To The Moon

There are no big surprises or shocks in the earnings of $Tesla Motors(TSLA)$ . For a high-growth company, it is ok for the performance last quarter.

Tesla's share price catalyst has never been based on earnings, mainly depending on the number of deliveries or on Elon Musk. However, there are still concerns if you look at Tesla's quarterly report.

Sold 75% of Bitcoin Holdings

Tesla sold $936 million worth of bitcoin in the second quarter, accounting for 75% of its holdings. It had just $218 million in Bitcoin remaining on its balance sheet, compared to $1.26 billion in the first quarter.

With the cryptocurrency trading down nearly 66% from its highs of about $69,000 per token last November, many investors have been feeling the pain. Musk seems to have timed the market well, as a rough calculation implies Tesla lost only around $189 million from its initial Bitcoin investment, based on the difference between its $936 million conversion of Bitcoin into fiat and 75% of its initial $1.5 billion outlay, which comes to $1.125 billion.

• Initial: $1.5 billion

• Lost: $1.125 billion(75% of $1.5 billion) - $936 million = $189 million

Cash Flow of Tesla 

If Tesla doesn't sell bitcoin, Tesla's cash flow would have gone from +$800 million to -$100 million. Tesla has had negative cash flow for the past four quarters, which isn't a big deal.

Tesla's operating activities have been able to generate stable cash flow. The problem of Tesla's negative cash flow is mainly due to the large investment costs and debt costs.

However, there is a cost of up to $1.3 billion called "Changes in operating assets and liabilities". That's why Elon Musk sold bitcoin to keep the positive cash flow.

What items are included? The table below is a summary of this item for the past 4 quarters (excluding the latest 2 quarters). Since Tesla has not filed a formal financial report with the SEC, it is not clear what the specific performance of the second quarter will be, so we can only speculate on the first quarter and previous data.

Of these sub-items that are negative to operating cash flow, "other non-current assets" have been in the hundreds of millions over the past quarters. The reasons for converting cash into "other non-current assets" may be land investments, equipment factories, goodwill, long-term investments, etc. It is hard to convert the assets into cash. It is unclear whether most of the $1.3 billion in the second quarter also went into "other non-current assets", and if so, we need to know more about where it is, whether it is a one-time or long-term expense.

Decrease in Orders

Musk has said several times recently that Tesla may decrease the sell prices. If Tesla's price increase is a confident expression of "strong consumption", then Musk's suggestion of Tesla's price reduction is easy to associate with "consumption weakened."

In addition, Musk's recent remarks on economic expectations and the decision to lay off have many speculating about weaker order numbers.

In this conference call, some analysts also asked this question:

“Are you seeing any sort of pressure in the order book?”

“Well, right now, our problem is very much production.”

“Specifically on your question, are we seeing a macroeconomic impact on our demand?"

“Some maybe, but it's…”

It's no surprise, that even iPhones experience sluggish consumption. Cars have longer life cycles. The key question is, what can Tesla do after the number of Tesla orders decrease?

Currently, Tesla still has a lot of orders. Musk said that the waiting period for a car is 6-12 months, which is enough for Tesla. Due to Tesla's high gross profit margin, there is still room for the price reduction. Tesla's price reduction will certainly attract consumers.

After price reduction, Tesla has to rely on new cars or new products to dominate the industry. In this conference call, Musk was very confident about the launch of the self-driving FSD and said he would continue to raise prices. As for the Tesla truck, it may not be mass-produced and delivered until next year.

Short-term Price Pressure-$857or $908? 

Below are $Tesla Motors(TSLA)$'s technical perspective resistance prices in short-term.

First Weekly chart showing that, there may have selling pressure once Tesla touched to 30-WMA(price at $857).

Pressure at WMA 30/$857

From the Day chart, we can see tesla broker through few recent highs since May, and the next pressure price would be close to 200DMA at $908.

Pressure at DMA200/$908.34

Final Question For You：

Do you have strong confidence in Tesla?

What‘s you short term or long term target price of Tesla? ( It will split stocks in August 4th)