Guest Post by Justin Spittler
Tesla just whiffed.
…and no one seems to care.
It’s complete insanity…and it’s going to end badly for many Tesla shareholders.
I’ll tell you why in a second. But let me first explain what I mean by “whiff.”
On Tuesday, the electric carmaker reported third-quarter sales of its Model 3.
This is the company’s first mass-market vehicle. It just started delivering them in July.
Yet, Tesla investors had high hopes for the first quarter of production… and why wouldn’t they?
In August, Tesla’s founder and CEO Elon Musk said the company would produce 1,500 Model 3s during the third quarter.
But on Tuesday, we learned that Tesla produced just 260 cars, or 83% fewer than Musk promised.
• This is bad news any way you slice it…
Tesla dropped as much as 3% Tuesday morning.
Then, something strange happened. Tesla’s stock turned higher.
On Tuesday, it actually closed up 2%. Yesterday, it jumped another 2%.
• Like I said, this is complete insanity…
But I can’t say I’m surprised.
You see, Tesla’s shareholders aren’t like most investors.
They don’t care about debt. They don’t care about profits. They don’t even care how expensive Tesla’s stock is.
All they care about is Elon’s vision.
And I get it. Electric vehicles (EVs) are the future. I’m as excited about this EV “revolution” as anyone.
But I’m still avoiding Tesla like the plague. And here’s why you should too…
• Tesla will miss its production goal again…
I’m not saying this because I have anything against the company or Musk.
I’m saying this because I’ve done the math.
You see, back in July, Musk said that Tesla was on track to produce 20,000 Model 3s per month by the end of the year.
At the time, that sounded wildly optimistic. Today, it’s borderline delusional.
After all, Tesla produced just 260 Model 3 cars last quarter. That’s fewer than 87 cars per month.
This means Tesla will need to ramp up its production by 23,000% to hit its lofty goal.
Some people would call that extremely difficult. I’m telling you that’s damn near impossible.
In short, Tesla’s shareholders will be disappointed again. And next time, they might not be so forgiving.
• Tesla is one of the most expensive stocks on the planet…
Its stock trades at a price-to-sales (P/S) ratio of 6.
That makes it nearly three times more expensive than the average large U.S. stock. More importantly, it’s 15 times more expensive than competitor General Motors. And it’s 19 times more expensive than Ford, another major U.S. carmaker.
Of course, Tesla’s valuation isn’t based on reality. It’s based on hopes and dreams.
In fact, many people own Tesla because it’s pioneering the EV revolution.
But you shouldn’t buy Tesla just because it was one of the first on the EV scene…
…especially since competition in the EV market is heating up.
• Just look at what BYD’s doing…
BYD is China’s answer to Tesla. It’s the world’s largest EV maker.
Unlike Tesla, BYD’s profitable. It made $815 million last year. Analysts expect it to earn over $1 billion this year.
It also pays a dividend, unlike Tesla.
To top it off, Warren Buffett’s a huge shareholder. He actually owns about 10% of the company.
And yet, the stock trades at a P/S ratio of just 1.9. It’s three times cheaper than Tesla.
• BYD isn’t the only company challenging Tesla, either…
Take Volvo. It aims to launch 10 more EV models by the end of next year. By 2025, it aims to have 30 EV models.
Jaguar is going electric, too. Soon, it will have an “electrified” option for all its models.
And just this week, both General Motors and Ford laid out their plans to expand their electric models. Ford says it plans to add 13 models over the next several years, with a five-year investment of $4.5 billion.
This is good news for everyday people. It means we’ll soon have a lot more EVs to choose from.
But this is very bad for Tesla. Soon, these companies will chip away at Tesla’s market share.
It’s only a matter of time before other investors realize this. When that happens, watch out.
Tesla’s shareholders will be in for a rude awakening. It will be much harder for them to ignore all of Tesla’s problems.
So, continue to avoid Tesla. Its share price could soon fall off a cliff.
