1/ A quick thread on $HTZ. I've never been so amused by a name that I have no intent to trade. Here we go...
Hertz filed for bankruptcy protection on May 22. The primary driver for this was ONGOING CASH BURN IN ITS BUSINESS, amplified by enormous leverage.
2/ Court documents were filed, a DIP loan was arranged, the credit default swaps paid out, there's no going back now. The debt holders own the company. $HTZ
3/ Here is a screenshot of their existing debt taken from Bloomberg. There's asset backed debt (secured by the value of the fleet) and corporate debt (secured by nothing more than leftover assets and future free cash flows, TO THE EXTENT SUCH CASH FLOWS EXIST). $HTZ
2/ Rolex watches are expensive and highly coveted by all manner of collectors, enthusiasts, and shady moneyed types around the world. On its face, this would make looting a Rolex store seem smart. It isn't.
3/ Because of the Rolex brand and status, it is one of the most counterfeited products in the world. It is also the target of thieves. This makes authentication absolutely critical.
1/ As a follow-up to my earlier musings on Wall Street/industry/COVID-19, let’s do a deep dive on air travel. Everybody knows intuitively that the airline industry is important and that COVID-19 has impacted it hard.
2/ How hard? Here’s one view straight from the TSA website. The collapse in air travel started in mid-March and continues through today.
3/ Here’s another view, which captures the staggering collapse in percentage terms. This is a natural consequence of shutting down the economy to prevent disease spread. The view/narrative/hope of optimists? This is temporary and should recover quickly.
1/ A few reflections from the lake. As someone with a couple decades of corporate experience that only recently developed a network of connections on Wall Street, I am surprised by how little crossover there is between the two groups.
2/ Almost nobody on Wall Street has true industrial experience, and even fewer real-world executives understand Wall Street. I am not passing judgement here, just observing. I believe this has led to two profoundly different interpretations of the impact of COVID-19.
3/ The Wall Street “top-down” view is the Fed has our back and so all dips should be bought. It is unquestionably a winning strategy since 08/09. When I speak with my Wall Street friends, they knew intuitively that things are bad “over there in the economy” but they BTFD anyway.
1/ Who is @elonmusk? A visionary hero to be worshipped by all? A dangerous narcissist that needs to be called out for his evil behavior? Both? Neither? Something in between? Read this thread and decide for yourself. $TSLAQ
3/ What was @elonmusk's response? He viciously smeared her good name on Twitter by asking her boss if she bribed Martin Tripp. Was he attempting to get her fired? If Elon had any evidence to back up his smear, we'd have seen it by now, no? $TSLAQ
It is document 328, attachment 2, starting on page 336 (exhibit 10). You really should read it for yourself. It is amazing. $TLSAQ
2/ A friendly reminder. At the time $TSLA is considering acquiring SolarCity, Kimbal is:
*A very large shareholder of SolarCity
*On the board of Tesla
*On the board of SpaceX
*CEO of The Kitchen
He is also Elon's brother and cousin to Lyndon Rive, the CEO of SolarCity. $TSLAQ
3/ The attorney, who does a brilliant job, begins by asking Kimbal about why he didn't recuse himself from the SolarCity deliberations. He also mentions the $TSLA code of conduct. Kimbal doesn't know much about the code, but quickly denies he has a conflict of interest. $TSLAQ
1/ The purpose of this thread is to document the social media/intimidation tactics used by Elon and his associates. There will be no shortage of historians who will examine the record after the collapse. This is for them. $TSLAQ
2/ BOTS – There are thousands of fake $TSLA bull accounts that have come and gone since I joined twitter. They usually come in waves during periods of high stress for the company. Who pays for these bots? What is their purpose? I think we know the answers.
3/ INVESTIGATORS – $TSLA and/or Elon Musk himself hire investigators to dig up dirt on anybody who dares to critique the man or his mission. I am aware of many such examples. Unsworth is not the only victim of these dirty tricks. All will come out.
1/ Time for the official TC Overly Simple Earnings Prediction Model That Works Until it Doesn't™️ thread.
Disclosure: I live in Elon's head, so he is likely to mess with the financials just to make me look foolish. I'm sneaking this in while he is off twitter.
2/ We begin with the simple observation that net income minus automotive gross margin has held remarkably steady at -$1.4B since the Model 3 reached scale. This is the hole Elon needs to climb out of with auto gross margin dollars just to break even. Let's plug in -$1.4B. $TSLAQ
3/ Next I estimate a purposely over-simplified number: Auto gross margin dollars per announced unit delivery. I do this by comparing the puts and takes (see what I did there Omar?) from last quarter. I settled on $10.1K per delivery. I'll explain my assumptions in the next tweet.
