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Chitchat Made in US EV Tesla sucks...
- Thread starter tanwahtiu
- Start date
Those who think today’s stock market is unlike that of 2000, when baseless enthusiasm pushed stocks up to wild valuations, only to collapse in subsequent years, should take another look. Do they remember counting eyeballs as a basis for value? Once again, history and reality are replaced by dreams with little substance. Tesla, in which I have a short position, is becoming the loudest canary in Wall Street’s coal mine.
Tesla requires repetitive capital raises to fund persistent operating losses. This requires bullish analysts and holders to keep the stock aloft with projections of imagined earnings from future products, while they overlook existing businesses, which continue to lose vast sums of money.
Morgan Stanley, one of Tesla’s major underwriters, has an analyst covering Tesla named Adam Jonas. Astonishingly, he raised his price target for the stock, despite recognizing the need to slash his earnings forecast.
In May, Jonas had estimated per-share losses (excluding stock-option expense) of $3.53 in 2017 and $1.14 in 2018, and a profit of $2.43 in 2019. His latest estimates: losses of $7.60 and $3.66, and a 2019 profit of $2.01.
Raising the target price while more than doubling the company’s projected loss indicates the craziness of the times. Price targets are fantasies, discounting distant earnings estimates by analysts who show little accuracy in estimating only a year ahead.
FOR MOST COMPANIES, profit is the major objective. Tesla is different because its founder is different. Elon Musk is driven by a mission to replace fossil fuels with renewable energy. Unlike companies seeking profit maximization by using patents to establish exclusive rights to products, Musk encourages competitors and has made virtually all of his patents available. Almost all auto companies have imminent plans to compete.
Tesla has been first-to-market in electric cars, but this in no way guarantees success, as competition and technological change are major challenges. Remember Atari, Blackberry, AOL, Napster, Netscape, and Palm?
Musk is smart and imaginative, but none of his major companies are profitable. Tesla has been around for 14 years and has cumulatively lost more than $3.7 billion, despite the massive subsidies that it and its customers have received. SolarCity, also a beneficiary of alternative-energy subsidies, lost hundreds of millions of dollars before being bailed out by Tesla. As subsidies diminish, and competition emerges, profits will be even more elusive.
Tesla tries to convey the illusion of inexhaustible demand for its cars, yet sales of the Model S and Model X have been flat for four quarters. Tesla’s rising inventory and shrinking deposits suggest declining demand.
Tesla claims to have more than 400,000 deposits for the Model 3, but these aren’t orders. They reflect a decision by potential buyers to get in line for a $7,500 tax credit at virtually no cost. Shifting $1,000 from a savings account into a refundable Tesla deposit costs only about $1 per year in lost interest.
Fewer than 100,000 of these depositors will actually get full tax credits before Tesla consumes its allowable allotment of them. Its competitors will be able to offer such credits to prospective buyers, just as Tesla’s expire.
Tesla marches to its own accounting drum. Unlike other auto companies, it refuses to release monthly sales figures, and it excludes many standard items in computing gross margins, making comparisons meaningless. Tesla de-emphasizes earnings under generally accepted accounting principles to make results look better—and much of Wall Street goes along with the nonsense. Jonas’ 2018 loss estimate would nearly double under GAAP.
Stock options are widely spread among Tesla employees, costing the company hundreds of millions of dollars a year, yet never counted as the expense they are. Few would work for Tesla for salary alone, but a big piece of the employees’ compensation isn’t in Tesla’s non-GAAP accounting. It is shameful that the Securities and Exchange Commission, which is supposed to protect investors, allows analysts to focus on non-GAAP numbers in their reports.
The stock has escaped the gravitational pull of actual results and is wedded to Musk’s own guesstimates of margins and cash flow, few of which have been accurately projected in the past. For instance, in February 2012 he said, “Tesla doesn’t need to ever raise another financing round.” Nine more financings followed.
Even Musk says the stock price, recently $357, is “higher than we have the right to deserve,” based on present performance. Yet the bulls swallow all of the weirdness with little question. There were virtually no comments or questions about imminent competition in the last conference call.
Musk has been hailed as a modern-day Edison, but perhaps a better comparison is Nikola Tesla, the company’s namesake. He, too, was a brilliant scientist and prominent showman who had many great ideas, but none became profitable for him.
ELON MUSK IS SPREADING himself very thin. It’s almost as if he is throwing things against the wall to see what sticks: recoverable space rockets, electric autos, solar power, autonomous vehicles, energy storage, roof tiles, tunneling, hyperloop transit, brain implants, and, no doubt, more to come. Most successful entrepreneurs are more intensely focused.
Only time will tell if earnings guesses by bullish analysts prove accurate. So far, the facts have consistently forced them to cut near-term estimates. There is little room for error now. After the last bond offering, there is nearly $10 billion of long-term debt against $5 billion in equity for a company burning through billions of dollars each year. The number of shares outstanding rose to 165 million this past June, from 140 million a year earlier.
Some of Tesla’s strongest supporters seem to have recognized these problems. A recent SEC report showed that T. Rowe Price halved its holdings in the second quarter and that Fidelity, the largest holder, also sold millions of shares in that period. The unkindest cut came from Morgan Stanley: Despite its analyst’s optimism, the firm cut its stake by 60%. A more realistic appraisal of Tesla’s value should soon be at hand.
Tesla requires repetitive capital raises to fund persistent operating losses. This requires bullish analysts and holders to keep the stock aloft with projections of imagined earnings from future products, while they overlook existing businesses, which continue to lose vast sums of money.
