Tesla (NASDAQ:TSLA) There is No Clear Evidence that 2018 Production is ‘Sold Out”
- There is no evidence that Y 2018 production has sold out.
- Norway registrations continue to deteriorate.
- LIBOR rates are rising again in Q-4.
- Tesla is a Trap!
It has been almost weeks since Tesla (NASDAQ:TSLA) reported its Q-3 earnings, sending the stock North to 350ish. While investors continue to pour money into the stock, data points are suggesting that Q-3 results may be the best the company may see for a long while.
These regulatory credits are arbitrary government-forced payments from other entities to Tesla’s shareholders. They could stop at any time if US federal and/or state legislative bodies or President Trump were to push for such a change accordingly. They are not necessarily 1-time gains, but they also are not considered permanent by all shareholders and analysis.
The ZEV credits sales were $52.3-M and non-ZEV regulatory credits sales were $137.2-M in the Q ended 30 September 2018, compared to $0.6-M ZEV credit sales and $19.5-M in non-ZEV regulatory credit sales in the 3 months ended 30 September 2017.
That is the jist of language from 1 November.
In the 24 October earnings release, Tesla only disclosed the $52-M ZEV part, not the $137-M non-ZEV part. This alone constitutes almost 50% of Tesla’s $312-M reported profit for the Quarter.
Tesla’s 1 November 10-Q filing then reveals those 2 things that cast doubt of Q-3 profitability.
The $312-M profit that many thought was from EV sales was not, hence as in the Y 2016 profitable Q, it was an accounting trick.
So, as we near the halfway point of the current Q headwinds are stiffening.
1st, when we look at the 10-Q filing, we get an idea of how bad the situation is in China thanks to the trade war and tariffs. The company generated $409.3-M in Q-3 revenues in that country, down from $563.6-M in the year-ago frame.
Competition also is building, as local manufacturer Nio continues to grow its EV presence.
Tesla’s management talked about shifting deliveries to North America and Europe to make up for the shortfall in China. That might work in the short term, but as major tax breaks in the US and the Netherlands expire in less than 2 months, it creates a problem for Tesla in Y 2019, especially in the Winter months where sales are seasonally slow.
Things in the Netherlands are trending well, with October registrations estimated to be nearly 2X that of Y 2017’s estimate. The problem is that gains in that country continue to be offset by struggles in Norway, which coincides with the ramping of the Jaguar i-Pace which is currently at 627 vehicles in a little more than 3 months.
And do not loose sight of the fact that there is an SEC probe and a FBI criminal investigation underway Vs Tesla and Elon Musk. which Mr. Musk characterizes as ‘Absurd’!
We believe that Tesla is no longer and investment grade stock, it is a speculation for professionals, Caution!
|NASDAQ:TSLA||341.06||6 November 2018||-0.34||339.07||348.8||336.09||6,767,000|
|HeffX-LTN Analysis for TSLA:||Overall||Short||Intermediate||Long|
|Neutral (0.22)||Bullish (0.27)||Bullish (0.33)||Neutral (0.06)|