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Bearish Tesla (NASDAQ: TSLA) analyst Gordon Johnson of GLJ Research believes the company’s Bitcoin announcement Monday was a distraction from a number of “very” negative business developments, specifically quality issues in China.
The analyst highlighted the following 5 negative items:
- TSLA took a large chunk of the cash (i.e., $1.5bn, or ~12.2% of the ~$12bn in equity raised in three offerings in 2020) generated from three secondary equity offerings in 2020, and invested it in a highly volatile and allegedly manipulated crypto currency (i.e., Bitcoin) instead of R&D and/or CAPEX (i.e., in the company), suggesting TSLA has run out of viable internal uses for its capital,
- TSLA sold just 12.684K MIC Model 3 cars in China in Jan. 2020 (and just 2.8K MIC Model Y cars) – despite capacity of 37.5K cars/month – meaning TSLA’s MIC Model 3 market share fell from 11.2% in Dec. 2020 to 7.6% in Jan. 2021,
- Five Chinese regulators summoned TSLA for several quality control issues, including unexpected accelerations, battery fires, and abnormal over-the-air (“OTA”) upgrades, demanding TSLA abide by China’s laws,
- Automotive News Europe reported that TSLA’s German factory may see a “massive delay”, and also noted that TSLA may not get the full $1.2bn in German government subsidies media outlets reported as a done-deal, and
- From a pre-market price of ~$840 to a close of $863, TSLA’s shares advanced $23/shr, despite just $1.36/shr invested in Bitcoin (implying the market overreacted).
The firm reiterated a Sell rating and $67.00 price target on Tesla.
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Shares of Tesla closed at $855.99 yesterday.