Still Short on Tesla

by JDH on July 21, 2018

Tesla has settled in the $313 range, ahead of the quarterly earnings report due at the beginning of August.  I assume the bulls will be able to find something positive in the earnings report, given that they built a tent and built a lot of cars in the last week of the quarter.

But, there are also reports that a lot of those cars are being stored in parking lots waiting for delivery, which makes no sense.  If you have an order backlog, why wouldn’t you sell the cars and turn them into cash?  Tesla says that’s exactly what they are doing; because they don’t have a dealer network, they store the cars until they can be delivered to the end user.  That makes a little bit of sense, if you are shipping them around the world: you put them all on a ship or a train or whatever all at the same time, so you don’t ship them one by one.  But even so, if you have customers, why haven’t they already been shipped?  Is it a good strategy to leave cars baking in the California sun?

Is it possible that some of these cars aren’t quite finished?  They were “factory gated” at the end of the quarter, meaning they left the factory, so that they could meet their production numbers, but is it possible that the reason they haven’t sold them is that they still need work?

I don’t know, but given the increasingly erratic behavior of Elon Musk, I think I’ll hold my puts for another week or two and see what happens.

Stay tuned.