To The Moon

Were your “shock” when $Tesla Motors(TSLA)$ announced its Q3 2023 earnings after US market closed on Wednesday? (see above).

It should not have come as a surprise.

This is because on 02 Oct 2023 (see above), Tesla has reported its Q3 2023 delivery of 435,059 EVs.

It should not be too difficult to second guess, taking into considerations the steep discounts extended.

Here is the skinny:

• Earnings: $0.66 per share adjusted vs $0.74 cents per share expected.

• Revenue: $23.35 billion per share vs $24.1 billion expected.

More importantly, this was the “first” time (in a long time) that Tesla has missed out on both [a] Earnings and [b] Revenue.

Last time it happened, it was during Tesla’s Q2 2019 results reported in July 2019.

Actually, we do not have to look so far back to witness a plunge in Tesla’s stock price.

The last time Tesla plunged was in Q4 2022, when it failed to meet the sales numbers (see below).

• On 18 Sep 2022, Tesla was at $303.25 per share.

• By 06 Jan 2023, it has whittled down to $113.06 per share.

• Tesla stock price has fallen -62.72% in a space of 3 months.

That became the “goal” behind mr musk subsequent endeavour; that is keep the sales numbers up even if it means resorting to steep discounts to induce demand.

It worked for Q1 and Q2 2023 earnings report.

However, the discounts have taken its toll on Tesla’s profit margins and revenue.

• Between Q4 2022 and Q3 2023, the “loss incurred” amounts to -$2,000 per vehicle.

• Multiply by the number of vehicles sold per quarter, it becomes a substantial sum.

• Something that Wall Street will not be too happy with.

• Looking at Tesla’s 12 months trailing key metrices of [1] Free cash flow and [2] Net income.

• Overall, these key metrices have been falling.

How I See It:

• For starters, mr musk trusts in no one else but himself.

• I believe, he will hold onto the belief of meeting the 2023 EV delivery numbers.

• Therefore, we should be expecting more discounts as mr musk attempts to deliver a record 476,000 EVs in Q4 2023.

• In order to hit its annual target of 1.80 Million EVs.

• With the latest news (see above) on Tesla joining $General Motors(GM)$ & $Ford(F)$ in slowing down EVs output, will Tesla still be able to meet its already revised 1.80 Million EVs for year 2023? I have my doubts.

• I also see that other EVs will be competing for a piece of the pie especially in China, where most EV makers hail from.

• One salient example is Chinese EV maker $BYD Co., Ltd.(BYDDF)$ . It has overtaken Tesla as the top EV seller in the Chinese market and is making its foray into Europe.

• Another is up & coming Chinese hybrid EV maker $Li Auto(LI)$ that has broken even and became profitable in 2023.

• Yes, Europe will be the next frontier for these up & coming competitors, going after the same pie that Tesla had once enjoyed monopoly over.

• Like it or not, “crowding” will chipped away some of the sales that might have gone to Tesla.

• Will the latest “bad press” acts as a deterrent for potential Tesla-buyers? (see above).

• Will this result in supply excess as mr musk presses on with its EV output?

• Ms Cathie Wood of ARK funds have sold $30 Millions worth of Tesla on the first week of October 2023 (see above).

• She definitely has a knack of selling Tesla while it still commanded a premium.

• All her visionary talk about where Tesla will be in 5 years time is nothing but Marketing talk to drive up prices just so she could reap a profit.

• The final nail to the coffin must have been mr musk’s “tempered expectations” mentioned during Tesla’s earnings call.

• I believed he has no choice but to sound off the alarm now with regards to its latest Cybertruck product because this confession is already extremely late in the making.

• So far, [1] no product specifications, [2] no pricing and [3] no confirmation on which of its Gigafactory will be manufacturing the cybertruck.

• With mr musk confessing that ramped up production of 250,000 Cybertruck will take place, only after 2024 is definitely not welcoming.

• FYI, cybertruck was first revealed back in 2019 with a $39,900 price tag.

• After an almost 5 years delay (common sight in Tesla), to date, it still have a backlog of at least 1 Million orders to fulfill.

• This definitely will not sit well with analysts & investors because forward-earnings cannot be forecast accurately.

• Cast aside the “odd” design of cybertruck, other automakers have caught up, releasing their own electric pickup trucks.

• This includes [a] the F-150 Lightning by Ford and [b] the R1T by $Rivian Automotive, Inc.(RIVN)$.

We know what happens when Wall Street is unhappy, don’t we.

• Do you think Tesla stock price will continue to fall?

• Do you think market will ignore the warnings and continue to load up on Tesla stocks?

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