Tesla's (TSLA) Musk Is Back to His Old Tricks with Cybertruck 'Order' Tweets and Could Be in Violation of SEC Deal - Analyst

November 26, 2019 8:53 AM EST
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Bearish Tesla (NASDAQ: TSLA) analyst Gordon Johnson from GLJ Research is taking exception to tweets from CEO Elon Musk that the company has 200K orders for the new Cybertruck so far. Johnson said, based on Tesla's own terms, these are not "orders". He also thinks Musk may be in violation of his SEC agreement with the tweets.

Johnson highlights that per Tesla's cybertruck motor vehicle pre-order agreement terms & conditions it states:

  1. "Your Pre-Order Payment covers the cost of these activities and other processing costs and is not a deposit for the Vehicle", and
  2. "This Pre-Order Payment and this Agreement are not made or entered into in anticipation of or pending any conditional sale contract".

"Stated differently not only are the fully-refundable $100 deposits being gathered by TSLA for cybertrucks not orders based on (2), they are also not deposits," Johnson commented.

Further, the analyst highlighted that:

  • (a) right before TSLA began selling the Model 3 in 2017 the company claimed it had 455K reservations; yet, on the 2Q19 conf. call, TSLA stated that "nearly all orders generated in 2Q19 were non-reservation holders", meaning the 275K Model 3 cars sold thru 2Q19 represented just a 60.4% conversion rate,
  • (b) fully-refundable $100 cash transfers to TSLA on a car that will likely cost $40-$50K when released in 2021/22, is not currently street legal (no side mirrors + no three stop lights in the back), will likely see a much smaller conversion rate than 60.4% & is not a pre-order

"Stated differently, despite TSLA's stock closing close to the 52-week high today, it appears E. Musk may have tweeted another claim that could potentially be in violation of his agreement w/ the SEC, implying a spate of bad news may be on the horizon," Johnson commented. "Furthermore, while E. Musk claimed over the weekend that the lack of curvature in the cybertruck was due to a new steel alloy, which will be created "at Tesla", and "breaks the stamping press", similar to E. Musk's claims that he would have a flying roadster, make brake pads that never need replacing, have a base on Mars in 2028, have a one hour bodyshop for TSLA repairs, etc. we see the claim by TSLA that it has created a new steel alloy as yet another "tall tale"."

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