Tesla Short Says Automaker's 'Hyper-Growth Story' is Over
*By Chloe Aiello*
Tesla's latest production miss proves it is no longer a "hyper growth story," Tesla short Mark Spiegel told Cheddar on Wednesday.
"Right now Tesla ($TSLA) is just an egregiously overvalued automaker, it's no longer a hyper growth story," said Spiegel, whose hedge fund Stanphyl Capital has launched an aggressive bet against the carmaker.
Tesla shares tumbled close to 7 percent on Wednesday after the company missed expectations on car deliveries and broadly discounted its vehicles to offset subsidy cuts. In a note to investors, Tesla ($TSLA) reported it delivered 90,700 total vehicles ー Wall Street was expecting 91,310. Of those, 27,550 were Model S and Model X, although analysts surveyed were expecting 27,800. Tesla delivered 63,150 Model 3s, falling below the Street's expectation of 65,300.
[Tesla on Wednesday also announced](http://ir.tesla.com/news-releases/news-release-details/tesla-q4-2018-vehicle-production-deliveries-also-announcing-2000) that it is cutting the price of all three models by $2,000 in an effort to absorb some of the cost associated with a reduction in federal tax credits for electric vehicle owners. As of Jan. 1, Tesla's $7,500 federal tax credit was cut in half to $3,750. Tesla was down about 6.3 percent in intraday trading at about $311 per share.
Sean O'Hara, president of Pacer ETF Distributors, agreed with Spiegel that Tesla's growth may have topped out. O'Hara's company Pacer Financial neither owns Tesla stock nor includes the shares in its ETFs.
"There are from time to time disruptive technologies that you would invest in because they have such huge growth potential, but what I think what you are seeing with Tesla here, based on their production numbers, is their growth potential may be peaking out at this point," O'Hara told Cheddar on Wednesday.
Concerning the electric vehicle subsidy cut, Spiegel said it foreshadows a plunge in demand for the Model 3.
"The huge backlog of orders that Tesla claimed in the hundreds of thousands, that was for a car that was fictional that will never exist. It was for a $35,000 Model 3 with a $7,500 tax credit," Spiegel said.
Dan Ives and Strecker Backe of Wedbush were less pessimistic in a Wednesday morning note, calling the price cut "a potential positive for demand but not what the bulls wanted to hear on the impact to profitability and ultimately the bottom line." The firm remains bullish on Tesla, maintaining a $440 12-month price target on the stock and an "outperform" rating.
The electric vehicles subsidy cuts will of course impact other automakers, too, but according to O'Hara, it is unlikely more traditional players in the space will implement across-the-board discounts on vehicles. These more established competitors, like Porsche and BMW, present a rising challenge to Tesla as they push deeper into the electric vehicle space.
"My opinion on Tesla is that sooner or later the major auto manufacturers are going to figure out how to squeeze them out," O'Hara said. "For a while they were a glamorous name in an uncrowded marketplace and they were a first mover, but I think they've got very very stiff competition with entrenched distribution networks already in place."
A big-screen adaptation of the anime “Chainsaw Man” has topped the North American box office, beating a Springsteen biopic and “Black Phone 2.” The movie earned $17.25 million in the U.S. and Canada this weekend. “Black Phone 2” fell to second place with $13 million. Two new releases, the rom-com “Regretting You” and “Springsteen — Deliver Me From Nowhere,” earned $12.85 million and $9.1 million, respectively. “Chainsaw Man – The Movie: Reze Arc” is based on the manga series about a demon hunter. It's another win for Sony-owned Crunchyroll, which also released a “Demon Slayer” film last month that debuted to a record $70 million.
The Federal Aviation Administration says flights departing for Los Angeles International Airport were halted briefly due to a staffing shortage at a Southern California air traffic facility. The FAA issued a temporary ground stop at one of the world’s busiest airports on Sunday morning soon after U.S. Transportation Secretary Sean Duffy predicted that travelers would see more flights delayed as the nation’s air traffic controllers work without pay during the federal government shutdown. The hold on planes taking off for LAX lasted an hour and 45 minutes and didn't appear to cause continued problems. The FAA said staffing shortages also delayed planes headed to Washington, Chicago and Newark, New Jersey on Sunday.
Boeing workers at three Midwest plants where military aircraft and weapons are developed have voted to reject the company’s latest contract offer and to continue a strike that started almost three months ago. The strike by about 3,200 machinists at the plants in the Missouri cities of St. Louis and St. Charles, and in Mascoutah, Illinois, is smaller in scale than a walkout last year by 33,000 Boeing workers who assemble commercial jetliners. The president of the International Association of Machinists says Sunday's outcome shows Boeing hasn't adequately addressed wages and retirement benefits. Boeing says Sunday's vote was close with 51% of union members opposing the revised offer.
The stunning indictment that led to the arrest of more than 30 people — including Miami Heat guard Terry Rozier and other NBA figures — has drawn new scrutiny of the booming business of sports betting in the U.S. The multibillion-dollar industry has made it easy for sports fans — and even some players — to wager on everything from the outcome of games to that of a single play with just a few taps of a cellphone. But regulating the rapidly-growing industry has proven to be a challenge. Professional sports leagues’ own role in promoting gambling has also raised eyebrows.
Tesla, the car company run by Elon Musk, reported Wednesday that it sold more vehicles in the past three months after boycotts hit hard earlier this year, but profits still fell sharply. Third-quarter earnings fell to $1.4 billion, from $2.2 billion a year earlier. Excluding charges, per share profit of 50 cents came in below analysts' estimate. Tesla shares fell 3.5% in after-hours trading. Musk said the company's robotaxi service, which is available in Austin, Texas, and San Francisco, will roll out to as many as 10 other metro areas by the end of the year.
Starbucks’ AI barista aims to speed service and improve experience. Nick Lichtenberg, Fortune Business Editor, explains its impact on workers and customers.
