3 Reasons Why I am So Confident TSLA Shorts are Screwed.January 18th, 2020
- Elon wants to be profitable and was Q4 2018
- Elon has squashed all other FUD
- Elon proved in Q3 that Tesla can be profitable this year
Elon has said last year that Tesla should be profitable every quarter going forward ... except maybe Q1 2019. Q1's typically dip in sales because due to seasonality, demand for cars dip in the winter.
Elon was wrong about Q2 and that had me a bit worried. But Tesla reported positive EPS Q3 2019 and last year they also posted profits Q3 and Q4.
With record deliveries for Q4 2019, this implies Tesla earned the most revenue. So the question is, did Tesla overspend in Q4 to the point where they came out negative?
Unlikely. If they didn't overspend Q4 last year, they probably didn't overspend in Q4 this year with regards to yearly rates.
However, this year, there may be higher expenses if Tesla paid for a bunch of new materials to produce cars at GF4. Did they do that? Probably not. Tesla has earned itself the reputation where they are good for it. They may pay for some things up front, but their reputation has never been stronger and their ability to leverage buying power for a little extension on finance would have many companies lining up at the massive growth opportunity to supply Tesla.
Tesla has also made drastic cost cutting efforts in 2019 leading to the Q3 profitability.
(Higher Profit than Q4 2018) - (Less Expenses than Q4 2018) = (Even Higher Profit than Q4 2018)
Now typically, this might not be enough to combat the wave of FUD. But the knowledge campaign for 2019 to inform everybody including myself about the anti-Tesla echo chambers using weak, fabricated, irrelevant speculation to scare people out of the stock has brought knowledgeable bulls to an all time high. And we have even tipped Jim Cramer to our side of the scale.
The balance is way off now. Namely in part because Elon and Tesla have successfully dismantled most of the uncertainty. Will Tesla have demand problems? That would be a terrible thing which would cause the company to suffer and potentially die. Nope. No demand problems. Record sales. Empty stores. And open season in China.
Could they have demand problems in China? We'll see. Highly unlikely. But with a quick production ramp + Model Y, Tesla could get ahead of themselves with production > demand in winter. Still expect record deliveries.
We won't have to worry about that for Q4 2019 though. And, the cars will sell. This I am sure.
How about Tesla fires? Last one I heard of was a 2012 Model S in China. That was many many months ago. Tesla vehicles are catching fire at basically a rate of 0 now. Can't FUD that. Oh wait, I do remember a Model X catching fire recently because somebody set it on fire. Doesn't count though.
Given the choice to produce profit or overspend, Elon has said he wants to be profitable. How profitable? Well... record profits only makes sense. Get GAAP profitable and join the S&P. That is a good plan.
Will they this quarter? Yes I think so. If they don't they will have to wait until their end of the next fiscal year. Which is December next year. So they likely did this massive EOY push to make sure they did.
Do I know a lot about Tesla? Why trust me over some analyst? You don't have to. I will just say this. I watch no less than 3 hours of Tesla news every day. I have manipulated my Facebook, Twitter and YouTube feeds to dominate my line of sight such that I hear every Tesla tidbit 3-30 times.
I haven't missed a HyperChange episode in 6 months. I have seen every Sandy Munroe and Jack Rickards interview/tear down. I watched Autonomy day more than 3 times. I order a CyberTruck 5 minutes after unveil (would have been sooner, but server load errr.)
I waited for years to see the CyberTruck. I knew I was buying it before I saw it. I drive a Model 3. I am in a Model 3 Owners Group with the owners that took possession in 2018 (first Model 3 owners in Canada and first actual Model 3 owner in Canada is in the group).
I am a developer of software. I am impressed by the UX and UI and ways that Tesla solves their problems. I am happy with their implementation of FSD. The cars themselves will have limitations such that they cannot drive in all conditions. Not in Canada at least with the Model 3. Model Y might be better and CyberTruck likely handle almost all conditions.
But what about the sudden acceleration that NHTSA is supposed to be looking into? I call bullshit. There has been too much fake FUD. It's like crying wolf for the 100th time.
I have seen hundreds of Tesla accidents. I have heard 2 people claim that the Tesla accelerated suddenly. Aladdin the day he got his car (I am guessing he tested it out and did something stupid since the logs confirmed that steering was classic over-correction) and some other guy who drove his car into a river by accident.
If this was a thing, I would have been aware of it. I see complains from blemishes/damage on deliveries, rust, fitment issues, foggy cameras, summon software, garage doors closing unintentionally due to HomeLink, curb rash, hammers hitting cars, cars hitting massive fridges/safes on the highway, people cutting off Teslas and Teslas avoiding the accidents, AutoPilot lane mistakes, battery degradation concerns. Not to mention issues with mudflaps, without mudflaps, tire chains, you name it.
Many many common things, but cars accelerating for no reason? Very rare. And much more probable to be human error.
So that FUD won't work. All they have left is analyst downgrades. Those seem to work. But it is an amazing thing to watch analysts downgrade a stock hitting record profits. Why are they doing that? Should analysts that do that be listened to? Can they be safely ignored? Should you trust the analyst that focuses on and rates many stocks? Do you think they spend 3 hours a night listening to Tesla news? Do they drive Tesla's so they are in the know of all the current features and capabilities?
The bulls have caught on. We are stronger than ever, with more profits than ever, with less expenses than ever with greater interest in the cars than ever with more ramping than ever.
I sold 2% of my TSLA shares when the stock hit $420. As for the rest...
I am long TSLA and TSLA options. I am not a financial advisor. Investing in anything comes with inherent risk. This is not financial advice.
- The Limiting Factor
- Tesla Daily
- EV Stock Channel
- Tom Nash
- Sam Alexander
- Now You Know
- Warren Redlich
The following YouTubers help support my TSLA long bias through stock price volatility. +Great insights.
- Tesla Daily Podcast
- The Limiting Factor
- Now You Know
- Dave Lee on Investing
- EV Stock Channel
- Set Climate & Heat Seats from App
- Top Safety
- Lower Fuel Costs
- Mobile Service
- Security Monitoring System (Sentry Mode)
- Dog Mode
- Great Handling
- Great looking cars
- Video Games
- Full Self Driving Beta
- Super Charger Network