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Tesla Faces Accelerating Rate of Model 3 Refunds (recode.net)
According to new U.S. data from analytics company Second Measure, Tesla is facing an accelerated rate of Model 3 refunds. As of the end of April, some 23 percent of all Model 3 deposits in the U.S. had been refunded. "Model 3 deposits are fully refundable up until the customer configures a car by selecting features and paying an additional fee of $2,500," notes Second Measure. "After configuration, vehicles are typically delivered in just a few weeks." Recode reports: These cancellations aren't necessarily bad for Tesla, since its production rate is nowhere near as high as it needs to be to fulfill the more than 450,000 reservations it still has. Last quarter, it delivered just 8,180 Model 3s. Presumably, potential Tesla customers could make a deposit again when production is more regular. The potential longer-term harm would be in alienating them so that they choose a different brand of car altogether. About 60 percent of Model 3 reservations so far in the U.S. were made back in April 2016, when Tesla first began taking deposits. About 18 percent of the total refunds on the Model 3 happened this past April, the largest share out of any month, according to Second Measure. That's when Musk explained that Model 3s would be delayed six to nine months. A Tesla spokesperson said that Second Measure's data does not align with its internal data, but would not be more specific as to how far off it is. But the analytics company's numbers did match up to Tesla's numbers last August, "when CEO Elon Musk disclosed that there were 455,000 net reservations out of 518,000 gross reservations, suggesting 63,000 cancelations and a 12 percent cancellation rate," reports TechCrunch.
Tesla is the most shorted stock in history.
This gives many, many people an incentive to trash-talk the company, so that the stock tanks and they can make money.
"Oh, but wait: if you look at the numbers this way, it shows that Tesla will crash and burn any day now."
or,
"Musk is a serial liar, literally nothing that comes out of his mouth is true. The company is run by incompetent nincompoops and Musk is one bad day swsy from a psychotic break"
Tesla will either crash and burn, or be completely out of the woods, in 3 months. Call it 6 months just for some wiggle room: by the end of the year, Tesla will be either gone or a rock solid investment.
What you are seeing is a bunch of last-ditch efforts to try and crash the stock so people can make some money from it.
Fortunately, many Tesla investors have realized that news reports about Tesla don't matter (I read one report that said exactly that, but can't find it ATM). They're going to wait out the summer storm and see a stronger, better company in the Fall.
Stock prices have dipped *slightly* over the last month, but have largely recovered.
Investors are keen to wait out the storm. Check back in 6 months time.
Tesla is $10 BILLION in debt. Teslas credit rating is a B3 which is SIX levels below investment grade. That means it is paying huge amount of interest. It has a very good chance of going bankrupt.
Tesla has around $10 billion in debt, and if the stock price drops down to around $200-230, another $900 million or so in debt comes due. At the moment they probably have less than $1 billion in cash reserves with roughly 50% being in the form of refundable cash deposits for the Model 3. These refunds have just evaporated around 10% of that reserve.
There's a reason Tesla is the most shorted stock on Wall St, and it's not because the shorts are haters. It's because by market capitalization, Tesla is larger than GM, despite making 1/35th of the cars that GM does, and only ever producing a running a single profitable quarter in its life (after liquidating ZEV credits). Tesla right now is buoyed by irrationality and hype.
For those interested in option prices as an indicator:
Tesla December 140 puts are $4.55 as of this post For comparison, Apple December 100 puts are $0.14.
A put option allows the owner of it to sell shares of stock at the contract price at a specific date in the future. In this case, buying the right to sell someone TSLA for $140 / share in December 2018 will cost $4.55 / share. That means a buyer today thinks TSLA will decline to less than $135.45 per share ($140-$4.55) at which point the position becomes profitable.
Apple would have to decline to a bit less than $100 / per share to have a similar decline, but the $100 December put contract is close enough. In case of Apple, put sellers are offering the contract at 14 cents per share. In other words, sellers of Tesla puts are pricing them 32x the price of Apple puts, meaning put sellers are demanding a high price since they think the odds of Tesla declining by at least 50% are reasonably high, especially compared to Apple. Maybe it isn't fair to compare to Apple, but GM December 22 puts are selling for 24 cents, and that is less of a decline on a percentage basis.
Another way of looking at Tesla compared to GM and Ford in charts helps explain why the puts are so expensive. The charts are from last year, but the story hasn't changed much.
Imagine how much harder physics would be if electrons had feelings! -Feynman, maybe
You don't think Musk has a Slashdot account??
His sheer levels of productivity suggest otherwise.