Founder & CEO Bond Angle, LLC, Bond Angle, LLC

Vicki Bryan

Founder & CEO Bond Angle, LLC

Bond Angle, LLC

Insightful commentary and analysis on bond markets and market movers, including financial, economic, and industry catalysts and management shenanigans. 

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<div class="content-highlight"><a href="https://www.smartkarma.com/entities/20279" target="_blank" data-smartkarma-citation="entities:20279:1">Tesla Motors (TSLA US)</a> has changed its mind, again, and now reportedly is <a href="https://electrek.co/2019/03/08/tesla-freezes-store-closure-layoffs-chaotic-sales-strategy/" target="_blank">putting on hold</a> plans to close hundreds of its mostly newly opened stores and lay off thousands more employees--at least until the end of the month.</div>Employees, customers, suppliers, and investors still are reeling over Tesla's startling decision, <a href="https://www.tesla.com/blog/35000-tesla-model-3-available-now" target="_blank">announced February 28th</a>, to move immediately to online-only sales, a dramatic reversal of strategy still in place as of the 2018 10-K filing on February 19th in which the company had touted growth via recent store expansions and substantial additions planned globally going forward. Tesla explained that even with now three substantial price cuts on all its cars and now three significant layoffs since last summer, it must slash costs even more to support the launch of its long overdue $35,000 base version of the flagship Model 3 (see my report <a href="https://www.smartkarma.com/insights/tesla-s-new-plan-buy-before-you-try" target="_blank">Tesla's New Plan: Buy Before You Try</a>).I warned clients that Tesla's stunning strategy reversal seemed driven more by alarming cash consumption plus much weaker than expected sales and profit margins already apparent in what is shaping up to be a disastrous first quarter--troubling trends that may continue. However, as <a href="https://twitter.com/VickiBryanBondA/status/1101940247930249222" target="_blank">I noted</a>, it also costs money to close stores, get out of leases (<a href="https://www.wsj.com/articles/landlords-to-tesla-youre-still-on-the-hook-for-your-store-leases-11552059041?mod=searchresults&amp;page=1&amp;pos=1" target="_blank">good luck with that</a>), <a href="https://electrek.co/2019/03/02/tesla-cut-employee-compensation-layoff/" target="_blank">fire employees</a> and redistribute remaining staff, and sell off fairly new equipment at steep losses.Not to mention that shiny new Tesla stores suddenly going dark may appear ominously similar to retail stores going out of business seen increasingly all over the country--a bad look for Tesla, especially given customers already are spooked by its escalating quality, reliability, and service problems (see "<a href="https://www.smartkarma.com/insights/musk-and-weird-q3-developments-are-driving-investors-to-telsa-s-rivals" target="_blank">Musk and Weird Q3 Developments Are Driving Investors to Telsa’s Rivals</a>" and "<a href="https://www.smartkarma.com/insights/tesla-dave-s-not-here-and-musk-won-t-leave" target="_blank">Tesla – Dave’s Not Here, and Musk Won’t Leave</a>" and <a href="https://www.smartkarma.com/insights/tesla-down-to-the-wire" target="_blank">"Tesla: Down to the Wire"</a> and <a href="https://www.smartkarma.com/insights/tesla-truth-and-consequences" target="_blank">Tesla - Truth and Consequences</a>).Tesla probably hasn't seen the light--it's just received as of March 1st a desperately needed cash infusion by finally securing overdue funding for Tesla Shanghai Gigafactory 3 which has been under construction since January (see <a href="https://www.smartkarma.com/insights/tesla-shanghai-surprise" target="_blank">Tesla - Shanghai Surprise</a>). Unfortunately, the four banks in Tesla's new "<a href="http://ir.teslamotors.com/node/19561/html" target="_blank">China Loan Agreement</a>," which the company announced on Thursday with a rare 8-K filing, committed only to fund a one-year limited purpose loan for up to 3.5 billion yuan ($521 million). This is barely enough time or cash to get the Shanghai assembly plant up and running--much less also stave off the current cash crunch.But Tesla must keep up appearances as well as bolster its liquidity through at least the end of the quarter as it gets ready to reveal Thursday evening the <a href="https://twitter.com/elonmusk/status/1102332778492772352" target="_blank">long-awaited Model Y</a>--though I suspect this won't result in a massive burst of cash from new reservations as Tesla hopes. Years of robbing Peter to pay Paul hasn't produced a sustainable growth model for Tesla, mostly because its business strategy still is better described as, "Wow, we didn't see that coming."<a href="https://www.smartkarma.com/entities/20279" target="_blank" data-smartkarma-citation="entities:20279:1"></a>Continue reading for Bond Angle analysis.

