A very long read from the valuewalk website. This is actually valuewalk republishing a Q1 investor note from a firm short $TSLA shares, Stanphyl Capital:
https://www.valuewalk.com/tesla-is-netflix-shortseller/
Tesla Is Netflix
For years I’ve said “Tesla is Blackberry”—the maker of a first-generation version of a product that—once the market was proven—would be supplanted into niche obscurity by newer, better versions; now I can provide a much more recent analogy: Tesla is Netflix. For years Netflix had an absurd valuation based on its pioneering position in streaming media, but once it proved that such a market existed myriad competitors swarmed all over it, and in April the stock collapsed when we learned that not only is Netflix no longer in “hypergrowth” mode but for the first time since 2011 (when it transitioned from physical DVDs) it actually lost subscribers. I believe Musk knows that Tesla is “the next Netflix” (hence his recent “Twitter buying distraction”), with VW, Hyundai/Kia, Ford, GM, BMW, Mercedes, BYD & other Chinese competitors and, in a few years, Toyota & Honda, being the Disney, HBO Max, Amazon Prime, Peacock, Hulu, Paramount +, etc., of the electric car market, stealing Tesla’s share and eventually pounding its stock price down 95% or so from today’s, into the valuation of “just another car company.”
In fact, in April Tesla reported that Q1 deliveries were sequentially nearly flat (just 1398 additional cars, a gain of just 0.45%) vs. the previous quarter, and even that was only “achieved” by a sneaky redefinition by Tesla of what “a delivery” is. Yes, the company is chip-constrained, but its competitors (who, unlike Tesla, are unwilling to delete safety equipment or use untested chips to maintain production) are even more constrained, and in fact waiting times are longer for Tesla’s direct EV competitors than they are for a Tesla; for instance, Ford’s Mustang Mach-E is so in demand that it has even halted additional orders for the 2022 model year. (Current annual Mach-E production capacity is around 65,000 for the U.S. & Europe and tens of thousands more for China, but in 2023 U.S. & European capacity will expand to 200,000.) The worst thing that can possibly happen to “the Tesla story” will be when its German and Texas plants are fully operational and the subsequent excess capacity stares the world right in the face, thereby ending its myth of “unlimited demand” (especially at current, drastically-raised prices, where the cheapest Model 3 now starts at $47,000 and the cheapest Model Y begins at $63,000); in fact, look for margin-destroying price cuts by late this year or early 2023.
Meanwhile, the “record” profits that accompanied Q1’s nearly flat delivery number were obtained via myriad one-time items, including $679 million of emission credit sales that will disappear over the next year or two as every automaker ramps up its EV sales, a mysterious $502 million reduction in SG&A expense (of which only $140 million was due to reduced stock comp) despite opening new factories in Germany and Texas (what is Tesla capitalizing instead of expensing???) and a combination of FIFO accounting and multiple sticker price increases that allowed Tesla to expense rapidly rising raw materials costs at older, lower prices while selling cars built from those materials at new, considerably higher prices. Adjusting for these factors, Tesla had GAAP earnings for the quarter that were at least $1/share lower than the posted $2.86, and annualizing that realistic $1.86/share to $7.44 means that at April’s closing price Tesla (on a no-growth quarter) had a PE ratio of around 117 vs. an industry-wide figure of less than 10. (Also, Tesla’s Q1 free cash flow was only around $1.8 billion, a drop of almost $1 billion vs. the previous quarter, despite a massive increase in net accounts payable.)
And for those of you who think that Tesla is “really an energy company,” in Q1 “Tesla Energy” had revenue of just $616 million (down 10.5% sequentially) and cost of revenue of $688 million, meaning it had a negative gross margin. So if Tesla is “really an energy company,” it’s even more screwed than if it’s just a car company!
p.s. Now that MAY 2022 has ended, let’s see how Tesla is faring against competition in Norway, the country with the highest registration of EVs in Europe. Note that Ford does NOT have an EV factory in Europe, and it is now outselling Tesla in EVs in Norway. Also, if it were not for the Model Y, Tesla would be a rough spot with only 5 sales of the Model 3 and none for Model X or S.
