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.
Sinead O’Sullivan breaks down Taylor Swift’s genius marketing for The Life of a Showgirl, which just set the record for most albums sold in a single week.
Markets are emerging from a turbulent Q3. Horizon’s Mike Dickson shares insights on interest rates, small caps, and where investors should look in Q4 and beyond
Bambu Ventures's Kyle Pretsch dives into Lemonaid’s $10M buyout, down from 23andMe’s $400M price tag, and what’s next after Chrome Co.’s dramatic pivot.
Former Cisco Systems CEO John Chambers learned all about technology’s volatile highs and lows as a veteran of the internet’s early boom days during the late 1990s and the ensuing meltdown that followed the mania. And now he is seeing potential signs of the cycle repeating with another transformative technology in artificial intelligence. Chambers is trying take some of the lessons he learned while riding a wave that turned Cisco into the world's most valuable company in 2000 before a crash hammered its stock price and apply them as an investor in AI startups. He recently discussed AI's promise and perils during an interview with The Associated Press.
Grove Collaborative’s CEO shares how the company is reinventing everyday goods with sustainability at the core and working toward a plastic-free future.
Atlanta Mayor Andre Dickens shares plans for affordable housing, community-led growth, and why private and public grocery stores could be key to food equity.
Tesla reported a surprise increase in sales in the third quarter as the electric car maker likely benefited from a rush by consumers to take advantage of a $7,500 credit before it expired on Sept. 30. The company reported Thursday that sales in the three months through September rose 7% compared to the same period a year ago. The gain follows two quarters of steep declines as people turned off by CEO Elon Musk’s foray into right-wing politics avoided buying his company’s cars and even protested at some dealerships. Sales rose to 497,099 vehicles, compared with 462,890 in the same period last year.