Tesla Motors (TSLA US) has changed its mind, again, and now reportedly is putting on hold plans to close hundreds of its mostly newly opened stores and lay off thousands more employees--at least until the end of the month.Employees, customers, suppliers, and investors still are reeling over Tesla's startling decision, announced February 28th, to move immediately to online-only sales, a dramatic reversal of strategy still in place as of the 2018 10-K filing on February 19th in which the company had touted growth via recent store expansions and substantial additions planned globally going forward. Tesla explained that even with now three substantial price cuts on all its cars and now three significant layoffs since last summer, it must slash costs even more to support the launch of its long overdue $35,000 base version of the flagship Model 3 (see my report Tesla's New Plan: Buy Before You Try).I warned clients that Tesla's stunning strategy reversal seemed driven more by alarming cash consumption plus much weaker than expected sales and profit margins already apparent in what is shaping up to be a disastrous first quarter--troubling trends that may continue. However, as I noted, it also costs money to close stores, get out of leases (good luck with that), fire employees and redistribute remaining staff, and sell off fairly new equipment at steep losses.Not to mention that shiny new Tesla stores suddenly going dark may appear ominously similar to retail stores going out of business seen increasingly all over the country--a bad look for Tesla, especially given customers already are spooked by its escalating quality, reliability, and service problems (see "Musk and Weird Q3 Developments Are Driving Investors to Telsa’s Rivals" and "Tesla – Dave’s Not Here, and Musk Won’t Leave" and "Tesla: Down to the Wire" and Tesla - Truth and Consequences).Tesla probably hasn't seen the light--it's just received as of March 1st a desperately needed cash infusion by finally securing overdue funding for Tesla Shanghai Gigafactory 3 which has been under construction since January (see Tesla - Shanghai Surprise). Unfortunately, the four banks in Tesla's new "China Loan Agreement," which the company announced on Thursday with a rare 8-K filing, committed only to fund a one-year limited purpose loan for up to 3.5 billion yuan ($521 million). This is barely enough time or cash to get the Shanghai assembly plant up and running--much less also stave off the current cash crunch.But Tesla must keep up appearances as well as bolster its liquidity through at least the end of the quarter as it gets ready to reveal Thursday evening the long-awaited Model Y--though I suspect this won't result in a massive burst of cash from new reservations as Tesla hopes. Years of robbing Peter to pay Paul hasn't produced a sustainable growth model for Tesla, mostly because its business strategy still is better described as, "Wow, we didn't see that coming."Continue reading for Bond Angle analysis.

<div class="content-highlight"><a href="https://www.smartkarma.com/entities/20279" target="_blank" data-smartkarma-citation="entities:20279:1">Tesla Motors (TSLA US)</a> revealed that's its big news teased since Wednesday night was the long-promised launch of the "Everyman" version of its<a href="https://www.tesla.com/blog/35000-tesla-model-3-available-now" target="_blank"> flagship Model 3 priced at $35k</a>, give or take depending on new options for range and interior selections.</div>Buried in the lede is that Tesla also is initiating additional price cuts across the board, including for Models S and X. It's moving to an online-only sales strategy and closing hundreds of stores which will trigger additional layoffs.Oh, and the first quarter will not be profitable after all, according to CEO Elon Musk on the conference call today to discuss Tesla's announcements.So is Telsa pursuing a new, evolving strategy for the future or is it being pushed to retrench?Read on for Bond Angle analysis.

Tesla Motors (TSLA US) revealed that's its big news teased since Wednesday night was the long-promised launch of the "Everyman" version of its flagship Model 3 priced at $35k, give or take depending on new options for range and interior selections.Buried in the lede is that Tesla also is initiating additional price cuts across the board, including for Models S and X. It's moving to an online-only sales strategy and closing hundreds of stores which will trigger additional layoffs.Oh, and the first quarter will not be profitable after all, according to CEO Elon Musk on the conference call today to discuss Tesla's announcements.So is Telsa pursuing a new, evolving strategy for the future or is it being pushed to retrench?Read on for Bond Angle analysis.

United States

Dick's Sporting Goods, Inc. operates as a sporting goods retailer that manages stores primarily in the eastern and central United States. The Company owns stores that offers a broad selection of brand name sporting goods equipment, apparel, and footwear.

