and here with more insight,
Christine short VP of research at Wall street horizon Christine.
So good to have you on the show today.
What do you make of Tesla's results this quarter?
I also want to mention in pre market it is still higher by 3.37% for Tesla,
it closed higher just fractionally about 8 10 7%.
Yeah, I mean, look, Tesla's always want to watch,
right and perhaps no more than this quarter because there is a lot going on.
As you pointed out, results are sort of mixed, right?
So they did be on the bottom line, missed slightly on the top line.
Um, deliveries were around 27% growth, not bad.
But if you look back at last year when we had deliveries growing, You know,
in the triple digits.
Um,
so not looking as good as we've seen it more recently as you pointed
out due to those lockdowns in Shanghai that factory not up to full capacity,
although it was only down for about 20, not even quite three weeks.
Um, but look at what an impact that can make,
especially when they don't have other factories that can necessarily offset
such as the new factory in Germany, the one outside of Austin.
Those are having a little trouble getting up to speed and you're right,
investors don't quite know what to do with this stock.
It shot up after the report.
Um, it's come back down a little more to earth right now, but it is still up.
Um, I think some other comments that kind of had me concerned, uh,
you know other than just knowing what the headwinds
are out there being supply chain global chip shortage,
labor supply cost increases and inflation
CFO saying that you know deliveries they're looking
to target 50% growth year over year.
But he does now think that target is a little lofty.
But of course if you want to listen to Elon
musk he's still targeting about 60% growth year over year.
So Ceo is often more optimistic than their Cfos but there was a lot packed in there
and overall what I see is a company that has a lot of headwinds to contend,
contend with in the next quarter and next year.
Yeah and to that point I also want to know was there anything in this
earnings report that indicated why or how Tesla was able to do so well.
Despite a lot of those headwinds that you mentioned
a lot of these pandemic related lockdowns that hit
manufacturing also hit workforces and other challenges that we
talk about pretty often just generally in the E.
V. Space like supply chain issues and raw material shortages.
It speaks to consumer demand right? They have a really loyal consumer.
They cannot even keep up with demand and that's
an issue Tesla's always had on the production side.
Right again the shanghai lockdowns were only about
three weeks and then once they brought workers back they kind
of kept them there to make sure there was no issues,
no infection but beyond just not being able to produce out of that factory, you know,
china is a huge market, the biggest market for Tesla and so, um, yeah,
it is impressive that they were able to still record growth.
They were able to be expectations.
Um, but I think a lot of that has to do with strong demand, which even Ellen said,
you know, the consumer is becoming a little fickle.
We are not sure how that's going to stand
up as inflation increases as we're seeing more um,
employment issues down the line.
If that consumer is going to be as strong as they have been post pandemic,
I also want to pivot a little bit here,
but maintain everything you're talking about in another headwind,
potentially that could hit Tesla moving forward is competition.
Just this week,
we've had conversations with so many legacy car makers
who are debuting their own electric vehicle models.
Also later in the show we're talking with forward about
its new plan to lead the electric vehicle transition.
Do you think ford or really any other
company out there at this point has the opportunity
and is really poised to take on Tesla
and dominate this market because of these headwinds.
And also just because of the changing landscape?
Yes, I think you're starting to see that.
I mean for the longest time, the narrative was
Tesla's in a different class. They have a different,
uh, customers.
So you're not going to really see the overlap perhaps,
but if you look at automotive margins from this last quarter um they
were lower and a lot of that's due to electric vehicle component,
you know, competition.
So um, they are starting to take a bite out of Tesla especially um,
at the different price points.
And the fact that Tesla really hasn't come out with a new product in a while and that's
that's an issue that they've dealt with.
Not only do they have these production issues,
there are new products and then quality,
there's persistent quality issues that they're going to have to contend with
and that's something that perhaps afford can come in a
GM can actually do better than Tesla in that space.
So I think again it's something that was kind of pushed to the background and now it's
becoming more and more of a headwind as as
ford comes and makes some some headways here.
Yeah.
And switching gears here,
the company also said it sold 75% of its Bitcoin
adding $936 million dollars in cash to its balance sheet.
Why did Tesla make this move right now?
And do you think it pays off in the long run we all
know how the crypto market has been doing during this time of volatility.
Um, what are your thoughts here?
Yeah, I think it was a good movie. Elon musk said they needed cash.
So yeah, they boosted their cash position by almost a billion.
Um, so I think that was the right move,
especially when you consider the impairment charge.
They may have had to take the analysts at Barclays pointing out that because
You know, crypto is an intangible asset,
you have to write it down when the value goes down and
that was going to be potentially to the tune of $460 million.
So I think they made the right move.
You know, they made sure to say that this isn't any sort of statement on, you know,
crypto or Bitcoin, they didn't sell any of their does coin.
It was really just a cash grab
and right now that's something that Tesla needs.
So yeah, I think that was the right move for them
and of course all of this is happening against the backdrop backdrop of the
lawsuit between Tesla Ceo Elon musk and the twitter acquisition that is no more.
Do you think that musk's involvement in twitter and the upcoming trial between
musk and twitter will have a negative impact on Tesla moving forward.
I mean taking a look at the valuation of the stock,
we know that it certainly lost a lot of value since these conversations were, had,
look it's a big distraction.
You know,
there was always a question whether Ellen could
successfully run Tesla and SpaceX and you know,
he has been able to, but then you add in a third company and investors start to wonder,
you know, what's going on here.
I think the other issue is the margin loan he took
out to make this acquisition or that he was proposing,
um, covering his, you know, $6 billion loan with Tesla shares.
And that's just another force weighing on Tesla stock, weighing on investors.
In addition to issues around inflation and supply chain
to have a margin loan of that size,
which many analysts said they had never seen a
margin loan that size for a public company.
So it's just another thing
that can chip away at Tesla's valuation.
Um,
and so certainly I don't think the distraction is needed right now when they have
so many other headwinds that they need to be focused on and need to be,
you know, actively, you know,
getting rid of and working on,
Yeah, you can't make things easier. That's for sure.
That's Christine short VP of research at Wall Street Horizon