Thread by @PlugInFUD

🚨 Elmer Terminal Conspiracy Theory Thread 🚨

(it's been a while my friends)

Listen in, fellow shorters, just make sure to remain on the good side of the event horizon of this Bag Hole™️

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🚨The Case Of The Missing Tesla Inventory🚨

...what could it be?

Website revamp?

Preventing shorties from tracking sales?

Fleet sale?

Elmer Terminal Bagspiracy Theory™️:

Perhaps Tesla is going through an ABL audit or other financial evaluation right now.

$tsla $tslaq

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OK, it was hard for me to organize my thoughts as to the potential chronology of this theory so feel free to rearrange the following tweets/events as you see fit.

As always, I look forward to input for those less baggy and smarter than myself.

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So, Tesla's lifeline right now is its (recently upsized) ABL agreement. It provides them with ~$2.5b+ of liquidity, and Tesla gets to borrow against inventory and other assets and gets cash in return.

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A condition of the ABL is that every month, $tsla has to provide the lenders with a Borrowing Base Certificate in which it shows what it is borrowing against. This appears to happen on the 25th of each month (maybe 20th but i think that goes back to orig. date).

$tslaq

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And for reference, here is what goes into the borrowing base. (there are also dutch assets of a similar makeup but that is much less important than the US assets).

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So, in Mar, when Tesla sent lenders its Borrowing Base Cert (after Elon rallied troops for 30k deliv. in 15 days), it likely reflected:

the 10k cars that ended up InTrans @Mar31
15-30k cars deliv. in late month (Elon said 30k deliv. as of Mar 21)
Plus norm. inv.

$tsla $tslaq

6

If someone at DB or elsewhere is reading that, they probably went WTF!!!!

Tesla has 30, 40, 50, 60k cars in inventory!!!!

And that may have triggered the basis for this evaluation that I am going to purport could be occurring.

7/

$tsla $tslaq

Here's another way that the ABL lenders could have gotten spooked:

The ABL agreement appears to have some language that "designated cash" (unrestr. cash) needs to be 50% of ABL line ("liq. threshold") or else pursestrings tighten.

$tsla $tslaq

8/

and given ABL was upsized to ~$2.5b, and intra-quarter cash was likely super low in early march (started with $3.5b, have cash costs in Q, they had delivered ~30k vehicles by Mar 21 & taken in perhaps $1.7b cash vs. $3.5b AP at Dec-18), perhaps Desig. Cash fell too low?

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Or a third option is that the lenders may have deemed that a Material Adverse Effect had occurred (which can breach a distinct rep, or many other reps), thus causing **technical** default (but not litrly $tslaq... yet)

10/

(i for one could make the case that massive price cuts, a >50% decline in deliveries for high-end trims, a 30% decline in deliveries for overall vehicles, wildly missing former expectations, could certainly be a MAE).

11/

OK so now we get to the "so what's the basis for this crackpot baggy theory elmer"

and it is, as i've been tweeting about, the fact that essentially all Tesla inventory listings are no longer available on its website. See thread:

https://twitter.com/PlugInFUD/status/1113195118620827653

$tsla $tslaq

12/

"well OK elmer, elon just fired the web design barnacle, or they're adding the neural network, i'm sure its nothing"

i agreed that I went to that simplest explanation first, but today we got this sus message via the TMC forums:

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So, according to this customer and according to this sales rep, Tesla is able to see the cars still in one of its systems, but those cars are apparently 1) not for sale and 2) not shown to buyers thru the Tesla website.

$tsla $tslaq

13/

So... wrapping up the theory...

if indeed the ABL lenders are spooked and need to get their bearings, they're allowed to request a Field Examination/appraisal, in which a third party would go out and physically make sure that Tesla's borrowing base is what it says it is...

14/

... which (in this baggy theory) COULD be what has prompted the apparent pulling of listings of cars.

when you do an inventory count, you cannot have *movement* in inventory, because that leads to inaccuracy. So you basically shut everything down while you count...

15/

which is why for a typical audit that's done on new years day or very shortly thereafter, to get an accurate snapshot with no activity.

16/

so to re-summarize the $tsla $tslaq conspiracy theory:

A) Tesla has (definitely) pulled customer-facing listings from its website, while (apparently) internal employees can still see the cars but they are marked not for sale

17/

B) The ABL lenders have the right to do a full collateral count at their whim;
C) They have many reasons why they may have requested one now;
D) Thus, the "locking" of inventory.

Again, this is an admittedly baggy theory, but figured I'd scream it into the void.

$tsla $tslaq

...and as to the "so what??", i have no comment on that. I don't think its in ABL lenders interest to cause default. I don't think that this means BK over the weekend (or anytime soon). Just that it is an interesting not-impossible explanation for the Inv. issue I noticed.

further reading on MAEs for context: themalawyer.com/material-adver…

Addendum 1:

@mndothemath pointed out that this happened right after Q end, which was true. Website started getting washed April 1.

(getting baggy layer deeper) could be that lenders gave green light to sell sell sell thru Mar 31 (need cash), then hit the brakes.

$tslaq

Addendum 2: this thread on more DIP / ABL dynamics

https://twitter.com/witwwos/status/1114283166313984000

Addendum 3:

This is definitely the kind of discounting I'd want to see if I'm a lender

teslamotorsclub.com/tmc/threads/en…

$tsla $tslaq

i messed up one of the clippings here - but the defintion of liquidity threshold is 50% of ABL line.

Addendum 4 SCOOPette

$tsla has begun to re-populate inventory on the website.

We're up to 256 Model S (vs ~120 before) and 250 Model X (vs ~50 before).

I do not think this invalidates the ABL (conspiratorial) theory. 5 days is enuf time to count & still not all back.

$tslaq

Good news is I'll have plenty more deals to send to @28delayslater as these cars came back at similar discounts as before.

Brand new inventory Model S P100D for $90,100

vs. same build in configurator at $103,500

and a referenced discount of $15k (idk the calc)

$tsla $tslaq

... i would expect that this repopulation will continue over the coming days.

only 9 Model X P100d, and 9 Model S P100d.

in reality there are likely hundreds of those across the country.

$tsla $tslaq