Tesla's saga is unfolding

Tesla reported better than expected earnings  last week but its stock tanked closely to 10%. People always try to find some reasons for a stock to move and they thought this big crash of Tesla was due to Musk’s arrogant humiliation to some analysts’ sharp questions on its profitability and ability to meet the production target that has been promised so many times but always failed to meet. I don’t care what are the real reasons behind its tanking but I’m just happy to see it got decimated! As you know, following its initial hard selloff a few weeks ago, I was expecting it to do a dead cat bounce towards $290. Well it did better than that and had actually went over $300 a bit. That was a great setup for a short for Tesla which was what I did, aiming to target its next downside point around $260. Tesla has not disappointed me so far.

To help you understand why Tesla is so much in a dire situation, just see a few facts below that have made Tesla fundamentally in trouble:

• Tesla has been burning over $3 billion per year so far and it currently has $2.7 billion in hand. That’s has made bond investors really nervous about its ability to meet its financial obligations without refinancing. But Musk seems to be very comfortable with their financial strength and has laughed at those doubters about their debt concerns. He openly said there was no need for Tesla to seek new debt or issue new shares. Really? Good luck anyone believing Musk on this!
• As I said, Tesla’s current business model will make it lose more by selling more. Here is the latest stat on this: right now, Tesla has a $22,584 pre-tax loss per vehicle. Without a miracle of dramatically scaling up its production, can you expect Tesla can ever make any money? Sounds like a joke to me!
• Here is the promise Musk has repeated made about their productivity target: 5,000 Model 3s per week by the end of June. What are they doing now? 2,270 Model 3s per week in the last week of April. So in less than 2 months, Tesla will need to more than double their productivity. Didn’t sound like a promise that can be met but investors in the past seemed just happy to believe whatever Musk had promised. Maybe not this time!

Regardless how much you love Tesla and Musk, its foreseeable future looks dire and is heading down!!