Musk comes out swinging at Tesla shareholder meeting

Tesla shares have rebounded solidly after hitting a three-year low of $176.99 on June 3, with yesterday’s session closing at $217.10/share into the company’s 2019 shareholders meeting.

The meeting was expected to be a forum for CEO Elon Musk to address the challenges that saw Tesla post a $732 million Q1 loss while its stock declined from a December 2018 peak north of $370 to under $200 in May despite a V-shaped rally in US equities as a whole.

In a sense it was. In another sense, however, it returned focus to CEO Elon Musk’s voluble personality and the potential for gaps between the company’s claims and reality.

For Tesla bulls, the meeting was celebratory. Musk came out swinging and left to a standing ovation. The Tesla CEO hit back at analyst claims that demand could prove an issue for Tesla, stating that there is “not a demand problem”, and adding that “sales have far exceeded production, and production has been pretty good.”

Musk also told his audience that the company continues to find new customers, stating that 90% of incoming orders are from buyers without a reservation for the Model 3.

“We have a decent shot at a record quarter on every level […] if not, it’s going to be very close,” said Musk in a leaked internal email.

Beyond the realm of pretty goods and decent shots, however, Musk was more evasive. Although the Tesla CEO was keen to discuss full automation, including a proposed “summon” feature that would see Tesla cars drive themselves from parking spots to their waiting owners, he was careful not to mention concrete timelines.

Musk was similarly vague on the question of profitability, stating that “profitability is always challenging when you're a fast-growing company”.

The question for Tesla is how mush further the company can go on enthusiasm alone. While Musk was keen to talk up the forthcoming Tesla pickup truck, calling it a “cyberpunk” production that will outperform a stock Porsche 911 while maintaining the ability to “haul a horse”, there were no reveals, and his presentation ended on an equivocal note with Musk stating that “we’re trying to create something new and it’s […] very hard. This is a very hard thing.”

Musk was also imprecise regarding Tesla’s recent acquisition of Maxwell technologies, claiming that the battery firm possesses some key technologies that will make it cheaper and easier to scale up production of lithium-ion batteries, but leaving the details for a “battery and powertrain” event in Q3.

Yesterday’s shareholder meeting came on the back of some positive headlines after Roth Capital partners upgraded TSLA from Neutral to Buy on Monday while Bair analyst Ben Kallo reiterated a Buy rating and a price target of $340, near TSLA’s all-time high.

Today’s session looks set to be an interesting one as markets take stock of the shareholder meeting’s releases against a backdrop of improving sentiment. From a technical perspective, however, the recent rally has brought Tesla shares back to an area of local resistance. According to Blue Line Futures’ Bill Baruch, much of Tuesday’s gain was due to short covering ahead of the investor meeting.

“I’m looking at $250 area, $245 as being an area to look to sell this,” Baruch told CNBC Tuesday.