Thread by @tomi

1/ Short thread on $TSLA Model 3 reservations backlog and demand.

The Company said on July 2 they had 420,000 reservations for the Model 3 in their Q2 deliveries report. Let's put aside the 420 number for a minute, though it has a fun tie to the fake LBO at $420.

2/ On July 19, Needham & Co Analyst Rajvindra Gill estimated that 24% of the reservations (or roughly 100K) had been canceled. That would take the total reservations number to 320K, ceteris paribus (assuming no further cancellations amidst all the negative press, etc.)

3/ Per the Q3 deliveries report released on October 2, $TSLA deliveried 55.8K Model 3s in the quarter, or roughly 4.3K/week. Include one week at lower rates for Q4 to be conservative, and you're at 60K Model 3 deliveries since July 2.

4/ Now you are at 255K reservations. Per this graphic from @EnerTuition's SA article, they've basically exhausted the LR RWD backlog. There's likely some AWD and P versions left, but it's becoming increasingly clear most of the remaining backlog is the cheap $35K version.

5/ Per Statista, the average selling price of a new car is right in the $35K range, so it's probably safe to assume at least 50%, if not 67% of the original reservations were for the cheap ($35K) model, i.e. at least 210K.

$TSLA can't manufacture them, or it will die - per Musk.

6/ Let's update the math:
420K (reported reservations)
- 100K (estimate of cancellations)
- 60K (Q3/Q4YTD deliveries)
- 210K (Model 3s that $TSLA can't manufacture)
= 50K cars left.

If $TSLA kept rate of deliveries from Q2, they'd have exhausted entire backlog sometime during Q4

7/ Friday $TSLA announced customers need to place orders by Monday, or they won't receive the full $7.5K tax credit (it halves in January to $3.75K).

Angry customers have reported canceling reservations, knowing they won't be able to get the $7.5K break on their $35K Model 3.

8/ So if the entire pricey backlog is gone and $TSLA cannot manufacture the cheaper variations, tariffs stop them from selling cars to China (55-60% higher prices) and they're not done with homologation process to sell in Europe, which Musk already said is early/mid-2019 event...

9/ ...then who are $TSLA selling to? Even if they can hold deliveries steady w/ incremental organic demand (free Supercharger giveaway, near-free financing in Norway, et al.), how do their sales NOT collapse in Q1, to the point where the entire house of cards comes crashing down?

10/ This would all come out in due diligence if anyone were to invest a large enough chunk to keep the lights on for another year (at least $5B per other thread, plus the Saudis are now out) or if they tried to raise equity (debt no longer an option).

So, where does $TSLA go?

Q

11/ TSLA:

$2.2B cash
($3B) payables
($0.94B) customer deposits
= (1.74B) needed

($230M) SCTY bond (Nov 2018)
($156M) TSLA loan (Dec 2018)
($940M) TSLA bond (Mar 2019)
= (3.07B) needed

($500M) Moody's minimum cash balance to operate the business
= (3.57B) minimum raise

12/ This all ignores the DOJ and SEC investigations, the two separate whistleblower lawsuits to both SCTY and TSLA, and assumes that TSLA runs at breakeven cash flow from now on.

I wouldn't count on the latter, and definitely wouldn't ignore the former when raising money.

13/ Some analysts continue to project cash burn throughout 2019 and $TSLA’s own guidance disappeared in the Q3 deliveries report.

If they aren’t at breakeven, the hole becomes much larger — burn in Q1 and Q2 were $0.7B and $1.1B.

Also: production projection didn’t hold, either.

Note: this thread by @ElonBachman gives great color to the conversion price rule on the March bond and is a must read

https://twitter.com/elonbachman/status/1034858046093238275?s=21