Hey, I’m Steven and this is Solving The
Money Problem.
If you’re new, welcome.
If you’re not, welcome back.
Today’s video is a quick one aimed at Tesla
investors, shareholders, fanboys, fangirls,
shorts and curious observers.
If you own Tesla stock, stick around.
I’ll post an in-depth Q2 earnings preview
in a week or so when we have delivery numbers
but I thought it was important to get this
out BEFORE then.
Elon Musk has dropped a few potential hints
recently which I’ll explore too.
As I said a few months ago, Tesla’s Q2 deliveries
will tell us EVERYTHING.
I mean, EVERYTHING we need to know.
Most importantly, we’ll see how Tesla vehicles
sales hold up against the wider market.
Q2 2020 is Tesla’s MOST important quarter,
ever.
My expectations remain unchanged from 3 months
ago.
Tesla will gain market share relative to other
automakers.
While total deliveries will inevitably be
down -- this is unavoidable given the Fremont
Factory was shut down for a large part of
the quarter -- we MUST look at the numbers
in context.
In this video, I’ll provide that context
and what it may mean for Tesla’s stock price.
And speaking of stocks.
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Let’s get back to it.
Demand
Tesla has, up until now, been permanently
production contained.
That is, they have never been able to make
enough vehicles to meet demand.
Their order backlog continues to grow quarter-over-quarter.
Tesla has stated this fact in consecutive
quarterly earnings reports.
It’s not wishful thinking.
It’s fact.
This matters.
And yet somehow, just about every Tesla bear
on the planet hasn’t been able to muster
up the intellectual capacity to deduce this.
Tesla sells every vehicle it makes.
Has done for over a decade and yet still,
we hear that there are concerns about demand.
No, there’s no concerns about demand, just
about the reasoning faculties of some Tesla
bears.
Let me be clear.
We do not know how much underlying demand
there is for Tesla’s vehicles.
Tesla could have demand for 5% more vehicles
than it can produce.
Or 50%.
Or 500%.
We simply DO NOT KNOW because any demand beyond
that which Tesla can meet remains a mystery.
They simply tell us “we have a record order
backlog”.
But the global mayhem of early 2020 has given
Tesla investors an incredible opportunity
to gain insight and clarity around underlying
demand.
There is NO DOUBT, some people who intended
on buying a Tesla in 2020 will have changed
their mind.
Some will have cancelled orders so they could
buy more toilet paper.
Many others who have lost income or had a
business murdered in cold blood by lockdown
orders will no longer think it sensible to
drop $40k or more on a new vehicle.
NO DOUBT.
But let’s think our way through this.
Relative Demand & Market Share
In Q1 2020, Tesla produced just over 100,000
vehicles and delivered almost 90,000 of them.
Great.
For those wondering, the leftover vehicles
were not unsold.
They were undelivered.
Big difference.
Believe it or not, shipping a vehicle from
Fremont California, to say…
Perth, Australia, takes time.
It’s also logistically insane to send tiny
batches of vehicles on a boat when you can
ship them in bulk.
Economies of scale matter.
So there will almost always be vehicle inventory
going into a new quarter.
However, Q2 is a special chance to discover
more about underlying demand.
Say Tesla produces 80,000 vehicles and delivers
50,000.
This would imply that Tesla production exceeded
demand in Q2.
This is entirely possible.
And if so, it’s not time to panic sell your
shares.
It’s time to look at the delivery numbers
of other automakers and THINK.
If Tesla deliveries are down 50% but Ford
deliveries are down 75%, GM are down 80% and
VW are down 70%... we will know Tesla is gaining
market share.
This matters.
SO much so in fact, that I’m going to ask
you to pause this video for a moment and let
that sink in.
This is one of the most important Tesla data
points we’ll ever see.
This is a type of insight we simply would
not have gained were it not for the global
****show early this year.
But it gets even better.
What If Tesla Delivers Every Vehicle It Makes?
Now, I don’t mean literally every vehicle.
