Guest Post by Simon Black
There’s no doubt you know the story…
On August 7, in the middle of the trading day, Tesla founder Elon Musk surprised investors with a tweet saying he was considering taking Tesla private at $420 per share (a $72 billion valuation) with “funding secured.” He quickly followed up with “Investor support is confirmed.”
Shares of Tesla soared 13% to $387 on the cryptic social media update from Tesla’s exalted chief.
The news created a media frenzy around the already red-hot company (and prompted the SEC to investigate Musk and Tesla for potentially lying to investors about a takeover). A single tweet – while the market was still open, no less – was an odd and informal way to announce such a major event.
Did Musk consult Tesla’s board of directors before making this public? Did they even know of his plans to take the company private? Is any of this even true?
It didn’t matter to Tesla’s shareholders, who believe Musk walks on water and his tweets are gospel. So the stock price soared.
And the deal made sense for Musk…
Investors, including himself, would make a fortune.
And he would no longer be bothered by those pesky short sellers, reporting enormous losses to the public and nagging production deadlines (which Tesla continually misses)…
As a private company, Musk wouldn’t even have to ask shareholders’ permission for a $50 billion pay package.
Only, Tesla isn’t going private.
Last Friday, in a blog post (you know the announcement has got to be important if it’s escalated to blog post formality) Musk announced Tesla would stay public.
He gave a bunch of excuses for the decision, including going private would be more time consuming than he realized and that his beloved retail shareholders (his congregation) couldn’t own shares in a private company.
Tesla shares sold off yesterday and now trade more than $20 below the price before Musk announced the go-private deal.
Once again, Elon Musk made a grand claim to shareholders and didn’t back it up.
I am honestly curious how this guy has any credibility left with shareholders. How many times do people need to be misled, lied to and underwhelmed before they finally realize that Elon Musk is not going to walk across water and deliver.
Here’s the big thing Tesla shareholders are missing… you have to separate the vision from the product and the product from the business. They are three separate things.
I’ll be the first to say that Elon has incredible vision, well visions. He wants to save the world from Skynet, go to Mars, eliminate traffic, build a hyperloop, save Thai boys from a cave. He has lots of great ideas.
And, even better than that, he actually puts effort into making these ideas happen. Lots of people come up with ideas, but few actually take steps to put them into action.
For example, Musk proposed an underwater submarine to save the Thai boys. It turns out it was a bad design and wouldn’t have worked. But at least the guy came up with the idea and threw resources at it.
Simply put, there just aren’t a lot of action takers in the world.
And there’s no doubt Tesla has a great product. It’s a cool, fast car with good tech behind it.
But the vision and the product are different than the actual business.
And the business is a disaster.
Tesla—the business– has a history of constantly overpromising and underdelivering – losing money, missing deadlines and sending the stock up and down along with Musk’s Twitter bullshit.
It’s incredible that the stock rises and falls based on Musk’s tweets. He’s proven time and again, the market shouldn’t put any weight into what he says. Still, he looms as this cult figure.
But if you separate his personality from Tesla, what are you left with?
You have a company that’s hemorrhaging cash ($717 million in the last quarter), losing money on every vehicle it sells and building what is arguably the most expensive manufacturing facility ever created in the history of the world (the Gigafactory).
Executives are leaving in droves and the company can’t recruit a COO. That sole fact, by the way, should terrify shareholders. One of the sexiest, high-flying companies in the world today can’t recruit a top executive…
Oh, by the way, even with everything above, Tesla is worth more than BMW, General Motors and Ford (companies with long operating histories, actual profit and large dividends).
The old car manufacturers might not have the vision of Musk. But they do have great products and great businesses.
The ideal investment has all three traits – great vision, great product and a great business.
At the end of the day, if you’ve got vision and a great product, but the business is crap… it doesn’t matter. Because you’re investing in the business.
This fact should be painfully obvious.
Yet there seem to be, literally, millions and millions of people who are blindly throwing money at Tesla (the money-losing business) based on their beliefs about Elon’s grand vision or the quality of the products.
It’s become so absurd that a single Tweet can literally create or destroy tens of billions of dollars of value in the company’s stock despite a track record of not being able to back it up.
Fool me once, shame on Elon.
Fool me twice, shame on anyone crazy enough to believe such unfiltered garbage.
What a nerd you are Simon Black. How much do they pay nowadays to rewrite the same talking point article? 1500 bucks? Don’t you have anything better to do with your time? I’ve seen this article written at least a hundred times. Same dumb points, nothing new. Are you aware that Tesla is currently making over 6000 model 3’s a week? At 50 grand a pop? That’s 300 million dollars a week just in model 3’s. Adding another 200 million a week in Model S and X, and the same idiots keep scratching their heads wondering why Musk says he doesn’t need to access capitol anymore. Tesla has crested the hill. No more climbing. It’s all glide now. If morons like Black actually listened to what Musk said, he said it would be profitable when they could sustain 5000 a week. They’re past that now. Look for them to have a monster third quarter. Never bet against the super smart. And Musk is definitely super smart. Yeah Simon, Musk is no businessman. That’s why he’s a billionaire, and you can’t even get a date. I didn’t realize you were just another Eric Peters with a prettier byline.
starfcker dreaming of Elon
Eyebleach, aisle 4
Who. Upvoted. That. Don’t encourage Jim, whatever you do. He has hundreds of thousands of pictures just like that on his hard drive and he could ruin this blog quick.
