, 9 tweets, 3 min read Read on Twitter
1) So we're facing another pumped up $TSLA delivery report imminently. $TSLAQ members are nervous, given that Q3 could be >100K. But here's a little reminder why deliveries shouldn't matter: Q3 incentives in the US were at record highs.
2) While $TSLA fans will say, "yeah, but Tesla's different; they're taking share from struggling ICE makers", this is utter bullshit. Record-high incentives on lower car sales in Q3 means the US car market-->60% of $TSLA's global sales--is in the dumps & everyone suffers.
3) We know that pricing has deteriorated in Q3 for $TSLA. We know that capex must at least double vs Q2 in order to get GF3 running in Q4; we know that, if $TSLA does sell >100K in Q3, Accounts Receivable could be up (thanks to @FredericLambert leak re: possible 3.5K shortfall).
4) But incentives being at record highs in the US during Q3 in a down market alone is enough to get me even more bearish. And think about FCF. If that number is negative (I've got -$700m vs consensus of +$200m), 100K deliveries or slight net profit won't matter.
5) Given $TSLA's structurally bankrupt, all eyes will be on FCF. Even people who shouldn't be in the investment business (like @GerberKawasaki) tend to skip EPS estimates & head straight for what the FCF number was.
6) Short more if $TSLA Q3 is >100K deliveries? I am. After "record deliveries" leak last May, w/ a follow-up pump in June, $TSLA rallied 26% until bad Q2 results came out. Stock dropped 20% thereafter. This time, only 4 weeks till Q3 results vs 10 weeks last time.
7) Also, given how many bought on the "record quarter of deliveries" in Q2 only to get burnt after results, I'm betting that a 100K+ for Q3 won't spur as much confidence. It could cause a short-term squeeze, as short interest is now at 6 days' volume vs only 3 days post-Q2 pump.
8) But once again, I'm looking at a piss-poor market for carmakers in the US, Europe, & China. This means margin deterioration. GF3 "up & running by Q4" means higher capex. $TSLA still owing Panasonic money & obligated to buy $3.1bn in cells/year, means not much wiggle for FCF.
9) So I'll use any bounce between now and Oct-31st (TBC) to get as short as possible. Because there is no future in Shanghai for $TSLA--which will be the only story they have to tell after US demand cliff--and fundamentals are deteriorating rapidly. Trade carefully.
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