When doing the work on Tesla (NASDAQ: TSLA ) we always thought the company should be private. Burning through all that cash and constantly needing new funding rounds sounds awfully like a private company, not a public one.

Shouldn’t Have Been Public

The loss-making, fundraising model is normal for private companies. Private equity and venture funds that are used to it are of course searching for it.

But public shareholders are used to stead-eddy. Public shareholders are typically served earnings progressions and quarterly metrics that don’t question a company’s sustainability.

So when public shareholders were forced to acclimate to Tesla hands needed wringing. The sustainability before Q2 had been based on the hope that CEO Elon Musk could muster up some fresh capital. The sustainability of the business model was not based on straight-lining trends or having a few years of cash burn before you run out.

Many of those public-type shareholders then turned bearish and even shorted because this Tesla model was more like an Uber model that burned a ton of cash, but Uber wasn’t public. Nobody needed to care about Uber’s cash burn except its private investors.

But Tesla’s cash burn model on any other company that couldn’t snap their fingers for the new capital was of course quickly going to zero. Musk was, of course, a different story and could raise capital until he didn’t need to.

Should Be Public, Now

But behind the curtains, Musk started seeing the gross margin ramp from S&X and Model 3. He realized he didn’t need to conjure up more investors to stay afloat. He could do it from his own cash flow.

From there he quickly calculated, our guess, is “if I don’t need them now, then why do I need them.”

Simultaneously the story quickly turned to a potential earnings inflection story, the types most investors only dream of.

The funny thing is so many good analysts used to¬†normal¬†public companies dug themselves into being bearish on the cash burn, raise money model that when the company said we’re going profitable in Q3 and Q4, they couldn’t swivel their heads to appreciate.

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