new warning for Tesla Stock after deliveries...

hey everyone me Kevin here let's talk

Tesla wow yes we did get a beat on

deliveries we beat deliveries at

48457 versus the

483173 but what are some of the details

we got to talk about regarding not only

what beat in terms of deliveries because

it wasn't the model 3 and Y which is

really interesting uh what about Morgan

Stanley what does Morgan Stanley saying

what Waring does Morgan Stanley see for

the stock that's a big deal what does

Gordon Johnson have to say in a tweet

reply to my quote tweeting him will

break down that drama as well as what

could margins and cash flow end up

looking like in Q4 that's going to be

the big old question so first and

foremost here these are the Tesla

production and delivery numbers here as

you can see we actually missed on model

3 and a model y numbers we came in with

deliveries of

4615 538 the market was expecting

462

523 so wait a minute how did we miss

when everybody's screaming about a beat

well where we beat was in the other

models category other models came in a

few thousand above expectations leading

not only the total number to beat but

offsetting the model 3 and model y Miss

now in this other models is expected to

be cybertruck information Elon Musk on

Twitter as of about a week ago indicated

that maybe Tesla would deliver a couple

hundred cyber trucks this year that's

not produced that's delivered so

probably somewhere around two to 300

cyber trucks actually getting delivered

this year which means most of these

beats probably came from Model S's and X

now that that is actually really

impressive this morning on the market

open live stream which keep in mind some

people are not aware that I do Market

open live stream every day at 5:30 or

5:25 in the morning California time just

go to the meet Kevin live channel it's

linked down below anyway I'm there every

single day and we're covering the market

but this morning what we thought was

really interesting was we were covering

Tesla and uh as we looked at the

vehicles on Tesla uh we realized that

the cheapest model X is actually sitting

below

$80,000 now you go to purchase price

you're sitting at

$799 which I think is a great value I

don't know that it makes sense to spend

an extra $115,000 for you know 1.3

seconds I I I personally don't think

that's worth it I don't think that's a

good investment that's like a vanity

item right fine sometimes we we want to

reward ourselves so to speak but anyway

look at the model y I personally think

the model y it's a deal and that's

actually where you would expect Tesla to

make a whole lot less money because look

you could get the rear wheeel drive

model y for under $444,000 you're

basically getting a 10 % smaller car for

roughly half the price the model Y is a

steel I personally think so now I know

the rear wheeel drive models got 260 Mi

of range and I know it's not the longest

but the point is the fact that other

models beat expectations here and offset

a model 3 and Y Miss is probably margin

ACC creative to Tesla it is a good thing

for Tesla and Tesla investors because we

want to see margins going up not down in

fact let me tell you what Morgan

Stanley's biggest concern is for Tesla

you ready for this this is in a note

released this morning uh Morgan Stanley

this is just a tiny little snippet here

of their entire piece but in this little

snippet here we would not rule out the

potential for Tesla's gross margin to

test

10% for uh you know maybe one of the

quarters ahead which somewhat implies

that the bottom is still ahead of us for

Tesla's margin and then maybe their core

operating margin could actually end up

flipping to negative now the company is

still optimistic they still maintain

their $380 price Target not only do they

maintain their $380 price Target but

they think that The Optimist is going to

be uh a big potential solution to what

they called the 330 trillion labor labor

market they reiterate which we've talked

about before this idea that hey uh you

know Tesla could make a lot of money

getting into Dojo as a service much like

AWS now uh delivers about 70% of the

earnings before interest taxes and uh

whatever uh depreciation over at Amazon

that same thing could happen at Tesla so

in other words Optimus bullishness Dojo

bullishness that's great but they do

think there's a chance you could go

negative here with margin in the next

few quarters or or at least see more of

a fall down to potentially 10%

personally I don't know why they didn't

address it but they didn't address this

maybe they draft Ed most of the piece

before the numbers came up because you

know they didn't want to wake up early

or whatever but the fact that other

models here beats to me is a sign that

margin might actually come in better

than expected commodity prices have come

down now we know there's a lag in when

commodity prices come down to when those

actually show up in vehicle margins but

look at for example lithium prices go to

a website like trading economics and

look at lith ium prices and then let's

zoom out a little bit here let's just go

out to the 5year chart look at that

collapse in lithium prices Commodities

have essentially just been coming

straight down over the last 6 months a

little bit of volatility around March

and April there this should be good I

mean look at another one bcom index so

