Elon Musk to Sell more Tesla Stock [thanks also Twitter]

Twitter's Us ad sales plunge 59 as woes

continue this is according to internal

forecasts and they're going to go

through some of the actual numbers here

but keep in mind what this potentially

means as a Tesla owner it's a potential

risk that hey is Elon boy to have to go

back and sell more Tesla now he's argued

that he's sold enough to sell for all of

2023 to float 2023 and maybe even into

2024 but if Twitter Revenue doesn't turn

around

he's going to end up having to well

probably continue to fund the business

somehow and that could be by selling

shares another company some people like

maybe he'll sell shares of starlink and

I think the answer to that is unlikely

that starlink will have enough liquidity

for this so uh Tesla will still be be

that door that he ends up having to

knock on now in order to try to support

the mission of course on my Twitter page

I now pay 1400 a month to tweet and have

this beautiful yellow check mark and a

check mark for myself and our and our

our team members just to support the

cause of of Twitter not going bankrupt

here all right anyway so Elon Musk

reportedly said Twitter's advertising

business was on the upswing almost all

advertisers have come back he asserted

and

and Elon does have an interesting way of

being able to kind of see the positive

and things just I I do too okay I see

the positive and things but anyone's got

a unique knack for talking about how

great something is when it's not great

at all so we've seen this with Tesla

well let's keep going

remember remember January demand is very

robust

there's no shortage of demand five price

Cuts later on the cars come on man come

on now Tesla did just get the full 7 500

tax credit for their model threes that I

have to say was impressive and almost

ingenious I was doing a little bit of

research on this and it looks like Tesla

might have actually been taking an

approach

to declare that the average number of

batteries they make is actually enough

to qualify their entire fleet for the 7

500 tax credit now the ah and ah and the

S the one who's gonna pay you this tax

credit has not updated their website yet

to indicate that this is true but the

Tesla website certainly does so clearly

they think they have enough of a uh a

legal argument to make the claim that 7

500 bucks is yours P.S I I think you

don't need more dudes on the front page

of Tesla showing how you could launch

the car you got to turn this into more

of the family car you got you gotta get

the ladies involved just my take test

like Tesla's demo is 25 to 45 year old

dudes they got that on lock

we we got we got to expand that just my

tank you know I I keep talking about

advertising with with Tesla and such and

here we go talking about Twitter

advertising and I'm just gonna keep

throwing out my opinions so that way in

the event that the gods are listening

maybe they could hear the criticisms

through through the fog of you know

Twitter in this case and uh and wake up

uh anyway okay so almost all advertisers

have come back as uh Elon Musk had

suggested but uh actually according to

the New York Times uh revenue from the

five weeks from April 1 to the first

week of May was 88 million dollars or

down 59 from a year earlier according to

an internal presentation of Pain by the

times so in other words revenue is

actually down 15 nine percent from the

time that Twitter was actually still

owned by Twitter that's quite a big

decline the company has regularly fallen

short of its U.S sales projection

sometimes by as much as 30 percent and

the performance is unlikely to improve

anytime soon I remember there was a

period where Disney was freaking out

because uh some like

a troll account ended up getting a

yellow check mark impersonated Disney

and then they were posting hate and all

this uh like some companies are a little

fussy about how the verification process

has gone and to some extent there's some

legitimacy in how the verification

process has gone a little awry but I I

do believe they're trying their best uh

what what I somewhat actually I would

say mostly disagree with is the

following here Twitter's ad staff is

concerned that advertisers may be

spooked by a rise in hate speech

pornography as well as ads featuring

gambling marijuana products and other

less desirable products to have your

well your product featured near I

personally haven't seen any of those

three or four things hate speech

pornography marijuana products gambling

products on Twitter that's not to say it

doesn't exist maybe anecdotal evidence

here isn't great so let's take a look at

what the New York Times is referencing

the New York Times I see this is an old

vid the New York or an old old piece the

New York Times is actually referencing

this Rising hate speech as uh December

2nd a December 2nd piece and this was

shortly about six weeks after Elon Musk

took over and there have been counter

studies to this New York Times piece