https://eu-evs.com/bestSellers/NO/Brands/Month/2022/5
**Top brands**
**MAKE # SHARE**
**BMW 1059 12.2%**
**VOLKSWAGEN 1056 12.2%**
**HYUNDAI 642 7.4%**
**AUDI 580 6.7%**
**VOLVO 543 6.3%**
**POLESTAR 465 5.4%**
**MG 418 4.8%**
**MERCEDES-BENZ 370 4.3%**
**KIA 369 4.3%**
**FORD 309 3.6%**
**BYD 293 3.4%**
**OPEL 277 3.2%**
**SKODA 269 3.1%**
**PEUGEOT 231 2.7%**
**TESLA 228 2.6% 👈**
**NISSAN 188 2.2%**
**MAXUS 175 2%**
**CITROEN 161 1.9%**
**MAZDA 148 1.7%**
**TOYOTA 136 1.6%**
**FAW 136 1.6%**
**CUPRA 113 1.3%**
**NIO 77 0.9%**
**PORSCHE 77 0.9%**
**FIAT 62 0.7%**
**RENAULT 47 0.5%**
**MINI 46 0.5%**
**XPENG 34 0.4%**
**YUTONG 33 0.4%**
**LEXUS 24 0.3%**
**JAGUAR 24 0.3%**
**HONDA 21 0.2%**
**DS 12 0.1%**
**VDL 10 0.1%**
**SCANIA 8 0.1%**
**DFSK 7 0.1%**
**SMART 2 0%**
**FUSO 1 0%**
**TOTAL 8651 100%**
Top models
MAKE MODEL #
VOLKSWAGEN ID.4 880
POLESTAR 2 465
BMW IX 458
VOLVO XC40 394
HYUNDAI IONIQ 5 361
FORD MUSTANG MACH-E 309
BMW I4 302
SKODA ENYAQ 269
MG MARVEL R 255
BYD TANG 255
AUDI E-TRON 242
AUDI Q4 E-TRON 230
TESLA MODEL Y 223 👈
HYUNDAI KONA 209
BMW IX3 190
NISSAN LEAF 188
KIA EV6 185
MAZDA MX-30 148
VOLVO C40 146
FAW EHS9 136
CITROEN E-C4 135
KIA NIRO 125
TOYOTA PROACE 124
PEUGEOT E-2008 118
MAXUS MAXUS EUNIQ 6 113
CUPRA BORN 113
BMW I3 108
MERCEDES-BENZ EQA 97
MG ZS 91
VOLKSWAGEN ID.3 90
VOLKSWAGEN ID.5 82
OPEL MOKKA-E 79
PORSCHE TAYCAN 77
NIO ES8 77
OPEL CORSA-E 76
PEUGEOT E-208 73
HYUNDAI IONIQ 72
MG MG5 72
MERCEDES-BENZ EQC 71
MERCEDES-BENZ EQB 70
FIAT 500E 62
AUDI Q4 E-TRON Sport 60
KIA SOUL 59
OPEL COMBO-E 49
OPEL VIVARO-E 49
MINI COOPER 46
RENAULT ZOE 46
MERCEDES-BENZ EQS 38
MERCEDES-BENZ EVITO 38
BYD ETP3 38
AUDI E-TRON SPORT 34
MERCEDES-BENZ EQE 33
YUTONG ZK6121BEV 33
MAXUS E-DELIVER 32
MAXUS EUNIQ 29
PEUGEOT E-EXPERT 26
JAGUAR I-PACE 24
LEXUS UX 300E 24
HONDA E 21
OPEL COMBO-E CARGO 18
CITROEN JUMPY 15
AUDI E-TRON GT 14
MERCEDES-BENZ SPRINTER 13
XPENG P7 13
DS 3 CROSSBACK 12
XPENG G3 12
TOYOTA PROACE CITY EV 12
CITROEN E-BERLINGO 10
VDL CITEA SLFA-180 10
MERCEDES-BENZ EQV 10
PEUGEOT E-TRAVELLER 8
DFSK SERES 3 7
OPEL ZAFIRA-E 6
TESLA MODEL 3 5 👈
XPENG P5 5
SCANIA P230 4
XPENG G3I 4
SCANIA P 230 4
PEUGEOT E-RIFTER 4
VOLKSWAGEN UP! 3
VOLVO FE 2
SMART FORTWO 2
PEUGEOT E-PARTNER 2
FUSO CANTER 1
BMW IX M60 1
VOLKSWAGEN CRAFTER 1
MAXUS MAXUS E-DEL9 1
RENAULT MEGANE 1
VOLVO FM ELECTRIC 1
CITROEN E-SPACETOURER 1
TOTAL 8651
That’s the Norway look. To see the 14 countries of Europe where registrations are kept on this website, this link for MAY 2022 shows Tesla with but 2.5% market share in the EU, selling only 554 Teslas total in MAY 2022 inside these 14 countries:
https://eu-evs.com/bestSellers/ALL/Brands/Month/2022/5
What happens when you have three new factories, such as Tesla has in Austin, Berlin and Shanghai and the demand plateaus as the valuewalk/Stanphy Capital piece suggests?