We’ve heard the “SLNN will come back” for almost a year now and it only resulted in more pain for the investors.
The 2015 Mustang is not a game changer. SLNN got ~$250k from short-term loans. That’s not even enough to cover their overhead. How will they get the cars? Not only financially, but it also seems like they are burning bridges with their suppliers as pointed out in the 10Q.
We already know that they burned through all the deposit money for the “FOURSIXTEEN” reservations without delivering on the cars. What makes you think the same thing will not happen with the Mustang 2015?
Your point is that Saleen will sell a lot of Mustang 2015 which will result in higher revenues and you say that this will somehow turns out into a “good surprise” on the Q4 results. Who cares about higher revenues? Even if they bring in 5 more millions (which they won’t), they are still stuck with a 11% gross profit. They would still have a huge operating deficit. Add interest expenses to that and Saleen’s financial would remain laughable.
You just have to use some simple math to see how ridiculous is Saleen’s financial situation. Let’s imagine a best case scenario for Saleen in Q4 and by “best case”, I mean unrealistic. Imagine that Saleen manage to get their hands on some 2015 Mustangs last week of November and starts delivery first of December. Imagine they manage to build a ton of cars and deliver them within 1 month which bring in $5m in revenue. On top of that, by some miracle of efficiency, Saleen manages to finish the quarter with a 20% gross margin (which is far better than what they got the rest of the year).
Well even then they would end up with about $500k of operating deficit. Their $250k 9 months loan can’t help much here. Add to that the $500k of interest expenses which will likely go up in Q4 and you will end up with a best case scenario of a ridiculously poor financial result.
When the best case scenario of a $4m company is to add a $1m deficit in just one quarter, you need to run.
