My thoughts following 1Q results and Tesla’s Autonomy Investor Day.
The key question that largely determines your view on where the stock is going: Does Tesla have enough demand to sell at similar levels to the other major premium sedans?
Read MoreTesla: 1Q Issues Reduce Demand Visibility, but Long-Term Demand Still Appears Healthy
- Tesla saw 1Q deliveries fall short of expectations, leading to demand concerns. The key question is whether this is a temporary blip or an ongoing structural issue
- Based on the data we know today, I view the issues as temporary in nature and see strong longer-term demand driven by high customer satisfaction and strong market share within their existing products
- Model S/X weakness is concerning, but explained by the decision to stop selling entry-level models. An upcoming refresh mitigates this risk, but Tesla must demonstrate superior value to other models
- Tesla Network buzz ahead of the Autonomy Investor Day is overly bullish in my view, but Tesla could still financially benefit from a capable semi-autonomous driving system
- The path to a higher stock is driven by showing profitable demand that can fund the next growth initiatives - the China Gigafactory and Model Y. I believe this is likely to occur over the course of 2019
Read MoreTesla: What BP's Oil Spill Tells Us About Potential SEC Enforcement for Musk
-With Musk ending his attempt to take Tesla private, focus will shift to potential SEC enforcement, which I believe will consist of a fine but no removal of Elon Musk
-Enforcement could hinge on whether Musk had intent to mislead investors with his tweets, which is a high bar to prove
-This is further supported by BP's oil spill, which involved disclosures that misled investors and a subsequent $525 million fine over three years, but no executive removal
-Despite these considerations, we still cannot rule out that the SEC will pursue a harsher punishment given the unprecedented nature of the disclosures
Read MoreTesla: Model 3 Trade On Track, but Is S/X Demand Slowing?
Tesla reported 1Q deliveries of just over 25,000, of which 13,450 were for the Model S, while 11,550 were for the Model X. The deliveries announcement today will add fuel to the bull thesis, as the company's deliveries were above consensus estimates of ~24,000 units for the quarter, suggesting that the company is on track to meet the high end of their 1H deliveries guidance of 47,000 - 50,000 target. The results were positive overall for the company, and the stock is currently trading up 5% as of this writing.
However, many investors remain skeptical of Tesla. Looking beyond the Model 3 trade, many investors are debating what is happening to underlying demand for Tesla's older models.
Read MoreThe Looming Technology That Could Crash the Auto Part Party
The auto part retailers have long been the darlings of the retail industry with consistent earnings growth, the highest margins in the sector, and protection from online players. And as a result, the stocks have been rewarded with a high valuation and market outperformance. However, there's a looming technology that could disrupt the industry that I don't think is being accounted for by investors.
Read MoreTesla: Tesla and the Blind Spots of Wall Street
As part of a shift in my writing, I am going to start talking a bit more about my own views on stocks (and stuff outside of stocks) and on the trades that I've made. I'll start with my latest trades on Tesla, where I bought some shares in late November and early January.
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