I’ve always agreed with Warren Buffet’s motto on what makes a company an attractive investment. Which is, look for companies that have good products and great management teams. But when you look at Tesla, you see the exact opposite. You see a company that is poorly managed and has terrible products. And you could go one further, they also have terrible service. It’s a perfect storm of a company.
Which makes Musk’s Sisyphisian work of relentlessly pushing up the stock price all the more remarkable. This turd of a company needs a whole lot of polishing to get people to buy into it. If anything, the story of the Tesla Bubble is a testament to social media. In the hands of a carnival barker like Musk with a large megaphone, it’s possible to fool a whole lot of people.
But it’s still obvious to most people that Tesla is the largest stock bubble in history. The only people oblivious to the fact are those that want to believe it’s not true. Why? Because they want the gravy train to continue. It’s easy to fool people who want the story to be true. Today’s high-flying Tesla shareholders are tomorrow’s victims. The only question is when.
Most of the run up in Tesla’s share price has had very little to do with Tesla’s performance. It was all about possible admittance to the S&P 500. If you look at Tesla’s last 4 quarters and subtract regulatory credits, they lost tens of millions of dollars per month. Not per quarter, PER MONTH.
The question now becomes, what is left to prop up Tesla’s stock price? Who else is going to buy in at these valuation levels? All the day traders and pension funds buying Tesla stock in 2020 were willing to take a gamble that one day in the future they could sell their stock to the index funds. But after the index funds are done with their purchases, who is left? The only thing that kept this stock price afloat was the potential S&P addition. And now that support is about to go away.
And even the S&P 500 seemed to have qualms about letting Tesla in at all. They could have admitted Tesla months ago but they chose to wait. Why? It’s because no one has seen a company with a valuation this large that has no real profits. It’s an odd situation and one that probably stirred much internal debate.
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.
When it comes to Tesla, I’m very much looking forward to 2021. Tesla is no longer the only game in town when it comes to EVs. Stiff competition is coming from every direction. Tesla’s reputation for poor quality is already causing massive market share bleeding in Europe and Asia. When it comes to the auto industry, quality is the most important indicator of future success...or failure.
Yup, 2021 is going to be great. Just not for Tesla.
But it’s still obvious to most people that Tesla is the largest stock bubble in history. The only people oblivious to the fact are those that want to believe it’s not true. Why? Because they want the gravy train to continue. It’s easy to fool people who want the story to be true. Today’s high-flying Tesla shareholders are tomorrow’s victims. The only question is when.
Most of the run up in Tesla’s share price has had very little to do with Tesla’s performance. It was all about possible admittance to the S&P 500. If you look at Tesla’s last 4 quarters and subtract regulatory credits, they lost tens of millions of dollars per month. Not per quarter, PER MONTH.
The question now becomes, what is left to prop up Tesla’s stock price? Who else is going to buy in at these valuation levels? All the day traders and pension funds buying Tesla stock in 2020 were willing to take a gamble that one day in the future they could sell their stock to the index funds. But after the index funds are done with their purchases, who is left? The only thing that kept this stock price afloat was the potential S&P addition. And now that support is about to go away.
And even the S&P 500 seemed to have qualms about letting Tesla in at all. They could have admitted Tesla months ago but they chose to wait. Why? It’s because no one has seen a company with a valuation this large that has no real profits. It’s an odd situation and one that probably stirred much internal debate.
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.
When it comes to Tesla, I’m very much looking forward to 2021. Tesla is no longer the only game in town when it comes to EVs. Stiff competition is coming from every direction. Tesla’s reputation for poor quality is already causing massive market share bleeding in Europe and Asia. When it comes to the auto industry, quality is the most important indicator of future success...or failure.
Yup, 2021 is going to be great. Just not for Tesla.
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