1/ It occurred to me that someday my children will learn that I am TeslaCharts. I compose this thread in part as an open letter to them. I've always taught them to embrace and learn from their errors. Here are my biggest mistakes and why I made them.
2/ I tweeted that $TSLA would never produce more than 5,000 cars per week in Fremont because I believed they were limited by paint shop emissions and permits. I never imagined Elon would simply put less paint on every car. This was a mistake.
3/ I always assumed $TSLA would collapse under the weight of service issues once the Model 3 reached scale. I never imagined Elon would simply refuse to honor warranties and make it very hard to schedule service. This was a mistake.
1/ I have read and reread the SOX whistleblower complaint by Karl Hansen. I believe there is an explosive accusation embedded in that document that is being widely overlooked. If this accusation is true, it should spell HUGE trouble for $TSLA and Elon. Let's review. $TSLAQ
2/ First, here is the link to the complaint, with a thanks to @MikeFlo46795160 for publishing it yesterday. Important disclosure: I'm not an attorney. I do, however, have extensive corporate experience and training on SOX related issues. $TSLAQ
3/ Forget Mexican drug cartels and employee theft. THIS is where things get interesting to me. Two days after the infamous funding secured tweet, Hansen files a whistleblower complaint with the SEC. $TSLAQ
1/ I hereby submit that this was a fake product. That it didn't exist. That it won't ever exist as displayed in October 2016. I came to this conclusion in the moment, but I've not yet explained how I knew. I will now. $TSLAQ
2/ Any idiot can put a solar array into an aesthetically pleasing encapsulated form that looks like a roof tile. The hard part is connecting the tiles and harvesting the electricity produced in a way that is SIMPLE, SAFE, and ECONOMICAL. Elon solved none of these things. $TSLAQ
3/ In fact, he probably didn't even try. First of all, there were no connectors whatsoever on the product shown that night. Literally. It has a smooth back. My jaw dropped. See for yourself. $TSLAQ
1/ I see a certain millennial is out tweeting about conspiracies and threading the needle on Q2 GAAP profit again. Time for some real data analysis and proper charting. Here is the official TC Fraud Detector Cheat Sheet™️ for next week. $TSLAQ
2/ As a reminder, if you subtract automotive gross margins from GAAP net income, you isolate the rest of the income statement. Essentially, $TSLA needs to generate $1.4B in automotive gross margin to break even. Notice the immaculate quarter of Q3 2018. Sus bro. $TSLAQ
3/ With 95,200 deliveries in Q2, $TSLA will have to achieve $14,700 automotive gross margin dollars per vehicle delivered. How has this metric trended in the past two years? It has dropped precipitously. $TSLAQ
1/ Out of sheer boredom, the adults in $TSLAQ have let the kids have the run of the big board lately. I'll take it back for this short thread on ASP changes in Q2 versus Q1, and some thoughts on what is needed for $TSLA to achieve a GAAP profit in Q2.
2/ Question 1: Did average selling price for Model 3 rise or decline in Q2 versus prior quarter? Let's have a look at the data. $TSLAQ
3/ We begin in the US. By my best estimates, nearly half of the NMVTIS registrations for the quarter (covering roughly 96% of ALL US sales) were for SR+. There were some SR+ in Q1 to be sure, but not many. This is negative for sequential ASP. $TSLAQ
1/ As a service to my loyal followers, I present a quick analysis of what the credit markets are telling us about $TSLA's future. H/T to @glenntongue for being patient with my amateurish questions. $TSLAQ
2/ We begin with a look at the long-term liabilities of $TSLA as shown in the Q1-2019 10Q. The benchmark bond was issued in 2017 and $1.8B comes due in August of 2025 $TSLAQ
3/ It current sells for $81.88 and has a coupon of 5.3%. $TSLAQ
1/ A quick thread on my account suspension last night. First and foremost - I've never had any problem or issue with Twitter. Nothing strange. No random unfollows. All hack attempts blocked and notified, etc. $TSLAQ
2/ I was in the middle of posting the same photoshopped picture several times with different captions (the 'nuke' pic). Suddenly, in the middle of a tweet, poof. My account was suspended without explanation. $TSLAQ
3/ For an extra layer of security, the phone associated with my account is that of a friend. That person was asleep at the time of my account suspension, so I couldn't appeal it or even understand what was going on. That is a good thing. Two factor authentication works. $TSLAQ