Burlington Stores, Inc. owns and operates clothing retail stores. The Company offers, through its stores and internet sites, men's, women's, and children's apparel. Burlington Holding operates within the United States and Puerto Rico.

Abercrombie & Fitch Co.  a specialty retailer that operates stores and direct-to-consumer operations. Through these channels, the Company sells: casual sportswear apparel, including knit and woven shirts, graphic t-shirts, fleece, jeans and woven pants, shorts, sweaters, and outerwear; personal care products; and accessories for men, women and kids.

Murphy USA Inc. produces and distributes petroleum products. The Company engages in refining, marketing, and transportation of oil and gas products. Murphy USA provides products and services worldwide.

The Gap, Inc., is an international specialty retailer operating retail and outlet stores.  The Company sells casual apparel, accessories and personal care products for men, women, and children. The Gap operates stores in the United States, Canada, the United Kingdom, France, Ireland, and Japan.

Ulta Beauty, Inc. operates a chain of beauty stores. The Company offers cosmetics, fragrance, skin, and hair care products, as well as salon services. Ulta Beauty serves customers throughout the United States.

Lithia Motors, Inc. retails, finances, and services new and used vehicles. The Company also provides other related services and products, such as the sale of parts and accessories, extended service contracts, aftermarket automotive products, and collision repair services. Lithia Motors operates throughout the United States.

Williams-Sonoma, Inc. retails cooking and serving equipment, home furnishings, and home accessories through retail stores, mail order catalogs and e-commerce. The Company offers its merchandise under the Williams-Sonoma, Pottery Barn, Pottery Barn Kids, Pottery Barn Teen, and West Elm.

GameStop Corporation operates specialty electronic game and PC entertainment software stores throughout the United States, Australia, Canada and Europe. The Company stores sell new and used video game hardware, video game software and accessories, as well as PC entertainment software, and related accessories and other merchandise.

Penske Automotive Group, Inc. operates franchised automobile dealerships. The Company's franchises are located throughout the United States, Puerto Rico and the United Kingdom.  Penske Automotive sells new and used vehicles as well as offers maintenance and repair services on all brands it represents.

Chow Tai Fook Jewellery Group Limited retails jewelry.  The Company sells rings, necklaces, earrings, pendants, bracelets, and small statues.  Chow Tai Fook Jewellery operates retail stores in China, Hong Kong, Macau, Taiwan, Malaysia, and Singapore.

HIKARI TSUSHIN, INC. is a mobile telecommunication service subscription agency. The Company also operates telecommunication services stores, HIT SHOP, which sell cellular telephones, and related goods.  Hikari Tsushin also sells office automation equipment and insurance.

Hotai Motor Company Ltd. operates as an automobile dealership. The Company sells and services new and used cars and trucks in Taiwan.

Nitori Holdings Co., Ltd., is based in Hokkaido and operates a furniture retail chain.  The Company sells living room furniture, storage furniture, dining furniture, office furniture, beds, and interior goods.  Nitori Holdings also sells original brand merchandise and imported merchandise.

Zalando SE provides online sale of fashion accessories. The Company offers clothing, sports products, shoes, bags, and other accessories for men, women, and children. Zalando markets its products worldwide.

JD Sports Fashion PLC operates a chain of retail stores which sell brand-name sports and leisure wear. The Company sells sports and leisure footwear, clothing, and accessories, among other items. JD Sports Fashion serves customers in the United Kingdom.

Kingfisher plc operates as a home improvement company. The Company offers hardware, home decoration, building materials, and garden products. Kingfisher markets its products worldwide.

JB Hi-Fi Limited is a music and electronic goods retailer in Australia.  The Company operates stores at sites located in most Australian States.  Products include consumer electronics, car sound systems, music and DVDs.

Premier Investments Ltd., through subsidiaries, retails clothing.  The Company retails name brand casual and business clothing for men and women, and stationery and storage products.

Carvana Co. operates an online platform for buying used cars. The Company offers test drives, vehicle financing, and car reviews. Carvana serves customers in the United States.

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Carvana (CVNA US)

Tesla's Plan B 2.0; Y Not

Tesla Motors (TSLA US) has changed its mind, again, and now reportedly is putting on hold plans to close hundreds of its mostly newly opened stores...

Vicki Bryan

Tesla's New Plan - Buy Before You Try

Tesla Motors (TSLA US) revealed that's its big news teased since Wednesday night was the long-promised launch of the "Everyman" version of its...

Vicki Bryan

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