Morgan Stanley, one of Tesla’s major underwriters, has an analyst covering Tesla named Adam Jonas. Astonishingly, he raised his price target for the stock, despite recognizing the need to slash his earnings forecast.
In May, Jonas had estimated per-share losses (excluding stock-option expense) of $3.53 in 2017 and $1.14 in 2018, and a profit of $2.43 in 2019. His latest estimates: losses of $7.60 and $3.66, and a 2019 profit of $2.01.
Raising the target price while more than doubling the company’s projected loss indicates the craziness of the times. Price targets are fantasies, discounting distant earnings estimates by analysts who show little accuracy in estimating only a year ahead.
FOR MOST COMPANIES, profit is the major objective. Tesla is different because its founder is different. Elon Musk is driven by a mission to replace fossil fuels with renewable energy. Unlike companies seeking profit maximization by using patents to establish exclusive rights to products, Musk encourages competitors and has made virtually all of his patents available. Almost all auto companies have imminent plans to compete.
Tesla has been first-to-market in electric cars, but this in no way guarantees success, as competition and technological change are major challenges. Remember Atari, Blackberry, AOL, Napster, Netscape, and Palm?
Musk is smart and imaginative, but none of his major companies are profitable. Tesla has been around for 14 years and has cumulatively lost more than $3.7 billion, despite the massive subsidies that it and its customers have received. SolarCity, also a beneficiary of alternative-energy subsidies, lost hundreds of millions of dollars before being bailed out by Tesla. As subsidies diminish, and competition emerges, profits will be even more elusive.
Tesla tries to convey the illusion of inexhaustible demand for its cars, yet sales of the Model S and Model X have been flat for four quarters. Tesla’s rising inventory and shrinking deposits suggest declining demand.
Tesla claims to have more than 400,000 deposits for the Model 3, but these aren’t orders. They reflect a decision by potential buyers to get in line for a $7,500 tax credit at virtually no cost. Shifting $1,000 from a savings account into a refundable Tesla deposit costs only about $1 per year in lost interest.
Fewer than 100,000 of these depositors will actually get full tax credits before Tesla consumes its allowable allotment of them. Its competitors will be able to offer such credits to prospective buyers, just as Tesla’s expire.
Tesla marches to its own accounting drum. Unlike other auto companies, it refuses to release monthly sales figures, and it excludes many standard items in computing gross margins, making comparisons meaningless. Tesla de-emphasizes earnings under generally accepted accounting principles to make results look better—and much of Wall Street goes along with the nonsense. Jonas’ 2018 loss estimate would nearly double under GAAP.
Stock options are widely spread among Tesla employees, costing the company hundreds of millions of dollars a year, yet never counted as the expense they are. Few would work for Tesla for salary alone, but a big piece of the employees’ compensation isn’t in Tesla’s non-GAAP accounting. It is shameful that the Securities and Exchange Commission, which is supposed to protect investors, allows analysts to focus on non-GAAP numbers in their reports.
The stock has escaped the gravitational pull of actual results and is wedded to Musk’s own guesstimates of margins and cash flow, few of which have been accurately projected in the past. For instance, in February 2012 he said, “Tesla doesn’t need to ever raise another financing round.” Nine more financings followed.
Even Musk says the stock price, recently $357, is “higher than we have the right to deserve,” based on present performance. Yet the bulls swallow all of the weirdness with little question. There were virtually no comments or questions about imminent competition in the last conference call.
Musk has been hailed as a modern-day Edison, but perhaps a better comparison is Nikola Tesla, the company’s namesake. He, too, was a brilliant scientist and prominent showman who had many great ideas, but none became profitable for him.
ELON MUSK IS SPREADING himself very thin. It’s almost as if he is throwing things against the wall to see what sticks: recoverable space rockets, electric autos, solar power, autonomous vehicles, energy storage, roof tiles, tunneling, hyperloop transit, brain implants, and, no doubt, more to come. Most successful entrepreneurs are more intensely focused.
Only time will tell if earnings guesses by bullish analysts prove accurate. So far, the facts have consistently forced them to cut near-term estimates. There is little room for error now. After the last bond offering, there is nearly $10 billion of long-term debt against $5 billion in equity for a company burning through billions of dollars each year. The number of shares outstanding rose to 165 million this past June, from 140 million a year earlier.
Some of Tesla’s strongest supporters seem to have recognized these problems. A recent SEC report showed that T. Rowe Price halved its holdings in the second quarter and that Fidelity, the largest holder, also sold millions of shares in that period. The unkindest cut came from Morgan Stanley: Despite its analyst’s optimism, the firm cut its stake by 60%. A more realistic appraisal of Tesla’s value should soon be at hand.
New Tesla killer coming up in the next few years.
Lucid Air (2019) Tesla Model S killer?
Fisker patents radical 'solid state battery' it claims can power a car for 500 miles and recharges in a few minutes.
Lucid Air (2019) Tesla Model S killer?
Fisker patents radical 'solid state battery' it claims can power a car for 500 miles and recharges in a few minutes.
Angmoh will never make it in manufacturing of everything.
They hv attitude problems to solve technical problems.
Not willing to work hard to toil the soils so turn to slaves to do the Hard work for them.
Think they are super race which in fact they are evil race want something for nothing.
Only think of making more evil gunbots to go to war where they hv no enemies but fake them to be their enemies.
They hv attitude problems to solve technical problems.
Not willing to work hard to toil the soils so turn to slaves to do the Hard work for them.
Think they are super race which in fact they are evil race want something for nothing.
Only think of making more evil gunbots to go to war where they hv no enemies but fake them to be their enemies.
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