Motorhead Profile picture
Aug 22, 2019 10 tweets 3 min read Read on X
1) Just had a great talk w/ a $TSLA analyst who says that some bulls & bears on the buyside are seeing the upcoming Shanghai GF3 ramp-up as a "swing trade" opportunity (i.e. "buy the story"). I laughed, but listened to the portrayal of the view.
2) Apparently, these investors--both bulls & bears--see @elonmusk holding a special event (probably hiring local Chinese) to cheer the roll-out of 100s of Model 3s in order to show that the launch in China is "game on, at full speed". These M3s will be shipped in from Fremont.
3) We both agreed that, if Fremont underwent the "production hell" that still reverberates w/ bad quality issues today, GF3 will be much worse. Most of the GF3 workers have probably never driven a car, let alone assembled one.
4) Me: "Don't these investors realize that $TSLA won't make any money at GF3?"

Analyst: "It doesn't matter. @elonmusk will pump the event & give grandiose projections of exponential demand. He may even hire flash mobs."

Me: "Really? Sounds like a selling opportunity".
5) There were a few points that this $TSLA analyst agreed the "GF3 Swing Traders" weren't factoring in:

#1: If the Chinese have had 6 months already to buy the imported M3 at $51K & $TSLA only sold 3.4K/month on avg, how can they sell more w/out lowering the price drastically?
6) Then there's currency exposure.

#2) ~60% of parts will be sourced from Fremont. Every 1% change in the USD/CNY will impact gross margin by 100bps. China's CNY is arguably overvalued. $TSLA analysts have never had to factor in currency risks, as 64% of sales are in the US.
7) Then there's nationalism:

#3) Many Chinese started swapping in their iPhones for Huawei smart phones once Huawei made phones comparable in quality to the iPhone. The Chinese will do the same once either BYD, BAIC, NIO, etc. come out w/ their own "up-to-snuff" EVs.
8) It appears like none of these "GF3 Swing Traders" have modeled out GF3 earnings potential. My most optimistic estimate at the moment is $300m in gross profit, *IF* $TSLA can actually produce 150K/year. The bottom line will be net losses. So GF3 should be an earnings headwind.
9) Also, what happens to US sales (64% of 1H auto revenues) while GF3 ramps up? Apparently few investors are taking a serious look at the Models S/X being 8/5 yrs old in 2020 & that the M3 has saturated CA. Even if GF3 is profitable, US profit declines will be much larger in 2020
10) GF3 is a serious earnings risk. The proof is that few Chinese have bought the M3 since March. After @elonmusk has his "flash mob" GF3 launch, the M3 price will be cut to $30K-$35K in order to run GF3 at 100% capacity. They have no choice. Start-up costs will be staggering.

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More from @BradMunchen

Jul 12
UBS downgrades $TSLA to Sell. PT = $197

Joseph Spack of UBS is considered as one of the most knowledgeable auto analysts on the Street (1/2 of his rivals are Tech or Energy analysts).

This report is well-timed. Lots to unpack, so here's a 🧵on the main parts:

1/13 Image
$TSLA's current premium is "unidentifiable" and "too significant".

2/13 Image
$TSLA premium to auto valuations is at all-time highs.

3/13 Image
Read 13 tweets
Nov 30, 2022
$TSLA could suffer in the US in 2023. This survey proves that Musk's clown show at TWTR is ruining $TSLA's brand value.

Chip supply & rival output is⬆️. New EV launches in the US will 2x in 2023 to 36.

This chart is a 6-month leading indicator for $TSLA demand in the US.

1/3
This is how many new EVs will be on sale in the US vs $TSLA & its line-up in 2023.

Aside from Musk repulsing potential buyers w/ his TWTR antics, negative views on $TSLA quality has gone from 4% to 13% in 12 months.

This comes as $TSLA's US capacity is +50% this year.

2/3
Net US respondents to this survey are negative on the $TSLA brand. Republican gains doesn't cover for the overwhelming negativity.

Great @WSJ article on the decay of $TSLA's brand value in the US.

It could be even worse in the EU & China.

3/3

wsj.com/articles/elon-…
Read 4 tweets
Nov 20, 2022
@BS__Exposed is a TSLAQ account. His YouTube video on Musk's FSD lies went viral. But his non-TSLA tweets are psychotic AF.

He blocked me (probably bc of my anti-CCP/pro-Ukraine tweets), so I looked through his feed.

He hates everyone except Russia & China, it seems👇

1/9
He hates Germany. I can understand hating Scholtz, but saying "Nazi Germany is back" is a bit much.

@BS__Exposed

2/9
He might hate the UK too (although I think he's a Brit). I can understand being against monarchy, but wishing QEII "may burn in hell forever" is a bit much.

@BS__Exposed

3/9
Read 9 tweets
Nov 20, 2022
To the morons who think $TSLA should do a share buyback: $TSLA needs to finance.

73% of 2022 deliveries in China & the EU were made in the last month of the quarter.

Reported cash at Q-end is inflated vs true levels during the first 2 months of the Q.

Short 🧵

1/3
$TSLA discloses foreign cash holdings each quarter.

Assume that 75% of foreign currency is RMB & 15% is EUR (CAD can't be >10%).

Using 3-month rates in each country since Q1 2021 shows reported interest income is *31%* below implied interest income using Q-end Cash.

2/3
This table shows the spread between reported vs implied interest income at $TSLA.

Note: if longer-term rates are used, the spread would be even higher.

So, my guess is an equity raise is much more likely than a share buyback at $TSLA in 2023.

cc: @KoguanLeo

3/3
Read 4 tweets
Apr 21, 2022
1/8 $TSLA Q1 thread

Results were incredibly good, despite delivery growth of only 2% QoQ.

3 main factors:

1) ASPs rose by 1% QoQ while COGS/unit were flat
2) ZEV credits were 2x est at $679m
3) Adj SG&A (ex-R&D) dropped by 14% QoQ

2) is a one-off; 1) & 3) are strange
2/8 Zach said long-term contracts for raw materials allowed them to keep COGS/unit down, but prices are "rising rapidly in Q2" & contract renegotiations are accelerating.

Q2 should see a rise in COGS/unit. See this lithium chart. $TSLA is said to have 3-12 month contracts.
3/8 What was extremely odd about Q1 was the 6% YoY fall in G&A despite an 81% YoY surge in revenues. How can G&A decline when Tesla has two new factories that just started operating?

This is the most fishy item of $TSLA's Q1 results & I hope there's some clarity in the 10-Q.
Read 8 tweets
Oct 19, 2021
1/ For Q3, I'm estimating $14.2bn in revenues & $1.53 in GAAP EPS for $TSLA.

Consensus is at $13.9bn & $1.25, respectively. I'm seeing a 23% GAAP EPS beat, so if $TSLA doesn't report something close to that, the stock should sell off.

These are my major assumptions:
2/ Key factor is the Model Y: 20% price cuts in China hurt. But Q3 is the 1st time $TSLA exported low-COGS MIC Ys to outside regions for higher prices.

Ys in China were +24% QoQ, while ex-China Ys were +27% QoQ. Clincher: 1/3 of these ex-China Ys were MIC Ys (high margins).
3/ Gross profit per unit (ex-ZEV/lease) in Q2 was $13K, or $2K > Q1 b/c Model Y mix was 34% in Q1 --> 42% in Q2.

For Q3, Y mix only rose to 45%, but as 1/3 of that was built in low-cost China, the margin impact should be big.

Ex-ZEV GM should be 27.8% vs consensus of 26%.
Read 6 tweets

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