“So, continue to avoid Tesla. Its share price could soon fall off a cliff”
it looks like this tax credit con artist is DRIVING it off the cliff. he shows no restraint at all, like a kid digging a billion dollar traffic tunnel in the back yard on a fucking whim!
And he wants to “fix” Puerto Rico? That’s rich……
Justin, you’re a good example why little kids shouldn’t be analysts. Don’t know enough about the world yet.
You are predictable. No data to support your position. Just faith in the brilliance of a government beholden carnival barker.
There are credible reports that Tesla is having to make some parts by hand. Which is why the production was so low.
I have confirmed reports that Tesla is buying parts created by 3D – can’t say where.
These do not bode well for a mass market vehicle production.
Electric cars are a really expensive toy, compared to a 1995 Toyota pickup truck. Why would you want one?
China is cloning all makes of luxury cars, including Tesla:
https://www.youtube.com/watch?v=ClV2eQuj8VM
I’ve got nothing against electric cars but what America really needs is what Elio is producing. A commuter vehicle that costs $8000. It gets 82 mpg and people who just need a small vehicle to go to the store or get to work in could buy it without a car ‘mortgage’ of 6 or 7 years. Problem is Elio can’t seem to go into production. He’s got an old auto plant I think in Louisiana same as Musk’s Fremont, Ca auto plant. He says his car is made from 100% OEM approved auto parts and just like Tesla he’s got thousands of people who have made pre production deposits to buy one of his cars. What gives?
https://www.eliomotors.com/
I don’t disagree, but I would point out that the problem with these tiny cars is that they’re death traps – so long as the gigantic American SUVs roam the roads.
Europe doesn’t really have CAFE standards, but the effect was much stronger: they taxed gasoline so that it is multiples of American prices. The result was that almost everyone drives a tiny car. And so the road is significantly safer for cars like the Elio.
Regulations always start with good intentions, but equally will always be manipulated as a way to reduce competition. Elio’s problem is likely that they can’t/won’t go through the many many $$$$s needed to get regulatory approval – money which in turn drives up the vehicle price.
I live in Germany. Despite the high price of gas they drive big cars here. Sure their are old small cars used by the lower income people who need to commute to work. Big Audi A6 Combis and others that are similar as well as those crosses between SUVs and cars are big.
Renault that makes a one seater EV. (Renault Twizy) You see them every now and then. It would get demolished in a medium scale accident
The cars are expensive enough as it is. Nobody seems to talk about battery replacement or hazmat materials.
The specs. that I have seen do not include the heater, radio, windshield wipers, AC or other electrical draws that affect the range of travel.
So, the pollution happens somewhere else? Sounds like NIMBY.
The U.S. Energy Information Administration (EIA) estimates that electricity transmission and distribution losses average about 5% of the electricity that is transmitted and distributed annually in the United States.
home charging station – $1,200 at 8+ hours
Fast charging is at 80% full and
parking garage EVSE – $5,500, multiples in one location – $4,000
curbside EVSE – $9,000, multiples in one location – $5,800
curbside DC fast charging EVSE – $60,000
I could list more, but you get the scam, er, idea.
i’m sure most of you are already aware, but after hearing several different “analysts” (several on npr, haha), it’s safe to assume that musk is essentially a cult leader. this is not hyperbole.
i truly can’t wait to see his bigass rocket launch to mars. should be absolutely hilarious. expect bigass explosions…
Tesla is just a govt welfare whore. End the welfare and Tesla folds like a tiny car sandwiched between to dump trucks.
Society would be far worse off if Tesla had actually MET THEIR GOALS.
So the commie chincks are gonna show the capitalist pigs how to make money? Dang, we are so f***ed.
A scam the amount of station just to charge them will be nuts people won’t be able to go on trips the power plants will be over loaded all the time I hate all you do gooders you cost and spend other peoples money so easy and then when it don’t work you say well next time it will commie shit