suggesting that may maybe the New York

Times might be miscounting or or the

research body I think it was a

university that ended up putting this

together might be miscounting uh how uh

they're actually

evaluating how many hate speech tweets

are rising because to some extent if you

have potentially I'm just going to make

an example here I'm not saying this is

potentially how the error was in in the

ways but on one hand you can have hate

speech that legitimately bashes a group

of individuals on Twitter and it

actually goes viral it gets a lot of

Engagement and then on the other hand

you could have potentially a bot farm

that posts you know a hundred thousand

tweets and they get zero engagement

because it's just a bot farm and then

all those 100

000 tweets are hate speech so now you've

got a hundred thousand tweets that are

hate speech but they get zero engagement

versus like a real hate speech that

actually goes viral that maybe gets a

million views right and it's just one

tweet so I do think there's potentially

a risk in measuring hate speech by uh by

by the the amount of uh time that hate

speech shows up on Twitter because if

you use a bot

like like a research tool or Search tool

and then you're counting no engagement

tweets then you're potentially really

skewing data so so I'd like to see the

controls of some of these uh you know

rise in hate speech arguments because I

I don't buy that rise in hate speech

argument however the New York Times this

branding of Twitter is experiencing a

rise in hate speech is unfortunately

probably

um well turning into what the New York

Times is good at and at reiterating

which is that oh sure their sales must

now be going down because obviously

there's a rise in hate speech I it's

kind of frustrating because it's like if

this was flawed and now everything

afterwards is being blamed on this you

almost kind of do make it seem like to

advertisers that oh no there's a rise in

hate speech on the platform it's a

little bit of a problem we've got this

former NBC Universal executive who's

starting work today uh obviously a lot

of people wishing her good luck

especially since another head of uh ad

safety just quit this weekend

uh at 90 percent of the company's

Revenue has previously come from ads

obviously Elon Musk has been trying to

prop that up by charging for uh the blue

service so you can get verified the

check mark or the yellow check mark if

you're an idiot you pay for that oops

but uh it'll be interesting to see how

this evolves when it comes to valuation

we knew that Twitter was substantially

an overvalued purchase back when Elon

bought it we knew that we talked about

it we said it we end realized it we went

through it so now the expectations are

that the company's worth about 20 Bill

versus 44. that's about a 55 decline

however internally I guess Fidelity is

marking them all the way down to 15 from

44. that's a decline of about 66 I'm

only disappointed that it's not a

decline of 69 percent

now uh here are some comments like

Twitter feels increasingly unpredictable

and chaotic and personally I just don't

see that I I don't see it that horrible

but okay some of the biggest advertisers

including Apple Amazon and Disney have

been spending Less on the platform than

last year but I also feel like

everybody's been spending Less on

Advertising large specialized banner ads

on Twitter's Trends page which can cost

about five hundred thousand dollars for

24 hours that's a lot of money or almost

always bought by large Brands to promote

events shows or movies but lately

they've been going unfilled ooh six Ad

Agency Executives who've worked with

Twitter said their clients continue to

limit spending on their platform but you

have to wonder how much of limited ad

spending is actually due to the economy

they cited confusion over musk's changes

of service inconsistent support from

Twitter and concerns about the

persistent presence of misleading and

toxic content on the platform I quite

frankly honestly believe that is a great

excuse in a bad economy

uh okay all right the rise of AI images

of an image that showed an explosion

near the Pentagon okay we already know

people are using deep fakes to do silly

things like that's gonna be true on

every platform I get what I guess all of

a sudden people are gonna stop

advertising on Reddit too because the

mems are doing too well I I know it's

memes but you know yeah tell me which

interview we heard the mems in anyway uh

actually it'll relate to Elon anyway so

uh some marketers are returning to the

platform great fantastic but anyway hey

this was him in uh China I'm pretty sure

uh so so the point is

yes there isn't necessarily the absolute

best growth at Twitter and that could

create some longer term potential red

flags for when and if Elon Musk is going

to need to sell again are we highly

concerned that this is a really big

near-term Catalyst well maybe and that's

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uh but yeah look at some point there is

