Tesla, once touted by ringmaster Elon Musk as the Greatest Show on Earth, is now toast.
Worse, than just being toast, it’s burnt on both sides.
Musk’s pied piper magic is fading, if not already farcical.
And Tesla’s electric vehicles, once the envy of the industry and the world, are showing their age, flaws, and vulnerability to the hungry pack of EV competitors chomping at their heels.
Poor Elon Musk
The bad boy of our electric future mangled his once accepted above-us-all, super-enlightened persona into a twisted heap of crying, bellyaching, stoner-twit tweets.
Musk oversold his invincibility to the crowd who idolized him and the regulators who gave him a wide berth because he is Elon Musk.
Investors are now worried about the reputation of Tesla Inc. (NasdaqGS:TSLA) for delivering vehicles, fires and fatalities, and whether out of reach profitability will come too late to save the cash burning behemoth.
The SEC, who Musk openly derides, were relatively gentle with the sensitive CEO before, but aren’t about to let the circus barker make them out to be a mere sideshow to his main act.
Even if the SEC, which essentially slapped Musk on the wrist last year for his outrageously fraudulent “Am considering taking Tesla private at $420. Funding secured” tweet, doesn’t strip him of his executive status or his ability to be a director of a public company, which is possible but highly unlikely, they will clamp down on him a lot harder for new tweets that violated the settlement he made with the SEC.
Musk’s infamous August 2018 tweet violated SEC regulations regarding disseminating misleading material information that could affect a public company’s stock.
He did it again, essentially spitting at his settlement and in the face of the SEC, tweeting in February, “Tesla made 0 cars in 2011, but will make around 500k in 2019.”
Realizing he’d been misleading again, he subsequently tweeted, “Meant to say annualized production rate at end of 2019 probably around 500k, ie 10k cars/week. Deliveries for year still estimated to be about 400k.”
Announcing that Tesla would make 100,000 more cars in 2019 than previously estimated is a material statement that would positively impact the stock – if it were true.
Of course, the SEC jumped all over Musk. Technically, he could be banned from having anything to do with running a public company.
He’s that unhinged.
Though the SEC is unlikely to level the harshest punishment on him they’re entitled to, because they recognize his “value” to the company’s shareholders and aren’t about to get blamed for sinking a public company that exists in the image of its founder, they are likely to put some chains on the overgrown baby bad boy.
Far worse, Tesla’s unfulfilled promises of producing enough cars to meet demand and turn a profit, keep coming up glaringly short.
And that’s turned investors against him, which means against the company.
Model 3 sales are slowing. Another Model S spontaneously caught fire, which was caught on camera in a parking garage in Japan. Production promises are still a pipe dream, and as usual, Tesla is burning through cash.
Before Tesla’s earnings even came out this week, the company said, “We had only delivered half of the entire quarter’s numbers by March 21, ten days before end of quarter.”
A press release Wednesday night added, “This caused a large number of vehicle deliveries to shift to the second quarter.”
That’s another way of Tesla saying, “Hey, this quarter was a bust but wait until next quarter when we’ll have all those missed deliveries piled high on all the Q2 deliveries we expect to make.”
Tesla’s first-quarter earnings amount to the same thing: rubbish.
Q1 vehicle deliveries were down 31% quarter-over-quarter.
The company saw its largest quarterly sales drop.
Revenue dropped 37% quarter over quarter.
The bottom line is the broad Wall Street consensus was for a per-share loss of $0.69.
FactSet estimated the loss would be $1.15. The highest estimated loss I saw was $1.30.
But Tesla beat all the estimates, they had an adjusted loss of $2.90/share. OUCH.
And though they ended the quarter with $2.2 billion in cash (that’s a finely manufactured number if ever there was one), that’s a $1.5 billion reduction from year-end 2018.
The real bottom line, like I said back in my February 26, 2019 piece right here on Tesla, “it’s a good time to short it. Thanks, Elon, for being a twidiot and destroying your aura, Tesla’s invincible position, and your stock.”
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So I guess we can thank Elon Musk, after all – because companies run by overgrown baby bad boys like him are the ones that can make us the most cash.