As I said, for logistical l reasons, there
will always be vehicle inventory.
But if Tesla sells MOST of its production
-- a comparable percent to prior quarters
-- holy ****ing ****.
If we discover Ford and GM deliveries are
down say 50% and Tesla deliveries are basically
flat… we’ve just learned that demand for
Tesla's is astronomical.
If automotive sales are down about 50% in
the quarter, yet Tesla sales are flat… there’s
two likely reasons:
1.
Half the people who wanted to buy a vehicle
of any kind decided NOT to buy a vehicle in
Q2 but Tesla had TWICE as much demand as they
could meet anyway… so even with half the
demand, Tesla is still production contained.
This would be amazing.
Or
2.
Half the people who wanted to buy a vehicle
of any kind either decided not to, or decided
to buy a Tesla instead.
In either case, if Tesla deliveries see LESS
of a percentage decline than other automakers,
we have discovered that relative demand for
Tesla is far more than imagined.
Once again.
This will be one of the most important data
points we ever get on Tesla.
Elon’s Hints
Time for some speculation.
Now, this is going out on a limb.
I admit.
I could be totally wrong here.
BUT.
Stick with me.
I think Elon Musk is smarter than most realise.
Including in how he communicates information.
On January 28th, a day before Tesla released
its Q4 earnings, Musk tweeted: “Chairs are
underappreciated”.
Some wondered “How high is Elon?”.
Others, like myself, instead of dismissing
the tweet as ambien-induced madness, noticed
that phonetically, it sounds like SHARES ARE
UNDER-APPRECIATED.
If you don’t have a dictionary handy, let
me define under-appreciated for you:
“Fail to value sufficiently highly”.
Tesla stock was in the mid $500s at the time
of Elon’s tweet.
A week later, following outstanding Q4 results,
it was almost $900.
The stock went vertical as a direct result
of Q4 earnings.
Maybe a coincidence.
But in my opinion, the tweet was Elon’s
way of simultaneously telling the SEC to go
**** themselves and offering a hint to cluey
investors.
And in my opinion, Elon will keep dropping
these hints in the future.
Leaked Emails
Once again, pure speculation but… let’s
be real.
Elon knows every email he sends internally
to “everyone” at Tesla can and will find
its way into the press -- if it’s saucy
enough.
What a great way to once again tell the SEC
to go **** themselves.
Tweeting material information is a no-no.
But I mean, if Elon sends an email and some
terrible person inside Tesla just happens
to leak it to the press like every time…
well, not Elon’s fault.
I want to be clear.
I do not respect the SEC.
I do not respect them.
Musk is no fool.
He’s acutely aware and is clever in his
choice of words.
Let’s look at the latest leaked email from
this week:
“For many reasons, a great deal of Tesla
execution worldwide is packed into the final
week of the quarter.
It is very important that we go all out through
end of June 30 to ensure a good outcome.
Wouldn’t bring this up if not very important.”
“To ensure a good outcome”.
Very understated.
But the final sentence: “Wouldn't bring
this up if not very important” really suggests
it is..
I wonder what a GOOD OUTCOME might be?
* Better than expected deliveries?
No doubt.
* A smaller than expected loss?
Maybe.
* A miraculous profit and S&P 500 inclusion?
Hmm… now we’re talking.
I’ll go on the record.
I do not EXPECT Tesla to show a Q2 profit.
BUT, I would not put it past them.
The big variables beside deliveries are ZEV
credits and recognition of incremental Full
Self Driving revenue which could each be 9-figure
amounts.
Musk will know better than anyone how likely
a profit is.
Here comes the big call.
If Tesla pulls off a miracle Q2 profit, it’s
game over.
To harbour any doubt about Tesla’s long
term viability after that would be tantamount
to advertising a malfunctioning mind.
I don’t say this to be rude.
I say this to make my point clearly.
If Tesla posts a Q2 profit despite factory
shutdowns, global panic, logistical challenges,
supplier issues and massively reduced consumer
spending, this tells us everything we need
to know about their future.
