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Musk Cali-Carnage Continues: Analysts Warn Of “Morale Risk” While Liberals, Tesla Owners Berate CEO

Courtesy of ZeroHedge View original post here.

Elon Musk continued his war of words with, well… the entire world, which reacted with shock to Musk's decision to sue Alameda County over not allowing him to re-open his Fremont factory.  Former Secretary of Labor and Berkeley professor Robert Reich, who Musk had previously called a "boring idiot" in both English and Russian in a Twitter flame-war on Sunday took another jab at the embattled CEO, saying "Billionaires are not the answer".

Responding to one of Musk's insults, Reich said, "if only you had put as much effort into delivering the ventilators you promised as you put into this tweet."

Separately, perpetual Tesla cheerleader Adam Jonas at Morgan Stanley also offered up his take on Musk's claims to want to move from California over the weekend. First and foremost, he predicted a gigantic $2 billion to $4 billion cash burn for Q2 and said GAAP loss estimates of $500  million could be too high:

We believe that the sentiment consistently displayed by Musk is likely out of genuine concern for the severity of the decline of profits and cash flow for the company in Q2. While we believe the liquidity / balance sheet of the company is intact, we are prepared for Q2cash burn to be on the order of magnitude of $2BN to $4BN,given large payable outflows and revenues down as much as 30% Y/Y.

In our view, while the situation is clearly out of Tesla’s control, Elon Musk’s urgency and willingness to take decisive action shows the impact the shutdown is having on the company globally. Taking a look at consensus numbers for 2Q20,expectations call for nearly $900MM in cash burn and GAAP net loss of ~$500MM; we believe these may still be too high.

He also predicted that Tesla's next U.S. Gigafactory would be announced in 1-3 months and could happen in Texas. The note does little to address the financial implications of such a move and estimates it could take "up to 3 years for a complete relocation from California".

Jonas still predicts a majority of the company's global production volume will come from Fremont over the next 2 years and also believes there is "morale risk" to employees from Musk's erratic behavior: 

We believe that there is risk to the morale of employees and staff currently in Fremont, as the questions of not only returning to work by June 1st in California continue to loom, but now the new question of continuing to work in California at all.

All OEMs and other contingencies in the supply chain are struggling with similar issues in the road to their targeted May 18th restart. As investors model a number of scenarios for cash consumption in Q2, we believe some attention should be paid to the potential problems for other counter-parties that could add to the volatility of near term financial outcomes.

Yet despite the massive predicted cash burn and the slate of numerous new risks, Jonas kept his $680 price target on the name. Because when Morgan Stanley underwriting fees are at risk, one does what one must…

In the interim, Tesla owners and once-fanboys have been spotted on social media all weekend echoing the thoughts of these owners:

Sending liberals and Tesla owners further into a rage alike will be the fact that Sen. Ted Cruz openly petitioned for Musk to move his operation to Texas over the weekend, as well: 

Recall, yesterday, we pointed out how the world was turning on Elon Musk after he decided he was going to pick up and leave California, after the state would not bow to his demands for re-opening. 

For now, it still looks as though  it is Tesla's intention to re-open Fremont when Elon Musk, not the government, says so. 


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