The impending Model 3 reveal has some Tesla (NASDAQ:TSLA) bulls in a fever pitch of frenzied glee. Tesla enthusiasts are proudly announcing that they will reserve one, three, a half-dozen or more and give them to their parents, their children and their friends.
These are not empty promises. Tesla may well have the most loyal customer base of any automobile company on earth. Tesla owners (who often are shareholders as well) are committed to the firm's mission and eager to help assure its success.
(Tesla Supercharger in Bozeman, MT; Montana Skeptic photo)
The Tesla faithful expect the company to raise hundreds of millions of dollars in Model 3 deposits. They are almost surely right about that.
They also believe the tsunami of Model 3 reservations will be a triumphant vindication of their faith in the firm's fundamental value. They are almost surely wrong about that.
The advent of the Model 3 presents an opportune moment to survey the landscape. As we do so, we identify several promising factors that are good for Tesla and several concerning developments that are bad.
We also see portents that might ultimately prove either good or bad but that now have a decidedly disquieting cast.
I. The Good
Let's begin with a few factors that are decidedly positive for the company's business prospects:
Tesla will raise $300 million or more in Model 3 deposits.
Tesla will likely secure at least 300,000 Model 3 reservations within a month of the March 31 prototype reveal (which would translate to $300 million in deposits). Indeed, I would not be surprised to see 400,000 reservations, or more, during Q2.
The resulting $400 million in cash will be most welcome. Tesla is likely to incur further operating losses during Q1. Assuming that during the balance of the year the company can break even
