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New Developments For Tesla

Jul. 20, 2020 12:53 PM ETTesla, Inc. (TSLA)SP500
Ruerd Heeg profile picture
Ruerd Heeg's Blog
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In my previous post I wrote about a lawsuit for Tesla (TSLA) not paying rent. After I came across a new sign of financial distress: a lawsuit for Tesla not paying a supplier. In my last post I also wrote about inventory building, because of lack of demand. In the last couple of days I saw several tweets confirming this. See for example here.

I read Tesla has sent only one ship to Europe so far in Q3 2020. I think Tesla can at most sell 3 ships full of cars in Europe, but probably less. Three ships of cars was about what Tesla sold in Q2 2020 but competition will further increase during Q3.

But surprisingly the other ships go to Hong Kong. I seriously wonder whether Tesla can sell many cars there, since compared to Europe not many people live in Hong Kong. Moreover Hong Kong has serious economic problems, that are related to the coronavirus and social unrest. Therefore other bears speculate Tesla is shipping cars to Hong Kong instead of to Europe because it can get inventory financing for these cars.

In a previous post I wrote why it is unlikely Tesla gets added to the S&P 500 (SP500). Another reason for the committee for not adding Tesla is Tesla's market cap is too high. Allegedly according to Credit Suisse: see here. Adding a very large company causes index constituent percentages to change relatively much. I think the committee will be reluctant to add Tesla because of this. At least the desire to minimize changes in its index could lead to not adding a very large companies like Tesla immediately.

Bottom line

My opinion on the stock is still: strong sell.

Analyst's Disclosure: I am/we are short TSLA.

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