Is Tesla down for the count? The latest blow was this headline Wednesday in the LA Times: “Ugly Turns Uglier as a Tesla Filing Shows Results Were Goosed by a Surge in Credits”. Indeed, had first quarter earnings not been augmented by $200 million in regulatory credits, the company’s $702 million loss would have been even worse. The fact that Musk didn’t mention this adjustment in a recent analyst call, and that it was buried in the company’s 10-Q filing with the SEC earlier this week, is bound to make analysts and investors skittish. From a technical standpoint, the stock must hold above the 230.75 Hidden Pivot support shown in the chart or it will sink to 180, or 23%, in search of traction.
For our part, we wish Musk only good fortune. The company’s predicament appears quite serious, and Tesla could go into a death spiral if creditors decide to get tough. Regardless, unlike some web sites that have stalked Tesla’s every move, and who have questioned whether the company’s sales figures can be trusted, I stop well short of inferring bad faith on Musk’s part, let alone criminality. This is mainly because, unlike cloud-app twaddlers like Uber’s Travis Kalanick and other digital-world whizzes who happen to be in favor on Wall Street, Musk has produced an actual thing that is a marvel of beauty and performance. Now he is doing whatever it takes to survive — and Tesla most surely deserves to survive no matter what accounting tricks it takes to keep the financiers on board. We should all wish him success, since, if Tesla flames out, a hundred years might pass before we see another entrepreneur with Musk’s energy, bold imagination and can-do spirit. _______ UPDATE (May 2, 9:50 p.m.): The stock has taken a sharp bounce precisely from a key Hidden Pivot support at 230.75 for the second time in a week, but it will need more loft to get out of trouble. Set the bar at 266.00 to be sure. _______ UPDATE (May 13, 12:12 p.m.): TSLA has finally broken down and looks bound for at least 214.64. The gap through p=236.30 after this support was lightly touched twice suggests there will be a tradable bounce precisely from 214.64. Here’s the chart. _______ UPDATE (May 19, 10:53 p.m.): Sellers turned the 241.64 pivot into resistance moments after crashing it on Friday. This implies the stock is on its way down to 193.31 (60-min, A=296.17 on 4/3).