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We've been calling out risk in Tesla over the recent medium term and this year.

Bad Tesla Print

They reported a bad delivery number.

I posted a model with the new deliveries and new thinking of going off beta. My EPS are way below the Street. I think my EPS versus the Street has been one of the best predictors of Tesla's stock price over the years.

I think there continues to be a stock risk as long as I'm a) way below the Street and b) FSD is not near getting regulatory approval for higher levels of autonomy.

What's Most Concerning for Tesla

Also this delivery print again showed production way above deliveries. Management is running the company risky. They are not slowing manufacturing production enough to match the slowdown in demand. They need to.

A company benefits when producing more units because fixed costs get shared by more units making fixed cost per unit lower and thus margins higher. But a company shouldn't produce more units when demand is slowing.

So in the short term, they are 'artificially' supporting margins to make bad quarters look less bad. But it's setting up a risk for a cliff of bad numbers. When consumers catch wind of the company having too much inventory, consumers will hold back. I don't think you can win a game of chicken with consumers.

TSLA is holding a bad hand and keeps playing it but the end result for people in this position is not good. They need to bite the bullet and slow production, take the growth hit, the stock hit, and save the company from too much risk.

Cash flow is fine now but if inventory's building now in a good economy, what happens next year when/if the economy slows, they are going to get stuck with too much inventory, write downs, earnings hits, etc.

The company is currently, sorry to say, an expensive auto company until they get FSD going. Timing has been pushed out and Musk himself on an earnings call called it 'the boy who cried FSD.'

Let's see. In the meantime, I think be careful. No change.

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