In the intense battleground that is Tesla (NASDAQ:TSLA), both bulls and bears can claim a win this week. Tesla stock plunged Thursday on poor Q1 delivery numbers. But TSLA stock may well rally on Friday after a courtroom win for CEO Elon Musk.

Musk was in court after the SEC (Securities and Exchange Commission) alleged he violated a settlement by using Twitter (NYSE:TWTR) to deliver material information. But Judge Alison Nathan sent both Musk and the SEC away without an answer, instead giving the two parties two weeks to work out a new agreement. Given there were legitimate fears of a possible ban on Musk serving as a director or officer of Tesla, the news looks like a win for the embattled CEO.

But the news on Wednesday is much more important to Tesla stock than what came on Thursday. A D&O ban was highly unlikely. In the wake of the “funding secured” debacle, few investors trust Musk’s Twitter timeline as a reliable source of information anyhow.

The delivery numbers, however, raise real concerns. Tesla’s growth story is in real question, and with a market cap still at $46 billion, that’s the bigger problem for Tesla stock.

Musk Escapes

Musk’s courtroom appearance on Thursday looks like a win. For one, the renegotiated settlement seems likely — at worst — to just be a reiteration of the original deal, perhaps with more specifics. Musk already has said he doesn’t “respect the SEC” — and may well violate that agreement again. But in the meantime, there should be little change for Tesla.

More importantly, the SEC told Judge Nathan that it wasn’t looking to remove Musk as CEO, anyway. Rather, its attorneys asked for “escalating fines” should Musk continue to violate the agreement.

Any bears expecting Musk’s removal — or suspension — from Tesla are likely disappointed. But given the long-running management issues here, some bulls may be disappointed as well. After the last few months, with a series of unforced errors and a steady stream of executive exits, more than a few shareholders likely wouldn’t mind if Musk stepped down — or had more help.

Deliveries Send TSLA Stock Down

Still, for the most part, the SEC news doesn’t much change the case for, or against, Tesla stock. As even shorts have pointed out, the Herbalife (NYSE:HLF) settlement proved that regulators don’t want to risk taking companies down by punishing executives. And while Musk may be the creative genius behind Tesla, execution has been lacking of late.

The deliveries number, however, can’t be ignored. Tesla delivered just 63,000 cars in the quarter — down 31% against Q4 figures. That’s a huge problem for a company supposedly dominating the EV market. And a company that — according to Musk (and many TSLA bulls) — has had more demand than it could serve.

Tesla did note that it had some 10,000 cars in transit at the end of the quarter. And it reaffirmed guidance for full-year deliveries of 360,000-400,000. Investorplace’s Luke Lango pointed to those facts in arguing that the numbers don’t break the bull case for TSLA stock. But I respectfully disagree.

First, Tesla had nearly 3,000 vehicles in transit at the end of the quarter before this one — which means that fact aside, deliveries still dropped sharply. Secondly, the quarter significantly increases the likelihood of a capital raise.

Tesla is going to burn operating cash in the quarter. It repaid its $920 million convertible debt in cash on March 1. It has to fund part of the new Gigafactory in Shanghai. The company wrote in its release that it had “sufficient cash on hand” at the end of the quarter. The question is: sufficient for what?

The Core Problem for Tesla Stock

In a way, the events of Wednesday and Thursday highlight the short case for Tesla stock — a case I’ve put my own money behind. There is so much noise about short “FUD” and Musk’s mission and the myriad allegations of impropriety or, occasionally, outright fraud. The SEC battle feeds into all of that.

But the underlying problem with TSLA stock is more simple and more fundamental. At its core, the bull case for TSLA is based on the idea that the company will be the most effective automobile manufacturer in modern history.

Its gross margin targets of 25% for the Model 3 are well above those of U.S. rivals Ford (NYSE:F) and General Motors (NYSE:GM), and even Japanese giant Toyota Motors (NYSE:TM). Its long-term revenue growth is based on maintaining its obvious market share lead in electric vehicles. As Musk himself has pointed out on many occasions, automobile manufacturing is a brutally difficult business and to support a $50 billion-plus valuation (and thus upside for Tesla stock), Tesla has to do it better than anyone else.

The Short Case for TSLA

Tesla is not doing that. It is not coming close. Musk said the company was building its own car carriers — it then acquired a trucking company last month. Deliveries just tumbled — including a 50%+ drop in the Model S and Model X, which are Tesla’s more profitable cars.

If Tesla isn’t more efficient than its rivals, TSLA stock is overvalued. It’s that simple. Meanwhile, the Q1 numbers are a sign that demand might not be what Tesla thought it was — and the huge end of quarter scramble to serve overseas markets suggests significant logistics improvements are needed.

None of those risks look priced into Tesla stock right now. And it’s those problems that drive the real short case here — not complaints about what Elon Musk said on Twitter.

As of this writing, Vince Martin is short Tesla through a hedged put option position.