Thursday, August 6, 2015
TESLA AND TESLA REDUX
The post below was written 11 months ago. I don't think it was ever posted, which is no surprise as I write a lot of stuff that never sees the light of day...fortunately!! But the date was September 4, 2014 and the observations were made below. Just wanted to update.
The stock was at $290 and the sky was the limit. By April, the stock dropped to $180; yesterday it was $270 and this morning it is opening in the $240 range, or down 10% plus. That’s volatility.
The previous article pointed out the small production and it is still a problem as 2015 was the year that they would achieve a pace of 100,000 units per year. Well, folks, it ain’t gonna happen—they changed “guidance” by -15% and still think 100,000 is going to happen…next year.
Meanwhile, the company loses $16,000 per car, up from a loss of $11,000 per car last December. The $2.3 billion raised in the market last year is essentially gone, burned up.
Are we starting to see a trend here? It is still valued at $34 billion (which is less than Apple, valued at $650 billion) but I can’t reconcile that with the current GM value of $50 billion.
Is anybody else thinking tulip bulbs? Google “tulip bulb craze.”
Soooo, the logical thing to do is short the stock, right? Not so fast, there, Baba Looey. It is already close to being “fully shorted” meaning a lot of short interest which is also dedicated buying interest since the shorts have to be covered eventually. The bigger influence, in my mind, is the power of Wall Street. Don’t discount the ability of the brokers who are going to pick up hundreds of millions when they place the $2 billion or $3 billion in the next financing round.
Let us just sit back and keep track and determine if the markets are, indeed, efficient.
I have not been an electric car fan, principally because I think it requires too much government support to make them even marginally competitive in the marketplace. Now, Tesla is getting about $3 billion or more in tax breaks to put a factory in Nevada.
The second reason I don't think electric cars should have a place on the planet involves the ecological damage created by the batteries. The awful ecological disaster in Canada where the raw material is mined has been used by NASA because it resembles a moonscape. The factories where the lithium is processed in China are polluters on a cosmic scale.
But...since the cars run part of the time on batteries (Tesla's are all electric, not hybrid as I understand it), they are "green." Now, the power plants that supply the electricity to power the batteries are deemed to be enemies of the environment by the politicians, but that doesn't appear to matter.
Now, get this:
Excitement over Tesla’s future has caused Wall Street to give this momentum stock a $35 billion market capitalization, versus General Motors’ $55 billion. Tesla sold 39,149 cars through June 30, while GM sold north of 9.7 million vehicles last year alone. Tesla has posted net losses of $581.93 million from January 2012 through June 2014, while GM has posted net income of $13.84 billion over the same period...
Not in this article, but in another it was noted that Mountain View, California saw a lot of Tesla purchases. I guess you can afford one when your house is worth $1 million, $773 per square foot.