can a CEO be this reckless? Will the SEC give him a pass? I suspect not. We'll know soon enough... $TSLA
20/ At a minimum, the tweets almost certainly put $TSLA in a very dangerous position for years to come. An excellent article was published yesterday to SeekingAlpha. The Porsche/VW squeeze of the century has crippled Porsche for a decade. Hard to imagine a different outcome here.
21/ It is also pretty safe to assume that whatever was holding up a capital raise before, things just got much worse. A great article this morning should tell you all you need to know about both what was holding them up and what will soon follow... $TSLA…
22/ To this observer, the timing of the $420 tweets was no coincidence. The Model 3 promises converge this quarter. Model S/X can't carry things anymore. Bills are coming due. The seeming inability to raise. And then, out of nowhere, a take private bluff. Trade $TSLA carefully.
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