type that into Google you get the

Bloomberg commodity index get rid of the

little spam that pops up then uh just

zoom out for a moment go well year today

doesn't do us any good anymore go uh one

year back look at this solid almost

perfect perfectly straight trend line of

a declining commodity prices go to the

alltime we should be a little higher

still today oh no look at that no way uh

we are a little higher than where we

were in like 2018 and 2019 we're

actually way lower in commodity prices

uh than where we have been really in in

um any of the period between 20 15 and

2002 kind of wild but the point is those

sort of declines should slowly start

showing up in margins so I think lower

Comm prices lower lithium prices and a

richer mix of vehicles should all be

beneficial to Tesla's margins for their

earnings coming up on the 24th so that

is a good sign now keep in mind I say

this every single time with Tesla good

news usually is around production and

delivery numbers okay that's like that

and even if it's bad news that's usually

the best possible news you're going to

get right so even if it's bad news it is

the best news because it's still like

the positive stuff like how many

vehicles would you deliver usually the

bad news comes out in the actual

earnings report which that's when we

look at the details and we're like

that's not as good as we thought you

know so my concern would be not that

margin comes in weak but instead we end

up

getting a free cash flow number that's

not as juicy although I'm also not

really worried about that this time I

was more worried about that in previous

Cycles I'm not as worried about that in

this cycle look uh here at Tesla's free

cash flow we had a free cash flow here

in the last um earning cycle here of

just over $800 million which we can get

just by subtracting the operating cash

provided from capex over here and uh

before that we were sitting at about a

Billy right so it's somewhat been

trending down here but the point is uh

you know I was looking for 400 million

that cycle and we got almost twice that

so so they did very well here I think

that with lower costs and higher margin

from some of these vehicles I actually

think uh that there's a chance with with

Elon Musk tapping the breaks on cap X

which he implied in the last earnings

call I think this could actually be a

positive earnings report and I've been

pretty negative going into the earnings

reports I usually see them as like a

sell event which then usually end up

being a civan I don't think this one's

going to be as bad now Gordo and I were

arguing uh well not really arguing I

mean you know it's Gordon Johnson we

always like to get his bare perspective

I like to see him so I was looking at it

you know I I respect everybody's opinion

I have no problem with anybody else's

opinion so Gordo says uh Q4 deliveries

20% year-over-year growth the lowest

since Q2 2020 the height of the pandemic

uh keep in mind he's not wrong I mean

the the the growth the headline growth

has slowed down at Tesla and we want to

see as we ramp Giga Berlin Austin and

cybertruck this move up we got to get

back to 30% Morgan Stanley by the way I

think they're at 27% EPS growth

projected for their math yep 27% kager

on EPS I'm at 30% so I've been off 50%

for a very very very long time I've met

30% Morgan sings at 27% % but 27%

Topline growth not great uh 20% that is

uh then you've got uh you know Gordon's

multiplying here costs a good soul to

get some cash burned that's okay because

they're probably still cash flow

positive but we'll find out uh this idea

that the Cyber truck is a mistake I mean

to me that's an opinion I don't think

that's a b that's a big deal I don't

think it's a mistake at all but that's

okay you know bull vers bear here right

that's an opinion that's fine but this

is interesting he says byd sold more

battery electric vehicles versus Tesla

uh as some of Tesla models lost their

full tax credit well okay it's not

entirely untrue that some Tesla vehicles

did lose their tax credit like the

cheapest model 3 did lose its tax credit

but it's worth noting that the cars

eligible for the federal tax credit of

$7,500 shrank a lot literally shrank by

like 50% uh and so a massive shrinkage

here in the number of cars eligible and

so you can now if you want the $7,500

tax credit these are the only Vehicles

eligible for $7,500 you ready for that

the bolt Okay who wants that the F-150

Lightning which barely has enough

production rivan does not have a single

car with $7,500 and then what do you

have at $7,500 Tesla Model 3 Performance

the model X long range qualifies for

$7,500 holy crap that's amazing use

metkevin.com Tesla as referral

code uh but anyway or is it meet Kevin I

should check M kevin.com by the way if

you go to meetkevin.com yeah it is M

Kevin met and meet both uh the gold

course we are replying to emails this

morning uh so we can get that all caught

up once we have everybody caught up in

email this morning we're raising the

price so you still have a few hours here

if you want to get in the gold course

lifetime access to the course member

live streams and all the other uh new

content all filmed within this quarter

none of it's repurposed content it's all

brand new but anyway look at this model

y all-wheel drive model y performance

model y rear wheel drive Tesla's killing