There you go with facts combatting propaganda.
I happen to know Simon personally.
He is is a multi multi person in his own right!!!!!!!!!!
You are an imbecile!!!!!!!!!!!
Starker, did you mean, ‘calling out EP?’
No, I called you out yesterday on the Ron Paul thread. WordPress brought it back. Scary to think that when the mighty admin sees my name, the first thing he thinks of is homosexual love. Note to self, stay away from Pennsylvania, particularly in the winter months. They get lonely there. Baaaaaaaa.
Who’s next?https://www.reuters.com/article/us-tesla-lawsuit/tesla-elon-musk-win-dismissal-of-lawsuit-over-model-3-production-idUSKCN1LC26L
“Did Musk consult Tesla’s board of directors before making this public? Did they even know of his plans to take the company private?” Uh, no betaboy. Musk is the boss. He decides and tells them what he has decided. And they deal with it. Hierarchy 101
Star – you have no clue about corporate governance. That is not how it works re release of that kind of info. That stuff is governed by law, and Musk and the entire board of Tesla must abide by it. Musk has screwed the pooch biggly. The repercussions of his little announcement are not yet over.
Oh! I notice his production of cars is way down. I am stunned, I tell you, just stunned. Tesla is not currently making 6000 model 3 cars a week. Nor 5000. Some say nor 4000. Oops. Model 3 production has collapsed.
I smell burnt toast. Eventually, someone is going to take it out of the toaster.
First of all, don’t let facts about corporate governance get in the way of slapping some soy boys around. I’m bored and it’s Monday so I’m just having some fun. I don’t know where you’re getting your information about model 3 production being down, I don’t believe it’s accurate. The last week’s count I heard from the sources that I follow who have been accurate so far with 6200. From what I understand, that’s not currently a substainable number but just seeing what they can do. More importantly, they claim to have cut production cost on the model 3 by a staggering 30% . All these things add up in a positive way. We’ll see
Idiotic. But since it was fraud, he probably didn’t want the Board in on it.
“The old car manufacturers might not have the vision of Musk.”
Yeah. They did:
https://www.zerohedge.com/news/2018-08-20/teslas-single-point-failure
They just weren’t operating in the Trillion$$$ of “free money for financiers” era.
Star, LLPOH and Admin,
How is it possible that there can be such a different opinion of Tesla?
Tesla loses billions and has a moribund business (Solar City too)…The only difference of opinion is as to whether Musk will flee the country in time.
Goes like this, WIP. If the three of us look at the same chart, Admin and Llpoh can tell you exactly what that chart says. I can tell you what that chart means. Smart guys, different skill sets, that’s all.
Star- Since you are so smart, did you ever find the info I left you on Tesla ?
Yes. It’s in Australia . They made a bet last year that they could do this a job in a hundred days or it would be free and they delivered on time. It was like a 50 million dollar contract . It works so well that now they’re doing other projects around the country. You find plenty of stories by searching for it. They’re so far ahead of the competition it’s not even funny.
Star- Power storage batteries are going to be HUGE for Tesla’s bottom line. Municipalities around the country are already using them.
Damn Star, that’s throwing down the gantlet.
Of course the tweet was an absolute lie, and a felonious stock manipulation attempt…Musk should be in jail, but he seems to have magic pixie dust with the SEC…
There was another guy some time ago that walked on water, and now there are 2.2 billion followers. Faith has an uncanny way of turning peoples’ minds:
“The projection begins with 2010 statistics when “Christianity was by far the world’s largest religion, with an estimated 2.2 billion adherents, nearly a third (31%) of all 6.9 billion people on Earth. Islam was second, with 1.6 billion adherents, or 23% of the global population.”
Not to mention Budda, Mohammad et al…….
The best data I can find is 4588 a week (updated date for 29.8.18). I think the only time TESLA has passed 5000 a week was in July
https://mobile.twitter.com/gerberkawasaki/status/1033400255771860992
Facts aside, for some reason anytime I hear anyone mention or refer to Tesla, I instantly think of DeLorean.
Screw tesla et all. Make a car simple like a 1965 Jag XKE out of reinforced steel so it crushes the modern cars but does have an air bag for the driver, electronic ignition, fuel injection, an extra gear, a hard top and anti-thief electronics. Make it in the South, paint the Beautiful Flag on top, and sell it for thousands less than the rest.