On Nov 22nd I wrote about how Tesla’s stock price has been carried for the past year on the prospect of future inclusion into the S&P 500. Here is an excerpt of what I said:
In any event, we’re a step closer to the end of the Tesla story. There are only so many ways to push up the valuation of a company that makes glitchy low-quality products and has terrible service. And now with the S&P carrot gone, the focus is going to shift to Tesla’s performance. This is not where Tesla typically likes the focus. In fact, it’s Musk’s full time job to shift everyone’s gaze away from present performance and look to the fantasies of the future. —Perezonomics.com 11/22/20
I figured that there would probably be other hot takes that basically agreed with what I said. However, I didn’t expect Musk to be one of them. Here is what he said earlier today:
“Investors are giving us a lot of credit for future profitability but if, at any point, they conclude that’s not going to happen, our stock will immediately get crushed like a souffle under a sledgehammer!” Musk wrote in the email, which was obtained by CNBC.
There you go. It’s normally Musk’s job to distract investors from delving too deeply into their true financial health. But he just admitted that focus is going to shift to their actual performance. He’s also admitted that it’s harder than ever convincing everyone that losses don’t matter.
But Q4 of 2020 is irrelevant. They can’t possible earn enough money in this quarter to offset losing a combined loss of $600 million in Q1 and Q2 (subtracting regulatory credits). It’s guaranteed that 2020 is going to be yet another year in which Tesla didn’t earn a real profit from operations. This is why there are still so many Tesla skeptics.
Everyone has written off 2020 and given Tesla a pass this year. It’s 2021 that’s going to be a problem for Musk. There has been a lot of patience with Tesla until now. But even Tesla has to produce real results at some point. And Tesla’s fake profits which include regulatory credits, some of which haven’t even been earned yet, won’t be good enough next year. In 2021, Tesla needs to show that they can turn a real profit without getting welfare checks from the government.
With the S&P 500 carrot getting taken off the table, Wall Street will be scrutinizing Tesla like never before in 2021. Judging by Musk’s e-mail today, he agrees with me.
I figured that there would probably be other hot takes that basically agreed with what I said. However, I didn’t expect Musk to be one of them. Here is what he said earlier today:
“Investors are giving us a lot of credit for future profitability but if, at any point, they conclude that’s not going to happen, our stock will immediately get crushed like a souffle under a sledgehammer!” Musk wrote in the email, which was obtained by CNBC.
There you go. It’s normally Musk’s job to distract investors from delving too deeply into their true financial health. But he just admitted that focus is going to shift to their actual performance. He’s also admitted that it’s harder than ever convincing everyone that losses don’t matter.
But Q4 of 2020 is irrelevant. They can’t possible earn enough money in this quarter to offset losing a combined loss of $600 million in Q1 and Q2 (subtracting regulatory credits). It’s guaranteed that 2020 is going to be yet another year in which Tesla didn’t earn a real profit from operations. This is why there are still so many Tesla skeptics.
Everyone has written off 2020 and given Tesla a pass this year. It’s 2021 that’s going to be a problem for Musk. There has been a lot of patience with Tesla until now. But even Tesla has to produce real results at some point. And Tesla’s fake profits which include regulatory credits, some of which haven’t even been earned yet, won’t be good enough next year. In 2021, Tesla needs to show that they can turn a real profit without getting welfare checks from the government.
With the S&P 500 carrot getting taken off the table, Wall Street will be scrutinizing Tesla like never before in 2021. Judging by Musk’s e-mail today, he agrees with me.
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