We have been predicting a poor Q4 for Tesla (NASDAQ:TSLA) since October as can be seen in the following articles:
However, Tesla management guided the Street for about 25,000 deliveries in Q4. We have never found the management's guidance to be credible. With the passage of time, the evidence is starting to show that Tesla could see a dramatically slow Q4 than forecasted.
The first evidence of the problem showed up in Inside EVs' October sales report. Tesla's October sales estimates were very light by historical standards.
Earlier today, we saw another piece of evidence. This time, the November sales report, which showed Tesla is likely underperforming significantly.
Bulls may be counting for growth in international sales but there is no indication that sales in Europe or China are anything but tepid.
We are also seeing evidence at consolidator sites such as ev-cpo.com that there is considerable Tesla Model S and Model X inventory in various parts of the world.
While the inventory showing up on ev-cpo.com might not seem high for automotive industry followers, it should be noted that Tesla primarily uses a build-to-order model and any inventory is an indicator of the Company unable to generate sales through that model. As such, we have predicted that Tesla is moving away from a pure build-to-order model for this reason.
All things considered, we find the Inside EVs sales report, along with other data points, highly supportive of our view that Tesla is only likely to deliver about 17,000 to 18,000 cars in Q4 compared to the 25,000 guidance (without drawing down on vehicles in flight)
We see Tesla stock moving dramatically lower as the quarter weakness becomes public. We also see this affecting the capital raise. We continue to forecast that Tesla's next capital raise will be in the $160s or $170s or possibly lower.
Our view: Sell Short
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.