The Final Hint
Once more, I speculate.
But stick with me.
This week, Elon Musk changed his twitter profile
picture.
Nothing out of the ordinary there.
Except that the new photo happens to show
a roaring hellstorm of flames blasting from
the raptor engines of a Falcon Heavy rocket.
Could this be another hint that Tesla shorts
are about to get burned?
Something to think about.
S&P 500 Inclusion
If you don’t know the significance of the
S&P 500 index, here’s the watered down version.
It’s basically the top 500 companies in
the US by market capitalization.
Cool story, bro.
What’s the point?
Well, there are certain other criteria needed
for inclusion.
Not only market cap, but time in business,
profitability etc.
So far, Tesla has remained ineligible but
should they post a profit of $1 or more in
Q2 2020, they immediately qualify for inclusion.
And why does this matter?
Overnight (literally), hundreds of funds who
buy and match the S&P 500 index will HAVE
to buy Tesla stock.
Lots of it.
This will put intense upward pressure on the
stock price.
S&P 500 inclusion is a huge growth catalyst
for Tesla stock in the near term.
Again, I do not expect Tesla to post a profit,
but if they do…
I would be astonished if Tesla stock doesn’t
react very positively.
Delivery Rumors
Rumors have recently surfaced suggesting Tesla
may exceed 85,000 or even 90,000 deliveries
for the quarter.
Should this turn out to be true… a profit
is likely, meaning S&P 500 inclusion is likely
but more importantly, as I said earlier, we
will gain hugely important insight into the
future of Tesla.
If Tesla’s quarter is as “bad” as everyone
else, we learn nothing new.
It’s not good or bad.
It’s neutral.
But if they gain relative market share and/or
turn a profit, it’s game over.
Don’t say I didn’t warn you.
Where Have All The Bears Gone?
And finally, before we wrap up, I’d just
like to ask the question.
Where have all the Tesla bears gone?
A few months ago, they were everywhere.
“Tesla will never make a profit”.
“Elon Musk is a fraud”.
“The competition is coming”.
“There’s no demand”.
“Tesla is a zero”.
Unfortunately, a typical CNBS viewer takes
this as fact without doing much -- or any
-- any homework and these appearances can
artificially suppress the stock price, cause
retail investors to sell and most importantly,
create buying opportunities for smart investors.
Today, the bears all seem to be in hibernation.
I don’t blame them.
Tesla has been hitting home run after home
run.
Should Tesla blow everyone away in Q2, I find
it hard to imagine a single bear will be willing
to crawl out of their den in shame and face
the finance media with a straight face and
continue to spout the same bearish drivel.
Except, of course, if they have a ****ty book
or consulting service to sell.
If Tesla archives S&P 500 inclusion, and the
bears all-but disappear from the mainstream
finance media, this may catalyse a widespread
and long term shift in sentiment from “Tesla
is doomed” to “Tesla might succeed”
to “Tesla has won”.
Sometimes, what is obvious to you or I may
take longer to reveal itself to others.
Tesla’s Q2 2020 is about those others.
We will learn so much about the future of
Tesla by discovering how much demand has fallen
(if at all) relative to other automakers.
I don’t say this to be insensitive, but
the health drama that swept the world in 2020
has given Tesla stock investors their SINGLE
MOST IMPORTANT INSIGHT EVER into the future
of the company.
All eyes are on Q2.
Will Tesla deliver the goods?
Time will tell.
And don’t forget your free stocks with Webull
and stake.
Links in description.
I’m Steven Mark Ryan.
This is Solving The Money Problem, and I love
you all.
Thanks so much for watching.
Let me know your thoughts in the comments
below.
How many vehicles will Tesla produce and deliver
in Q2 2020?
Will they post a profit or loss?
How much?
Will the bears ever be seen again if Tesla
posts a profit and achieves S&P 500 inclusion?
And of course, if you have any ideas for future
videos, let me know.
I read ALL your comments.
p.s.
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I do not respect the SEC.
I do not respect them.
