Tag Archives: Losses

Tesla stock soars on news they ‘only’ lost $717 million, by Simon Black

Posted on August 4, 2018 | Leave a comment

Tesla is like a reverse religion. Every time it fails the true believers believe even more. From Simon Black at sovereignman.com:

Sometimes I feel like I’m living in an alternate universe… it’s like the financial version of the ‘upside down’ from Stranger Things.

Case in point: last night the infamously loss-making electric car maker Tesla announced its quarterly earnings.

As usual, the numbers were gruesome. Tesla’s net loss was TWICE AS BAD as the previous quarter, a record NEGATIVE $717 million. That’s a LOT WORSE than analysts were expecting.

After adjusting for various capital investments, Tesla’s total cash burn for the quarter was MINUS $740 million… which is a bit better than what analysts were expecting. Congratulations.

Oh yeah, and Tesla cult leader CEO Elon Musk mustered an apology to all the analysts he insulted on the previous quarter’s earnings call (where he derided them for asking “boring” and “bonehead” questions).

And now the stock has soared 12%.

Is this really what capitalism has come to?

Companies are richly rewarded for posting record losses that are worse than anyone expected because the grown men who pilot them can refrain from publicly hurling childish insults at financial analysts while managing to ‘only’ burn $740 million of shareholder capital?

Give me a break.

In total, Tesla has burned through $5 billion of its investors’ cash.

And nearly half of the money it has left in the bank is in the form of customer deposits, which are often refundable. So that money’s not even safe.

Most likely Tesla will have to raise billions of dollars over the next few years just to stay afloat.

And yet, despite these losses, and despite the fact that their CEO is sidetracked making flamethrowers, limited-edition Tesla surfboards and promising to solve Flint, Michigan’s water crisis. . .

. . . and despite the fact that he seems more concerned with Twitter spats than running the business (the Wall Street Journal ranked Musk as the second-most active tech CEO on Twitter behind Salesforce.com’s Marc Benioff, with 1,256 tweets this year through mid-July) . . .

. . . shareholders still granted their CEO the largest executive compensation package in the history of the world earlier this year (worth a potential $50 billion). . .

To continue reading: Tesla stock soars on news they ‘only’ lost $717 million

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Tesla Posts Record Loss – and Stock Price Goes up! by Eric Peters

Posted on August 2, 2018 | Leave a comment

Someday people will look back and say that Tesla and Netflix were symbols of our age: companies that went deeper and deeper into debt, never made a dime, and were rewarded with outrageous stock prices. From Eric Peters at theburningplatform.com:

Elon Musk’s crony capitalist con operation just posted its biggest loss to date – $430 million in three months – but Tesla stock prices climbed 10 percent after the announcement.

What to make of this?

It’s like being in a nursing home, beside the bed of your blind, dementia-addled 94-year-old grandmother and the doctor just told you she probably hasn’t got much time left – but you decide to go out and buy her a new car.

With the difference being that you’re buying grandma the car.

In Tesla’s case, it’s taxpayerswho are buying the cars – for the affluent virtue-signalers who “buy” them at massively subsidized but massively high prices.

Even so, Elon still can’t make a buck on these things.

Not that it matters.

The conga line of suckers seems endless. In part because of Elon’s Rasputin-like ability to bedazzle the media, which reports every promise with the gush of a 16-year-old girl effusing over her prom date and never reports that her date raped her after the prom.

Mum is always the word when it comes to Elon.

For example – and most recently – the media gushed over the arrival (sort of) of the “affordable” Model 3, sticker price only $35,000! Which is only $15,000 more than a well-equipped Honda Civic sedan, which does the job of getting from A to B vastly better, if the metrics are cheaper and easier and more conveniently.

But the media has not told you that the “affordable” $35,000 Model 3 isn’t available.

Only the $40,000 Model 3 currently is.

And it’s only twice as expensive as a well-equipped Honda Civic.

But what’s $20,000 between friends, eh?

Keep in mind, too, that both the $35,000 Model 3 and the $40,000 Model 3 are really more like $50,000 Model 3s – if you take away the subsidies and price them such as to account for their true cost to manufacture and sell at a profit – as opposed to giving each away at a loss, as Elon has been doing for the past 15 years.

To continue reading: Tesla Posts Record Loss – and Stock Price Goes up!

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Capitalism has new rules. And they’re seriously messed up. By Simon Black

Posted on May 5, 2018 | Leave a comment

So-called investors throw cash at companies that burn through it and haven’t a clue as to when they might turn a profit. From Simon Black at sovereignman.com:

It was just a month and a half ago that Tesla approved an eye-popping long-term pay package, worth as much as $50 BILLION to founder and CEO Elon Musk.

And on Wednesday afternoon, Tesla held its first corporate earnings call since then.

You’d think that Elon would have been gracious and professional, anxious to demonstrate that the shareholders’ trust in him has been well-placed.

Instead the call was filled with contempt and disrespect, with Elon outright refusing to answer questions that he deemed ‘boring’.

Bear in mind, Tesla’s financial results were gruesome; the company burned through yet another $1.1 billion in cash last quarter. That’s 70% worse than in the same period last year.

Even more problematic, Tesla is losing money at such an unexpectedly fast rate that they’ll likely run out within the next several months.

According to the Wall Street Journal’s analysis, Tesla doesn’t have enough cash to cover its basic debt payments and capital leases due within the next six months.

Needless to say, investors are worried.

The shareholders and analysts on the call kept pressing Elon to explain how the company was going to survive, and how he would turn around Tesla’s notorious production challenges.

But Elon completely dismissed any such questions as “boring”, “bonehead”, and “not cool”.

Pretty amazing.

I mean, this guy was given a potentially $50 billion compensation package just six weeks ago.

So the LEAST he could do was answer his investors’ completely reasonable questions.

But he didn’t. It’s almost as if he deliberately wanted to show as much disrespect as possible to the trust and confidence that shareholders have placed in him.

This is a pretty despicable attitude for any executive to have.

Yet this whole situation is emblematic of what I call ‘the new rules of capitalism.’

And New Rule #1 is: Businesses no longer need to make money.

Tesla is just one of a multitude of high-flying, hot-shot companies whose entire business models are based on burning through cash, managed by executives who don’t care.

WeWork, as we’ve often discussed, is an even more absurd example.

WeWork provides short-term office space to companies around the world, with a whole bunch of interesting perks (including free tequila).

For customers, it’s great. But WeWork loses tons of money providing all those great perks to its customers… which means that investors are ultimately footing the bill.

To continue reading: Capitalism has new rules. And they’re seriously messed up.

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