1/ Thoughts about the $TSLA earnings report today. First & foremost, as usual, until we see the 10-Q, we know nothing.
2/ $TSLA basically went full blast in Q1, shutting down in China only briefly & shutting down Fremont only after it would have been too late to deliver further production in Q1. So...
3/ Q1 will be the last $TSLA quarter with a pretty balance sheet or income statement. It becomes truly ugly from here on out, for lots of reasons, many of which Tesla can't cure.
4/ So, the imperative is: show as good a result as possible, then raise capital. Yeah, I read that mid-March 8-K, too about how Tesla had ample liquidity. @Badger24 & I wrote about it. $11.6B of liquidity is much closer to $8B, but...
seekingalpha.com/article/433348…
seekingalpha.com/article/433348…
5/ ... Tesla can't allow cash to go below, at a bare minimum, $2B. Plus, with Shanghai adding production, the available credit under the ABL is going to shrink, not grow. Plus, every week that goes by is, very conservatively, another $250MM of cash burn, much from B/S unwind.
6/ With the Q1 financials being the best we'll see in a long while, and the share price in the stratosphere, I believe Tesla will move ASAP to raise cash after it prints the Q1 10-Q.
7/ How to do that? There is so much play in the joints. Use an inflated RVG estimate (thanks, $CVNA!) to inflate B/S values. Monkey with warranty reserves. Recognize FSD deferred income. Recognize FCA emissions revenue. Sell regulatory credits at whatever price they'll fetch.
8/ Notwithstanding the reporting of @timkhiggins in today's @WSJ, those are the reasons why Barclay's Brian Johnson thinks Tesla will beat consensus on earnings. Timmy neglected to mention that. Maybe it went over his head.
9/ Cash will look good in this Quarterly Update. Tesla raised $2.3 billion in February so it's almost impossible to see how cash balance isn't larger than in the 10-K.
10/ And the fact that Tesla Shanghai is a separate operation with (in economic reality) different stakeholders from Tesla Rest of World? Will the Quarterly Update explain that? Offer some useful segment reporting?
11/ Just kidding. We know it won't. The three pertinent questions are: 1) Will any analyst, now that MaxedOutMama & I have laid it out for them, ask about china? 2) Will $TSLA do proper segment reporting later in 10-Q? & 3) will SEC do a damned thing about it if Tesla doesn't?
12/ The utter failure of the analysts & the mainstream biz media to understand the import of the China agreements is simply staggering. They could start here. seekingalpha.com/article/433978…
13/ And the blindness of $TSLA bulls is mind-blowing. They keep insisting Shanghai isn't for exports, and that Tesla will keep its IP...
14/ They've ignored all the info MOM & I have laid out. They've also ignored the "Basic Information" sheet attached to the Grant Contract. It describes "Business range" of Tesla Shanghai as including...
15/ ... "technology transfer in the field of electric vehicles and parts" and "export business." It's all as plain as day. It will devastate all Tesla operations outside Shanghai. And Tesla outside Shanghai won't be able to extract even a penny from the Shanghai operation.
16/ But that realization is for another day. Tonight: hugely misleading financials. Happy talk. Congratulations to Elon from the analysts. Let's go to YouTube. With no hard questions asked (or, if asked, no follow-up upon evasion).
17/ So, and this is just me, I would strongly caution against shorting into this earnings report. -fin-
