In short, nothing about the company's recent actions aligned with the supposed strength it was seeing. That appears to be confirmed this morning. While there are definite concerns here, first things first, I would close out the bearish call spread from the early March trade thesis right here. The April 18 $290-$320 was initially sold for around $11.60. This morning it can be repurchased for $3.00 or less. That's worth grabbing.
In terms of Telsa, I still see it as a game. Only now, we've moved onto the phase where it feels like we're midway through a game of Jenga and someone is attempting to remove a very suspect piece in the Tesla tower although I see this more playing out as a wobble, but not fall kind of day, week, and month.
The company reported vehicle deliveries of 63,000 on Thursday morning with 54,590 of those being Model 3. These numbers, despite a year-over-year increase of 110%, were 31% lower than last quarter and well short of the 74,930 consensus number. Management tried to pass off some of the miss on international deliveries but even adding those 10,600 into the results would have left the company short. This will weigh on first-quarter results. The company will take every opportunity to tell you they have plenty of cash on hand, but management wouldn't supply a number. Facts are facts, Telsa is burning cash at a high rate. Grand promises are made and consistently broken. The cult is the other thing that keeps this stock afloat. Ironically, that may be the very thing that saves it as well. With an inflated stock price, Tesla can raise money. Musk should be more worried about survival than the stock price or sticking it to the shorts.
Unfortunately, bulls have to add this worry of delivery shortfalls to the pending SEC hearing. Roth Capital is concerned that maybe the SEC has closed the door to the capital markets for Telsa, at least temporarily. The shortfall also brings about concerns regarding Musk's earlier tweets, especially in regards to delivery numbers. I have to wonder why any analyst would pound the table and call a bottom today. Global Equities Research analyst Trip Chowdhry is doing just that.
Let's not forget, with each Tesla stumble, we are seeing new competition emerge on the horizon. NIO (NIO) and Electrameccanica Vehicles (SOLO) has started to produce cars and make deliveries. While these may not be direct competitors, they are independents, recent start-ups. These aren't a product of a legacy car company. And those are coming too as well. I'm starting to believe that being first to the market was a huge advantage Telsa has squandered away.
I'm watching the $255 level on the downside and $270 on the upside. Under $255 and we break the lows from March 25th. Above $270 and we're into the gap formed today. Overall, I really don't have an interest being a long-term owner or short in this name. It's 99% emotion and 1% I don't know what. It still remains as a trading stock, preferably intraday as the overnight risk for longs and shorts remains high, but there are plenty of other stocks to trade, so why try to force it with this one?
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