Tesla FUD On The Rise As Q2 2020 Earnings Call Date Looms Closer

Featured Image Credit: Daniel Oberhaus/Flickr [CC BY 2.0]

Tesla investors should probably brace themselves for TSLA FUD that is once more on the rise as the date of the company’s Q2 2020 Earnings Call looms closer. With Tesla looking more and more like it has a fighting chance at qualifying for the S&P 500, it appears that bears are doing what they can to keep TSLA stock as pinned down as possible. 

This trend is not new for the TSLA investment community. During the lead-up to the release of vehicle delivery and/or quarterly earnings report, a rise in critical articles and analyses on the company are typical. This has been happening for quite some time now and has gotten almost predictable over the years. As Tesla gets closer to achieving another milestone this quarter, the number of critical reports and outlandish claims against the company has started to increase--just as expected. 

Even before Tesla released its Q2 2020 results, reports from reporters who are mostly against Elon Musk and the electric car maker emerged. One of the most prominent of these is an article from Business Insider which alleged that older Tesla Model S vehicles had a serious design flaw in their battery cooling coils that could lead to fires. This report was echoed in other media outlets like the Los Angeles Times.  

My speculation: The exact hardware for the battery coolant loop is pretty unique, and I'm sure Tesla had very early (pre-production) issues with quality on them during initial R&D... If the sources for this "news" have any truth to them, I'd bet it's related to pre-production.

— Jason Hughes (@wk057) July 2, 2020

The accusations of a widespread defect in the Model S is nonsense, according to Tesla teardown veteran Jason Hughes, who has done extensive deep dives on Tesla batteries for years. In a rebuttal, Hughes stated that there have never been any widespread battery coolant leaks observed in Tesla’s flagship sedan over the years. In the rare event that a Model S’ battery coolant does leak, Hughes stated that it would probably not cause a fire since the coolant itself is not flammable--unless it’s specifically distilled.  

Musk himself did not escape FUD, either. Following the release of Tesla’s Q2 2020 vehicle delivery and production report, Musk experienced what he described as a “social media denial of service” attack. This was due to reporter Ken Klippenstein, from The Nation, urging his social media followers to spam Musk’s Twitter mentions with an image of the CEO being photobombed by controversial figure Ghislaine Maxwell. The image was explained by Musk and his former wife, Talulah Riley, but it did little to deter the reporter and his followers, with the former even provoking the CEO by dubbing him a “massive f**king baby.”  

One would probably say that Elon Musk’s appearance at a Vanity Fair party in 2014 is not related to Tesla’s current performance as a company at all. And that is exactly the point. Musk’s “social media denial of service attack” over the weekend is irrelevant to Tesla’s fundamentals, but it does create noise around the CEO, and in turn, the company. What is rather interesting is that this type of noise would likely not stop anytime soon. Just yesterday, for example, a piece from Forbes was published which some might describe as outlandish. 

Credit: Forbes

The piece was titled “Tesla Downside if China Arrests Musk,” and just as its headline suggested, it discussed how TSLA shares could take a significant hit if the CEO gets arrested in China. The publication did not specify the reason why Musk could get arrested in China, nor did it explain how such a scenario could even come about. The publication simply stated that as Tesla’s operations in China expands, Musk would likely travel to China frequently, and if he were to “mess” with Chinese authorities, trouble would ensue.  

Such a point ignores the working relationship between the Chinese government and the Tesla CEO that has been cultivated over the years. Immediately after the groundbreaking ceremony of Gigafactory Shanghai, for example, Musk was hosted by Chinese Premier Li Keqiang in Beijing at the Tower of Violet Light, a site that is usually reserved for the country’s most distinguished guests. During their meeting, Li proved very supportive of Musk, at one point even offering to issue a “Chinese Green Card” to the CEO. 

After breaking ground in Shanghai, Tesla CEO @elonmusk had a meeting with China's Premier Li Keqiang at Tower of Violet Light (中南海紫光阁) in Beijing China 🇨🇳 . $TSLA #Tesla #China #TeslaChina pic.twitter.com/CHREQXcEyM

— Vincent 🔥🔥🩳🔥🔥 (@vincent13031925) January 9, 2019

Musk has also proven to be quite respectful of the work ethic of Tesla’s China team. In his recent appearance at the WAIC 2020 alone, Musk expressed his support and thanks to Tesla China for pushing Gigafactory Shanghai to new heights. The CEO then stated that he could not wait to visit the China-based site once more. This could come early next year, provided that Gigafactory Shanghai is able to ramp the production of the Model Y properly.  

Tesla is expected to hold its Q2 2020 Earnings Call on July 22, 2020, after markets close. From now until the call’s date, TSLA investors could expect more FUD and noise to emerge. Such is simply the nature of Tesla stock at this point: it's volatile, very attractive to shorts and bears, and yet, still resilient and very rewarding to those who support it.  

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This article is for informational purposes only. You should not construe any such information or other material as an investment, financial, or other advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, or offer by Ma. Claribelle Deveza, Tesmanian, or any third party service provider to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. Ma. Claribelle Deveza holds zero share of Tesla, Inc., and currently (at the time of this article's publishing) holds zero options or securities in Tesla Inc. and/or its affiliates.