A week ago or so, I received a tweet in my Twitter feed from Elon Musk, informing me that Twitter’s average load time has improved by four hundred milliseconds. I doubt I noticed the difference, and I doubt many other Twitter users did either.

Frankly, while Musk is re-arranging the deck chairs at Twitter, I suspect most investors would be a lot more interested to hear more from Musk about measurement at the one company of his that has the most prospect of actually being a great business, Tesla.

Tesla has been a real dog for the past four months or so. I refer to that amount of time because it is the time since inception of TL20, The Technology Letter Twenty, the list of twenty great companies to consider investing in. Tesla is a great company, and it’s one of the TL20. It could be a great stock, but it’s been terrible since the inauguration of The Twenty.

Tesla is the worst performer since the July 15th inauguration date, down thirty-seven percent. Because the TL20 is market cap-weighted, Tesla exercises a disproportionate effect upon the group. The entire TL20 is down 12.6% since inception, but excluding Tesla, it would be down just 2.2%.

By that alternate measure, the TL20 would be ahead of the 6.5% decline in The Nasdaq Composite Index since July 15th, and it would be a lot closer to the Standard & Poor’s 500 Index, which is roughly flat since July.

What will stem this decline? What might help is if Musk were to share more data about how Tesla’s sales prospects look. The data the company traditionally discloses is vague, and has lately become very cloudy and hard to interpret.

That is happening at a time when there is rising anxiety that Tesla’s sales may be about to fall apart. Tesla is a bubble stock, and to an extent, a bubble company, and it has never been tested in a prolonged economic downturn.

Founded in 2003, Tesla came public June 28th of 2010, after the last major economic contraction, The Great Recession. Its vehicles, which list starting at just under fifty thousand dollars for the base Model 3, represent pricing in a time of relative economic prosperity.

In an economic crunch, even some bulls think Tesla will have to cut prices. An Uber-bull on the stock, Trip Chowdhry of the boutique Global Equities Research, writes in recent missives to investors that both Tesla, and competitor Lucid Group, “will need to drop vehicle prices by at least 10% to 15%” because neither is “immune to recession,” as he put it.

TSLA stock chart by TradingView If it is true that Tesla is now entering its first real test of demand, it might be good to have a more solid measure of demand. That’s where metrics come in.

Tesla’s financial reporting has to date consisted of a two-step: deliveries and revenue. The company reports total car deliveries shortly after a quarter is over, and two weeks later, it reports revenue. In between, the Street writes predictions about revenue using deliveries as a leading indicator.

That kind of very simple calculus is a thing that works just fine when business is going up and up in good times, much as Netflix, another bubble company, for a long time dazzled the Street with rising subscriber numbers — until it stopped growing.

For Tesla, deliveries have become problematic as a reflection of anything of late because they’re under pressure from factors unrelated to demand.

Tesla, like many firms that make real, physical stuff, has been dealing with the supply chain issue. As a result, deliveries lately are not keeping up with expectations. Musk, and CFO Zachary Kirkhorn, have set a goal to increase both production of cars and deliveries, on a unit base, by fifty percent, annually, over a multi-year time horizon. Production rose fifty-four percent last quarter, but deliveries rose only forty-two percent, and Musk and Kirkhorn said deliveries will continue to be under pressure.

The Street expects deliveries will still be under pressure in 2023, forecasting total delivery growth of just forty-four percent next year.

There’s a second reason deliveries are cloudy, and that’s the rising backlog of cars not delivered. The company has been raising prices this year to offset rising costs, not just materials costs but the rising cost of freight.

Consequently, cars in backlog, once they are delivered and recognized as revenue, will probably skew Tesla’s average pricing upward irrespective of demand. That can cloud Tesla’s true pricing power, quarter to quarter.

If deliveries aren’t a great indicator of demand, Tesla’s actual commentary about demand is vague.

Musk and Kirkhorn typically talk about how the “order book” is doing in broad terms. On the October earnings call, Musk remarked that, “demand is a little higher than it would otherwise be,” without elaborating.

It would be nice to have another measure of demand. The balance sheet provides some extra data, but not much. The deferred revenue balance includes many parts of Tesla’s offering that have nothing do with the vehicle sale itself, such as the company’s self-driving software and system software updates.

The other balance sheet metric that’s slightly relevant is the figure of Tesla’s customer deposits, which is the amount a customer has to put down when they place an order, such as the $250 deposit for a base Model 3. But that figure also includes deposits for Tesla energy products, so it’s not a clean auto number.

And the deposit amount per vehicle is highly variable based on the model and configurations. To my knowledge, no one has triangulated how customer deposits correlate to aggregate car demand for Tesla in any given period.

So, there is no good measure for demand, other than Musk’s upbeat tone — that, and the company’s past performance of generally increasing sales nicely over many years.

Other areas of tech have come up with additional measures to reassure investors. The prime example is the software industry.

A year ago, I wrote a broad overview about how the software world has sprouted numerous measures of the business quarter to quarter. The Metrics, as I term them, include tons of non-GAAP numbers such as “remaining performance obligation,” a measure of the total value of software contracts signed that has yet to be realized as revenue.

If Musk and Kirkhorn had any desire to reassure the investing public, they could disclose a similar sort of measure. For example, what is the total order book value in dollar terms? How much of that might be realized in a given period, the current portion of the order book, would be a nice complement.

Based on the remarks and tone of the conference calls, I don’t get the sense Musk and Kirkhorn have any urgency to provide such reassurance. And I expect they don’t want competitors to know those kinds of things.

That means investors will have to decide: Is this a company that’s priced too high for a recession, or will its position as an EV leader prove more durable than people suspect?

Even in a tough market, if prices fall as Chowdhry expects, Tesla would still be the best house in a bad neighborhood, as it is far ahead of the competition in making product.

I wrote last month that the crop of young contenders are a mess. Lucid, Rivian Automotive and Faraday Future have continued to miss expectations as they struggle to get to volume production. All three, moreover, are pricing their wares at the high end of the market, so none of them are a budget alternative.

See also:

TL20: Not dumping Tesla yet, November 10th,

How does Rivian, Tesla’s most interesting competitor, stack up? July 9th.

Ford and others can be a budget alternative, buttheir progress in EV sales still leave them far behind Tesla. A report in November by S&P Global Mobility stated that of 525,000 electric vehicles registered in the U.S. in the first nine months of this year, sixty-five percent, 340,000, were Teslas.

Ford has sold a total of 53,752 electric vehicles this year, making it number two behind Tesla, according to The Detroit News’s Jordyn Grzelewski. While Tesla doesn’t report regional numbers, you could say that based on deliveries of 343,830 cars, worldwide, in the third quarter alone, there is good reason to believe Ford is a very distant second place.

If Tesla isn’t recession resistant, but if management won’t reassure investors with additional disclosure, then at some point, the prospect of share buybacks will probably become one of the most important parts of the story.

Musk during October’s earnings call indicated a big buyback is a distinct possibility.

“We've debated the buyback idea extensively at board level,” said Musk. “The board generally thinks that it makes sense to do a buyback.

"Even if next year is a very difficult year, we still have the ability to do a $5 billion to $10 billion buyback,” said Musk.

“This is obviously pending board review and approval, so, it's likely that we'll do some meaningful buyback.”