Tesla's Cure For Musk's Missteps Is - More Musk

For any other company's stock, the combination of these results with Musk's political priorities would spell doom. The closely watched metric of Tesla's automotive gross margin, after stripping out sales of regulatory credits, slumped to 12.5 the lowest, according to Morgan Stanley, in over a decade, when Tesla was still more of a start-up. Adjusted earnings came in almost 40 below a consensus forecast that had been nosediving anyway. Tesla eked out positive free cash flow, but only through a combination of favourable moves in accounts payables and receivables, and by slashing capital expenditure almost in half.

To cap it all off, the electric vehicle maker suspended guidance due to the recent 'shifting global trade policy" that you may have heard about. There is a double irony here. First, Musk has had a fairly tight relationship with the US president doing much of that shifting. Second, Tesla's guidance was hardly the brightest of beacons, somehow marrying volatility and vagueness in recent quarters.

Hence, as of writing this, after-hours trading has Tesla's stock - up almost 5.

Given we already knew sales had slumped, and partly because of factory turnarounds to refresh the Model Y, one might argue the bad news was priced in already. That's a stretch, though, when Tesla's stock, despite sliding this year, still trades at 85x forward earnings. Moreover, even idled production lines couldn't account for the extent of the drop in sales this quarter.