If 3,000 per week is the minimum contract size Tesla can go to, then Tesla may be forced to order 3K kits on an ongoing basis whether it needs or not. These 3,000 kits per week at $10,000 per kit of orders leads to $30M in cash burn per week.

Given these orders have a lead time of 2 months, it is likely that Tesla will be, or already has been, saddled with at least a quarters worth of inventory. One-quarter inventory could mean $650M in cash (in part financed with ABL) that needs to be parked in parts inventory ($50M X 13 weeks).

Going forward, for every week of delay in Model 3 ramping, Tesla will be burning cash/ABL at a rate of $30M per week.


As the capital raise comes into focus, and with Model 3 story in disarray, we expect that the next capital raise will be a difficult one for Tesla. As funds and savvy investors realize this eventuality, we expect that there will be an exodus from the stock.

In our opinion, there is a steep fall ahead for Tesla stock.

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