EV OBSERVATIONS 09.14.2020

Tesla Forecasting ….. Nikola/GM Fiasco

**** Check out this extremely thorough and historically highly accurate Tesla sales/revenue/profit forecasting source. As a regular viewer of Gali Russell’s Hyperchange YouTube channel, thanks to Gali’s recent video, I learned about James Stephenson, a Tesla Model 3 owner and fanatical Tesla follower since 2014. James works as a financial planner and analyst (not in the Wall Street analyst-moron sense) and is a passionate modeler of Tesla’s sales and financial information. While Gali and Rob Mauer (Tesla Daily YouTube Podcast) are exceptionally good analysts and modelers, James work is another order of magnitude beyond theirs. His model has over 1,000 data elements. The key benefit of James’ model is that you can see his results and learn from his efforts – for free! James points out in his video with Gali that no one on Wall Street does this kind of modeling. Another astute observer of the stock market recently pointed out that Wall Street “analysts” only look backward, not forward.

Every week James updates his forecast and once a month updates it publicly over Twitter – 14 tweets of 4 spreadsheet pages each – 56 spreadsheets in all capturing every relevant detail of Tesla’s operations. According to James’ tracking, normally his forecasts are about 95% + accurate. All you have to do is follow James on Twitter to get this information: @ICannot_Enough.

Now here’s some good news from James’ August 9^th, 2020 forecast. Tesla’s 2020 total revenue: $33.1 B, net income: $3.5 B. Tesla’s 2021 total revenue: $74.2 B, net income: $10.4 B. That’s right in line with several Tesla followers’ estimates, including this writer’s. Wall Street doesn’t have a clue about Tesla’s anticipated 2020’s Q3 and Q4 net income – after all they are significantly above Q1 and Q2’s combined net income of $120 Million. Sign up on Twitter to follow James and you will have far better information than anyone on Wall Street! Watch for Tesla’s Q3 results somewhere between October 21^st and 28^th.

**** Just as you thought nothing else could add to the recent German and Ford drama in the auto industry, GM steps up to the plate and hits a stinker of a foul ball. OMG, where to start! I will be writing on this fiasco in a far more detailed posting soon, but at this point my head is reeling and I am waiting for the next moves by the SEC, GM, and soon-to-be-moribund Nikola Corporation.

GM and its CEO Mary Barra have been desperate to get GM’s stock back above its 2010 offering price of $33.00. Even all GM’s electric vehicle and Ultium battery unveilings on March 4^th, 2020 didn’t offer any significant stock price bump. GM’s closing stock price was $30.52 on 3/3, $31.53 on 3/4, $30.10 on 3/5, $28.69 on 3/6, $24.69 on 3/9, and $27.12 on 3/10. Could it be the GM-jaundiced stock market was saying: “We’ll believe it when we see it”?

When Nikola’s Chairman and Founder, and ex-CEO Trevor Milton, after shopping Nikola and himself all over the established auto industry reportedly including two attempts at Toyota, came along begging for a big brother that could bail Nikola out of its no-product or technology dilemma, there Mary Barra stood, champagne bottle in hand. After one of the quickest, sloppiest, and most cursory red-flag studies in preparation for a huge business deal, on September 8^th 2020 GM announced that it had signed an agreement with Nikola to produce its Badger pickup truck in exchange for $2 Billion worth of Nikola stock giving GM 11% ownership of Nikola, a $700 Million cash payment from Nikola to GM for tooling and design/production services, and more. Although Nikola’s CEO at the time Trevor Milton had previously relentlessly bragged about Nikola’s breakthrough battery and hydrogen fuel cell technologies, it was GM batteries (really LG Chem’s) and GM’s fuel cell (maybe Honda’s?) that would be used in the GM-produced Badger  pickup. In fact, the Badger would be a GM electric/hydrogen powered pickup with a Badger-styled body by GM.

Notably, the effect of this September 8^th announcement was temporary – greeted with a huge yawn by GM fans and investors, and with a greater but also temporary response by Nikola investors and fans. Here are the closing stock prices of GM and Nikola for a five day period:

On September 10^th, an investment research house appropriately named Hindenburg Research (HR) came out with an 86 page report that exhaustively laid out Nikola’s and Trevor alleged lies and misrepresentations over the course of both the company’s history as well as Milton’s business past. HR’s report is extremely well documented with copies of emails, tweets, photos, videos, and the like. Its last few pages contained 53 specific questions it challenged Nikola and Milton to answer. Because it suspected that Nikola was a fraud, Hindenburg announced it was selling short Nikola shares. Why not? Others were hot on Nikola’s and Milton’s trail.

With the usual howls of protest against unscrupulous short sellers and shoddy investigations, Milton and Nikola threatened to sue HR. HR’s founder’s reply was: “….. that his firm would welcome a lawsuit by Nikola.” On Monday September 14^th, Nikola and Milton’s law firm finally released their “rebuttal” to HR’s accusations. The nine page document put out by Nikola cherry picks a few points raised by HR while obviously being evasive (as usual), and in many followers’ judgment further incriminating itself(s) in some of their answers. At no point does Nikola’s “rebuttal” document specifically address any of HR’s 53 questions at the end of its report.

Nikola claims to be working with the SEC, but that may be just legal puffery since the SEC might have already had Nikola and Milton under investigation, perhaps as a result of its whistleblower program.

In the meantime, two prominent law firms, Rosen Law Firm and The Schall Law Firm (and perhaps others) are preparing class action lawsuits against Nikola and Milton.

And where is GM? Hiding! Deathly quiet. No doubt in turmoil at the Board level and on the top floors of Detroit’s Renaissance Center buildings. I have no doubt that in the face of HR’s allegations against Nikola and Milton – rigorously organizing, detailing, and confirming many peoples’ observations about Nikola and Milton – GM will be forced to break its agreement with Nikola. Moreover, GM will have to find a fall person for this debacle that has further tarnished its reputation, and that person is likely to be Mary Barra and some of her executive team. How about GM’s Board members that had to approve this deal? I can hear the knives being sharpened now. And the irony is that GM’s stock is likely to fall further as a result of GM’s frenetic shotgun marriage with Nikola.

This is a compelling and dramatic ongoing story that I am all over. What a book it will make someday! Much more to come. Stay tuned……….

Image courtesy of Pixabay

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