Published on July 2nd, 2020 | by Frugal Moogal0
Tesla [TSLA] Crushes Deliveries, And Other Thoughts
July 2nd, 2020 by Frugal Moogal
Well, I created my own best and worst case scenarios for production and deliveries, used what I could find and a number of estimates to nail down numbers that I felt were accurate, and this morning Tesla released the actual numbers. In that last article (mostly Tesla’s press release), Zach noted that the numbers would probably be a reason for some of our authors to produce long pieces on them, and …
I honestly don’t have much more to say about the numbers themselves. I guessed production of 84,053 with a range of 80,000–92,000. Actual production was 82,272, so I was high by about 2% from my exact number, with the number falling comfortably in the lower end of my range. I guessed deliveries of 93,568 with a range of 89,000–101,000, with actual deliveries of 90,650, off on the high side by a hair more than 3%. Not too shabby, if I do say so myself.
What I Think I Think…
Instead of diving back into why I expected the number (go visit those other articles if you want to see that reasoning in depth), I’m going to give a few quick takes on things I am thinking right now. If you think any of this is worth a larger exploration, leave a comment about what you’re interested in and I’ll look into diving in further in the future.
On Leasing Numbers — Tesla only leased 5% of its vehicles sold in Q2 2020. This seems to be a seriously overlooked part of the Tesla package, in an industry where the average automaker leases around 30% of its vehicle sales. This significantly changes how Tesla accounts for the money.
Earnings Should Look Good — Tesla delivered more cars in Q2 2020 than it did in Q1 2020, and its lease accounting number fell to 5% from 7% in Q1 2020. All things considered, I feel it would be surprising if we don’t see a profit for Q2, which would allow Tesla to be included in the S&P 500.
Regulatory Credits — Quick note on regulatory credits, as Tesla claimed $354 million in credits last quarter, and the bear argument always seems to be that without regulatory credits, Tesla wouldn’t make money. My first problem with this is anyone can claim the regulatory credits. It’s just that Tesla has chosen to pursue them — or, perhaps more correctly, Tesla’s business plan allows them to be granted. Regardless, I think Tesla could still make money without recognizing a dollar of regulatory credits this quarter.
Roller Coasters Are Fun — I found it fun to think about capacity using roller coasters as an example, so he’s another fun photo of a roller coaster, because why not?
Tesla’s Short Interest Has Dried Up — This was something I hadn’t noticed until after I wrote my last TSLA FUD article. Part of the reason the drumbeat of terrible Tesla news has probably slowed is that Tesla short interest has fallen like crazy lately. As I write this, it’s estimated that short interest is now at 15,140,000 shares — or 10.27%. If we compare this to historical data, according to the Nasdaq, short interest is about half of what is was when the Cybertruck was unveiled just over 8 months ago.
But Wait, There’s More (errr … less) With Shorts — To get the full picture of the short interest decline, it’s worth remembering that Tesla has issued more shares through time. Here’s a chart with the shares outstanding shown twice quarterly. I can’t find a daily chart, but Tesla has increased the number of shares that are outstanding (AKA on the market) by about 5 million since the Cybertruck was unveiled. 15,140,000 shares shorted would have been 11.90% percent of the float on October 21. Depending on if you use October 15 or October 31’s short data to align with the October 21st outstanding shares data, the short position was either 20.6% or 17.63%, respectively, meaning we have seen a reduction of the short position by approximately half in that time. It was over 23% one year ago.
What Lowered Short Interest Means — It’s impossible to guarantee anything, as things can and do change rapidly, but lowered short activity should lead to less volatility in movement of the stock. It also means that short sellers lost billions on their bets. The day of the Cybertruck announcement, Tesla shares closed at $354.83. If just the short sellers who got out lost only $100 apiece on their bets, their loss would be over $1.5 billion. Based on super ultra rough math — if you’d like to use the above linked articles to attempt to estimate this better, be my guest — I believe that short sellers lost around $6 billion on their Tesla bets in the last year, or nearly enough to cover all of the debt that Tesla owes (when you include their cash-on-hand) at the end of last quarter. Sucks for them.
What the Heck, Another Roller Coaster — This time, I’ll use the excuse of saying that this coaster mimics a graph of how I feel Tesla short sellers felt over the past year…
The Ride Isn’t Over Yet
With additional factories and capacity quickly being built, new products getting prepped for production, and battery investor day coming up, we’ve got a lot of room for Tesla as a company to continue and expand its lead.
… and to end on an important final note: I’m excited for when the pandemic is over and I can go ride some coasters again.
I am a Tesla [NASDAQ:TSLA] shareholder who has purchased shares within the preceding 12 months. Research I do for articles, including this article, may compel me to increase or decrease stock positions. However, I will not do so within 48 hours after any article is published in which I discuss matters that I feel may materially affect stock price. I do not believe that my voice could or should influence stock price by itself, and I strongly caution anyone against using my work as your sole data point to choose to invest or divest in any company. My articles are my opinion, which was formulated using research based on publicly available data. However, my research or conclusions may be incorrect.
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