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Monday, April 16, 2018

Tesla: Musk Statements, Bold or Uh Oh


Elon Musk had some bold comments recently. He tweeted, "Tesla will be profitable & cash flow+ in Q3 & Q4, so obv no need to raise money." If true it's huge for the stock.

The question is of course is that the hope or the reality.

You can see in our model (click TSLA and scroll around) that we have negative cash flow and negative cash meaning either Tesla (NASDAQ:TSLA) raises cash or that's all folks.

Musk's comments have to be considered because they imply that Tesla would ramp Model 3 production huge and blow away our numbers, while at the same time run super-efficient to shrink the negative Model 3 gross margins and see margins jump way past our expectations.

It could be, but Musk how do you fit that with something else he tweeted that same day. Musk recently just shifted gears that old-fashioned human production could actually be better than too many robots. He said in another tweet, "Yes, excessive automation at Tesla was a mistake."

So you have in one short day of tweets that Musk thinks Tesla's going to blow away second half numbers but that he's going to have to do it with less automation. When he says "excessive automation" it tells me production efficiency is about to suffer. So which is it? Blow away numbers or less efficiency?

Frankly I'm confused and still on the sidelines.  If you figured that one out please let me know. I'm still thinking about it.

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Reading comprehension quiz.
Elon Musk
A) Promises that he will blow away second half numbers.
B) Thinks he's going to blow away second half numbers.
C) Had his Twitter account hijacked by some Russian spy saying he's going to blow away second half numbers.
D) Tweeted he's 100% sure automation is still the best way to go.

Please answer in comments.

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