When Tesla reports its second-quarter delivery numbers this week, investors will be looking to see if Elon Musk was able to recover from those dismal Q1 numbers, when the company delivered just 63,000 vehicles to customers. Musk told employees last week that they needed to "go all out" in order to hit the 90,000 to 100,000 delivery benchmark that Musk has forecast.
But for Tesla ($TSLA) shorts like Gabe Hoffman, whether or not Tesla hits its guidance obscures the larger structural problems with the company.
"The truth is, it doesn't really matter" how many cars Tesla delivered last quarter, Hoffman told Cheddar, because the carmaker had to slash prices to goose demand as the federal tax credit for electric cars goes away (it dropped to $1,875 as of Monday).
"People have been looking to this number as the last piece of news that's not horrible," Hoffman said. He is general partner at the hedge fund Accipiter Capital Management, which has had Tesla as its largest short position all year. That position has paid off ー the stock has lost about a third of its value in the first half of 2019 even when factoring in a 20 percent climb in June.
Tesla shorts like Hoffman believe the stock is fundamentally flawed as Musk faces down the barrel of increasing competition from legacy luxury automakers like Audi and BMW, which benefit from scale and supply chain strengths that Tesla, as a relatively young company, has not yet mastered.
"Any company that sits under a mountain of debt ー any company that loses billions and billions of dollars a year ー I simply don't see any future for the stock long term," Hoffman said. "I do believe it will be very nearly worthless."
The fundamental problem is demand, according to Hoffman. Domestic demand "isn't there" and Musk's bet that he can make up for it in China ー Tesla is working furiously to complete a Shanghai Gigafactory ー is misguided, he said.
Adding to that, the company is grappling with quality issues like paint fading, a revolving door of high-level executive departures, and a sense among some Tesla owners that the service arm is understaffed, With that at the forefront, Hoffman predicts Tesla shares are likely to continue to struggle in the back half of the year, even if Q2 deliveries hit their mark.
Chipmaker Nvidia is poised to release a quarterly report that could provide a better sense of whether the stock market has been riding an overhyped artificial intelligence bubble or is being propelled by a technological boom that’s still gathering momentum.
Cracker Barrel said late Tuesday it’s returning to its old logo after critics — including President Donald Trump — protested the company’s plan to modernize.
Low-value imports are losing their duty-free status in the U.S. this week as part of President Donald Trump's agenda for making the nation less dependent on foreign goods. A widely used customs exemption for international shipments worth $800 or less is set to end starting on Friday. Trump already ended the “de minimis” rule for inexpensive items sent from China and Hong Kong, but having to pay import taxes on small parcels from everywhere else likely will be a big change for some small businesses and online shoppers. Purchases that previously entered the U.S. without needing to clear customs will be subject to the origin country’s tariff rate, which can range from 10% to 50%.
Southwest Airlines will soon require plus-size travelers to pay for an extra seat in advance if they can't fit within the armrests of one seat. This change is part of several updates the airline is making. The new rule starts on Jan. 27, the same day Southwest begins assigning seats. Currently, plus-size passengers can pay for an extra seat in advance and later get a refund, or request a free extra seat at the airport. Under the new policy, refunds are still possible but not guaranteed. Southwest said in a statement it is updating policies to prepare for assigned seating next year.
Cracker Barrel is sticking with its new logo. For now. But the chain is also apologizing to fans who were angered when the change was announced last week.
Elon Musk on Monday targeted Apple and OpenAI in an antitrust lawsuit alleging that the iPhone maker and the ChatGPT maker are teaming up to thwart competition in artificial intelligence.
Hear from Gabino & Stephen Roche on Saphyre’s institutional AI platform that centralizes pre‑ and post‑trade data, redefining settlement speed and accuracy.
