6 Things that are going to happen after the Tesla Q1 Earnings Call

1) Mainstream media will focus on the dip in some key metrics but will deny their listeners/viewers the most important information: these ‘dips’ were entirely driven by ultra-short-term one-off effects of which some, eg the inventory build-up, will even generate a positive unwinding-effect in Q2 (aka a Q1 headwind becomes a Q2 tailwind).

2) Short sellers and TSLA swing traders now sweating will mount a maximum FUD wave. It’s obvious why short sellers would do. Swing traders see the opportunity but want a lower re-entry: a >10% move is hard to adjust for.

3) This will create volatility as a huge tug of war ensues. However, those who aim to contain TSLA stand to lose as investors realise the major short/medium-term implications of yesterday’s announcements.

4) The soon-to-be launched new model aims at the segment below Model Y/3 and hence has a much larger potential customer pool! The Model Y was in 2023 the worldwide bestselling vehicle across all types of vehicles despite an average selling price (ASP) well above $40,000! Should the new model achieve only 1/3 of the Model Y success but in a much larger segment of the global auto market, it could outdo even the Model Y!

5) Unlike prior expansions, requiring capacity buildouts, this expansion would launch from existing production lines. This is a critical consideration since it means that Tesla’s capital expenditures and therefore subsequent depreciation charges will be much lower. This makes for much faster P&L profitability compared to any previous vehicle launch on new production lines.

6) The resulting fixed cost absorption together with the fact that many automakers’ retrenchment from the global battery electric vehicle (BEV) market hand Tesla a vast and cheap supply of batteries suggest we may see a partial return to a global BEV market of the years prior to 2023 when the electric vehicle market was Tesla’s and everyone else was paying rent.

My take: I find the analysis interesting especially points 1 and 2. Mainstream media and sensible sellers will focus on what has happened (in the past), the shareholders or potential buyers will look for opportunity (in the future) and the skeptics (someone who is negatively bias against Tesla) will spread FUD comments about the company. There's nothing wrong with the first 2 groups, just don't listen to the last group and panic sell. As always don't just look at headlines or bias personal opinions but read the content and ask for sources of info. Time will tell what the article said is true or not.

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