Will Tesla burn cash in the second quarter?

In the summer of 2018, when the #1 controversy on Tesla was whether the company would run out of cash by year end, we defended that the ramp of the Model 3 would generate massive free cash flows, as the company would cash-in payments well ahead of cashing-out supplier payables. Wall Street analysts overlooked this basic Balance Sheet effect, and history proved us right at the time.
This time round, we see Wall-Street analysts overlooking the same phenomenon… in reverse. In the second quarter, as Tesla is likely to deliver 60,000 less cars sequentially, we see a huge free-cash-flow headwind, likely to result in a break-even quarter at best.
We therefore expect Tesla to miss free-cash-flow expectations in July (unless our peers read our research and adjust their numbers…). We would nevertheless buy any resulting weakness, as the company will make-up for lost free cash flow in the second half of the year, when volume growth resumes.