it I mean yes okay one of the vehicles

lost the $7,500 but relative to the rest

of the EV Community Tesla's like the

only one I mean rivan their cars are at

35 or 3750 half of the tax credit so the

government's actually incentivizing

Teslas over rivian rivian miss this

morning they're really a topic for a

different video actually I don't think

their Miss is that big of a deal uh I

I've actually been surprisingly becoming

a little bit less bearish on rivan uh

you know even though in the past they

shorted them profitably I've I've become

less bearish on them because I think

they're finally getting their act

together and and they're surviving some

of the the real pain

here but anyway this argument here byd

sold more battery electric vehicles than

Tesla who cares is is sort of my

argument so I quoted tweeted I quote

tweeted this uh and I wrote yes byd may

have sold more battery electric vehicles

than Tesla 526 versus 484 th000 but

let's not forget byd sells cars at an

average of 20

$5,000 T Tesla sells them at an average

of

$46,000 so you make a lot more money at

Tesla now yes Tesla's operating margins

have fallen this is true Gordon Johnson

hits on that right away it's it is a

bare argument right now is that Tesla's

operating margins aren't excellent right

now uh and we could see that actually

just by going to their last earnings

report right here the uh let's go to the

actual income statement a statement of

operations here so this is it I'll hide

myself for a moment so what you can find

here is income from operations sits at

about

7.5% of total revenues so right now 1764

operating income divided by all of their

revenues is only 7 1.5% that's very low

byd sits at about

8.9% so they are beating Tesla on

operating margins here and if you want

to get even more nasty to Tesla just

subtract their operating income or or

subtract regulatory credits from their

operating income you're left with only

about a 5.4% operating margin it's low

it is low now one of the reasons that

operating margin uh has gotten so low is

mostly because those revenues have

really stagnated whereas those operating

expenses uh have not right look at uh

look at for example our operating

expenses operating expenses were uh $2.1

billion they went up to 2.4 at the same

time as Revenue declined about $1.5

billion so yes yes absolutely operating

expenses have risen as the company is

scaling as the company is adding uh uh

more facilities

sgna uh obviously the scanning their

scaling their manufacturing plants but

some of that goes into cogs but still

you have to build out the hiring the

human resources the regulatory work the

legal work and all this so your sgna

your your general operating expenses go

up at the same time you're spending way

more money on R&D now expanding into the

dojo and Optimus world not just R&D for

the cars so yes Opex is going up at the

same time as revenues did take a hit

likely in my opinion due to interest

rates the the fact though that we were

able to see these numbers at Tesla at a

time when Tesla had the worst interest

rates ever in the career of Tesla in

quarter four the highest interest rates

ever okay remember October is part of Q4

that's when interest rates

peaked and we got a beat on deliveries

here I have to say it's pretty

impressive it's pretty impressive in

fact take a look at this this is a chart

here that overlays uh finished vehicles

and inventory versus days of inventory

and what you could find here is that

vehicles in inventory actually shot up

about 10,000 Vehicles right here but

days of inventory is almost flat in fact

days of inventory has really started to

flatten over here uh that's despite

production either going slightly down or

up uh a bit more than that so it's a

sign these vehicles are selling which is

good and again the fact that when we

look at this Matrix here from Tesla

Chan we see the other section of

vehicles starting to explode again the

S's and x's in my opinion it's a sign

that that wealthier demographic is

deciding you know what I'm

interest rates are starting to fall

stocks are starting to go up I'm willing

to spend money again and because I'm

willing to spend money I'm going to

splurge on the X or I'm going to splurge

on the S or whatever I want I want a

different car than the one everybody

else is whatever I think that's mostly a

head trip and don't get me wrong I mean

it's like pot calling the kettle black

okay I I got a Model S and the model X

okay I just look at them and and I have

some regret because I should have just

gotten two wise you know I could have

gotten two wise for the cost of one of

them uh but they didn't have a y or a

three when I bought the X so it was

either the x or the S I got the X uh and

then the model S I I don't know that

that was just

stupid uh but but whatever okay whatever

so I'm not I have to say I'm not bearish

on this earnings report and given that

Tesla has lagged the other magnificent

six bullish my take maybe I'm biased but

I'm not nervous about this one TR not

advertise these things that you told us

here I feel like nobody else knows about

this we'll we'll try a little

advertising and see how it goes

congratulations man you have done so

much people love you people look up to

you Kevin PA there financial analyst and

YouTuber meet Kevin always great to get

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