a risk Elon might have to sell Tesla

shares again do I think that's coming in

2023 unlikely do I think that that's

really going to affect the stock at this

point not necessarily mostly because I

think Tesla stock is going to be one of

the recipients of the Nike Swoosh

recovery and uh what's crazy about Tesla

is not only does Tesla need to Nike

Swoosh along with the broader Market

here's the the Nike stock chart on a

weekly basis right now not only do we

actually need to make this a Nike Swoosh

which means you have a sharp down and

then a long up to actually turn this

into a swoosh but we'll probably have to

break these all-time highs of 414

because Tesla's going to have to start

pricing in where the Market's going to

have to start pricing in some of the

latest and greatest of Tesla which would

be hey it ended up Surviving this

recession or whatever the heck it is

we're going through period hey now

you've got project Highland which could

be a sub 30 000 model 3 which I've

regularly contended that the best 25 000

car would just be the model three some

kind of refresh for the model 3. so

we'll see what happens there then you've

got the Cyber truck obviously we'd like

to see some more ramping of the uh well

the Cyber truck in 2024 uh and the semi

and of course that doesn't price in

really the how good FSD is getting full

self driving uh or uh any any of the

other uh mega pack expansions that we've

recently been seeing as well as the

ramps of other factories it's not to say

Tesla's not going to experience a big

load of cash burn though remember at the

shareholder meeting when

that I patted myself in the back here I

convinced Elon to advertise

um haven't seen the implication of the

implications of uh advertising it but on

top of that remember that Elon suggested

the next 12 months could be quite

difficult for Tesla I believe one of the

risk factors for that is actually cash

burn I I really think it's going to be

quite incredibly expansive for Tesla to

manufacture uh well I shouldn't say

manufacturer because that implies ramped

for Tesla to create the manufacturing

facilities that they're building whether

that's Northeast Mexico

reinvestments into a Chinese expansion

or Shanghai expansion uh finishing the

ramp at Berlin and Austin the mega pack

Factory these are going to be extremely

expensive Endeavors and so the the

beautiful free cash flow that Tesla had

previously enjoyed I don't think will

exist anymore I'm I'm expecting negative

free cash flow and I expect Tesla's cash

to actually go from you know as as some

people have put it oh my gosh trying to

start so much cash I got over 20 you

know 19 20 billion dollars in cash I

expect that to actually go down pretty

quickly uh and and now keep in mind that

as we've reviewed the balance sheet of

Tesla previously in the last you know

say six months to nine months we've also

contended that most of their extra

balance sheet money their extra cash is

quite frankly just

payables or is offset by bills that they

need to pay again that's not bad

especially if you're a free cash flowing

company but unfortunately I I do think

there will be a risk that we're going to

go to negative cash flow but that's okay

because Tesla doesn't have any debt and

I do think that Tesla will be able to

raise enough cash either through

financing or even

I I know I know buckle up but yeah there

could be a stock offering in 2023

especially as the price goes up I would

guess that if Tesla stock ended up

knocking on the door of 300 bucks again

might see an offering an offering of I

would probably go for maybe a 10 Billy

offering at 300 bucks

that uh just to give you an idea of how

horrible that could be for the impact of

the stock I'm being facetious because

everybody seems to think that an

offering is so horrible remember folks

the point of the stock market okay the

point of the stock market uh is

to raise capital

okay so uh 300 bucks would put them

right about at a trilly again that would

be a one percent shift in in like in

other words with them raising 10 billion

dollars out of one trilly valuation is

literally selling just one extra percent

it's really not that big of a deal so

point being am I really worried about

Tesla stock in the near term

do I look worried

no I'm obviously not worried I I I think

the Twitter thing Elon should be Gucci

until the end of the year uh probably

early next year Tesla's money

yeah they'll probably be a raise if that

free cash flow sector goes negative

they'll probably be a raise I mean let's

look at it really quick so here was q1

what was q1 so net cash from operating

activities was two five we only had

about 400 Millies here free cash flow

I expect that's going to go negative

flat or negative flat would be okay

because if they could keep investing two

billies into the factories

and it doesn't go negative that's great

now you don't have to raise money but

let's say it goes negative to the tune

of 500 Millis a quarter

honestly even negative ability a quarter

that's four billies raising 10 billion

dollars gives you another two and a half

years of of basically investment money

for your plants and factories and

whatever else or if you spend twice as

much it gives you another say a year and

a half roughly a year and a quarter uh

it and then when you look at the balance

sheet here's their balance sheet you

know people seem very convinced that oh

but Kevin look Tesla had 22.4 billies in

cash it's so wonderful yeah I I agree

with you they've got lots of cash that's

fantastic but when we go over here and

we look at the bills that we gotta pay

right let's just take the top two over

here look at that that's payables and

accrued liabilities

15.9 Billy plus 7.3 already puts you at

23.2 billies of bills you got to pay uh

and we've got some long-term liabilities

in here and virtually nothing long-term

liabilities appear to be this line right

here here oh let's look at that it's

actually sneaking up look how it's been

rising actually oh interesting I didn't

even notice this this has been sneaking

up on me look at this other long-term

liabilities right here 3.8 3.9 4.3 5.3

almost six billies right here so we got

six billies of of longer term debt here

uh and then the uh deferred revenue that

current liabilities current portion of

debt current portion of debt is probably

what is that another 1.4 over there so

you add this all together

not considering deferred revenue or uh

uh the current portion of lease is

generally how I do my I do my own

balance sheet math in a unique way I

understand that but you do it as more of

a meet Kevin asset test so we got a 30.6

ish in bills and and debts here right

and uh offset that by about 22 foreign

cash you know that's great but you don't

really have a lot of cash left now sure

you do have inventory and receivables

but let's go ahead and drop that

inventory uh in value by about 10

percent so that's going to bring us to

about 13 billies 13 billies plus about

three in accounts receivable throw that

in what do we got you got another about

16 in potential here what does that

leave you with well if you offset all of

this you're left with about eight bill

that's good but now you're you're really

starting to run that eight billies down

you start running that eight Billy down

at the tune of say three billies a

quarter you're out of you're out of

money after two and a half quarters so

you had about two and a half quarters uh

at a break even on free cash flow

if uh if if you keep having to you know

spend lots of money uh on these

factories so so I do think that uh that

aligns with roughly somewhere like a

December January uh money raise

hopefully when Tesla's around you know

somewhere on maybe a trillion bucks

evaluation somewhere around 300 a share

do keep in mind though as we did with

the math them raising 10 Billy isn't the

end of the world it it is literally one

percent of the market cap because it

might have a larger impact to float

depending on how they raise it you know

it could move a little bit more than

that but but it's okay like Tesla's

going to get through this I'm not

worried about uh the sale of more stocks

I would be more worried about Elon

selling and then I would be about Tesla

raising money uh but then again you know

how much more is Elon gonna have to add

what another three billy or something

like that that'd be one-third of what

the company itself needs to raise

another third of a percent it shouldn't

be a big deal but the problem is it just

eats up the order book right and and

that's where it kind of hurts a little

bit uh and I think that's why we've seen

this crazy ride with Tesla so

long and short of it there's uh there's

kind of my wide breakdown of all of this

Tesla Madness now the good news about

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