Tesla’s Disastrous Earnings are Just the Start

1. Tesla Tesla’ ’s s Disastrous Disastrous Earnings the the Start Earnings are Start are Just Just Tnitialesla stock just hit the lowest level in more than two years. This week’s earnings call highlighted a wider than expected first quarter loss, missed revenue expectations, concerns about margins, demand and deteriorating cash position. The The Tesla Tesla growth growth story story is is officially officially dead! dead! Tesla shares, already down more than 20 percent this year are just starting their downward ascent. The disastrous Q1 results are severe warning signs for what is yet to come. Here are some of the numbers:  37% drop in revenue  $702 million GAAP loss  Deliveries of Model S and X down 45%  Deliveries of Model 3 down 20% Tesla re-affirmed it’s 2019 guidance of 360,000-400,000 vehicles or a 45%-65% increase from last year. This aggressive forecast can only spell trouble for the company as the demand drop is clear and investors will be disappointed yet again. The company’s has been notorious for overpromising and underdelivering. The The Debt Debt Spiral Spiral Tesla’s cash burn continues, and the company will likely have to raise another $3 billion+ of capital this year to sustain its capex and debt needs. Raising capital at the current levels will be extremely hard as Tesla’s stock price has finally caught up to its bond price.

2. Tesla Tesla is is rated rated six six notches notches into into non non investment investment grade, grade, or or junk junk bond bond by by both both Moody Moody’ ’s s Investors Investors Service Service and and S&P S&P Global Global Ratings Ratings. These rating agencies are not the only ones that have a negative outlook on the company’s future: Musk Musk is is living living in in Fairytale Fairytale World World Elon Musk made yet another bold promise about what the future holds for Tesla. He claimed that Tesla will roll out 1 million completely self-driving robo-taxi’s by 2020. If you have followed Musk for a while you know that he has a strong tendency to overrate things. According to Tesla’s CEO, you can expect to make $30,000 a year simply by joining this service. It’s important to be suspicious of these wild claims as the hype surrounding this company is unwarranted at this point. This is likely just a way to distract investors from what is really going on at Tesla. For Stock Stock Market Market Research Research and News visit Smart Money Gains. Judging Judging from from the the delivery delivery numbers numbers demand demand is is dropping dropping and and the the current current forecast forecast is is as as attainable attainable as as the the millions millions of of Robot Robot Taxi Taxi’ ’s s we we will will have have in in 365 365 days. days. The reality is that it is strange to hear someone state that they are better than Google at software, better than Nvidia in hardware, and they can build better ride-hailing than the leaders of ride-hailing.

3. Get the Latest Latest Financial Financial News News at Smart Money Gains. Bottom Bottom Line Line The reality is that Tesla has now become a giant marketing bubble sustained by Elon Musk. If the company cannot sell its products profitably on a sustainable basis it has not future. The mounting losses will continue, and we can expect an even more severe downward price pressure. It would be advisable to not buy the dip but buy some put options instead. You cannot put out a fire with wishful thinking.