Tag Archives: Tesla

Tesla Gets Slammed by Tesla, by Wolf Richter

Tesla’s running out of financial options to keep its traveling mysterious show afloat. The stock has lots of room on the downside. From Wolf Richter at wolfstreet.com:

When will investors get tired of feeding their capital into this cash-burn machine?

Tesla shares plunged 8.2% during regular trading hours on Tuesday and another 2% in after-hours trading to $272.50, below where they’d been a year ago ($277.45), and down 28% from September 18, when the market still had hopes for the Model 3.

The unsecured junk bond due in 2025 with a 5.3% coupon – which Tesla sold last August when its stock was still over $357 a share – dropped to a record low of 89 cents on the dollar in after-hours trading.

During a nasty day on the stock market, wunderkind Tesla got hammered by Tesla reality.

At first it was the NTSB

The National Transportation Safety Board announced that it was sending investigators to California to investigate the fatal and fiery crash of a Model X on Friday morning that had shut down a carpool ramp and two lanes of Highway 101, the Silicon Valley artery, for almost six hours, twice as long as most accidents of this type, according to the California Highway Patrol. NTSB said it would examine various issues, including the post-crash fire and removing the vehicle from the accident site.

This is the second NTSB field investigation into the crash of a Tesla this year. In January, the NTSB opened an investigation into the crash of a Tesla — apparently in semi-autonomous mode — and a fire truck.

In the accident on Friday, the Model X hit a freeway divider, then was hit by a Mazda, and crashed into an Audi. The lithium-ion cells caught fire. The driver of the Tesla perished. The fire department ended up calling Tesla to determine how to extinguish the fire, as the exposed batteries were also an electrocution hazard.

To continue reading: Tesla Gets Slammed by Tesla

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“Tesla, without any doubt, is on the verge of bankruptcy.” By Simon Black

Tesla’s stock market valuation disagrees with Simon Black, but SLL wouldn’t bet against him. From Simon Black at sovereignman.com:

Just a few days ago, shareholders of Tesla approved an almost comical pay package for their cult leader CEO Elon Musk that could potentially put $50 BILLION in his pocket over the next decade.

Let’s put this figure in perspective: at $5 billion per year, Musk would make more than every single CEO in the S&P 500. COMBINED.

In other words, if you add up the salaries of all the CEOs of the 500 largest companies in America, it would still be less than the $5 billion per year that Mr. Musk stands to earn.

That’s pretty astounding given that Tesla’s own 2017 4th quarter financial report (page 24) states that Elon “does not devote his full time and attention to Tesla”.

Or more importantly, that under Musk’s leadership, Tesla’s chronic financial incontinence has racked up more than $4.97 billion in operating losses for its shareholders.

Or that the company has been under SEC investigation (without bothering to disclose this fact to shareholders).

Yet they saw fit to reward him with the largest CEO pay package in the history of the world.

This is precisely the type of behavior that is only seen during periods of extreme irrationality when financial markets are at their peak… and poised for a serious correction.

I’ll close this brief letter today quoting John Thompson, Chicago-based value investor and Chief Investment Officer of Vilas Capital Management.

Thompson is one of the few hedge fund managers who has consistently outperformed the market, and his fund is betting big against Tesla. What follows are some passages about Tesla from Thompson’s recent investor updates:

I think Tesla is going to crash in the next 3-6 months. . .

. . . partially due to their incompetence in making and delivering the Model 3, partially due to falling demand for the Model S and X, partially due to the extreme valuation, partially due to their horrendous financesthat will imminently require a huge capital raise, partially due to a likely downgrade of their credit rating by Moody’s from B- to CCC (default likely) which should scare their parts suppliers into requiring cash on delivery (a death knell), partially due to the market’s recent falling appetite for risk, and partially due to our suspicions of fraudulent accounting activities, evidenced by 85 SEC letters/investigations and two top finance people leaving in the last month. . .

To continue reading: “Tesla, without any doubt, is on the verge of bankruptcy.”

What the Headlines about Tesla, Snap, and Twitter “Earnings” Should Have Said, by Wolf Richter

Truth is the first casualty of war and earnings reports. From Wolf Richter at wolfstreet.com:

How can the media be so gullible – and pliable? I don’t know either.

When Snap reported “earnings” this week – in quotes because it was its biggest loss ever – media headlines were euphoric, from TechCrunch(“Snap shares skyrocket on first earnings beat with revived user growth”) to The Wall Street Journal (“Snap Climbs Back Above IPO Price After ‘Shocker’ Earnings”).

The theory was that Snap had reported “better-than-expected earnings.” Thanks to these headlines, over February 7 and 8, Snap shares skyrocketed 48% to $20.75, though they have fallen off somewhat since then.

So here are some modest suggestions as to what the headlines should have been, based on Snap’s “earnings” report:

Snap losses surge 106% to $350 million in Q4, and 570% to $3.4 billion for the year, the most ever.

Snap lost more money than it generates in revenues; what is it doing with all this money?

Snap burned $820 million in cash in 2017, but still sits on $2 billion from investors and can keep going at this cash-burn rate through 2019, so no problem.

Snap Q4 loss soars to $350 million, on $286 million in revenues. Stop and think about that for a moment.

Losses are ballooning faster than revenues, and from a larger base, which is the road to financial perdition, but no problem for analysts.

Twitter also reported earnings this week, and the media headlines showered it with love, from The New York Times (“Twitter Has Good News for Once: Its First Quarterly Profit”) to CNBC (“Twitter rockets more than 20 percent after the company reports first-ever net profit”).

Twitter’s shares jumped 27% on the announcement, after they’d already soared 60% over the past year on takeover hype that never materializes but keeps getting trotted out time and again to pump up shares. Since the spike following the earnings announcement, shares have declined 10%.

So here are some suggestions for headlines to describe Twitter’s situation:

Twitter 2017 revenues shrink 3.4%, Q4 revenues inch up 2%, as company embarks on Cost-Cutting as strategy

Twitter makes $91 million in Q4 profit after gutting R&D and sales and marketing expenses, which might explain revenue stagnation. But still loses $457 million for the year.

Twitter cuts $68 million from R&D and $71 million from sales and marketing expenses in Q4, trying to shrink itself to growth. Good luck.

Even the ceaseless promos from President Trump and the media circus around his Twitter actions fail to boost Twitter’s revenues.

No other company has ever gotten this much constant and free promo from any White House, but Twitter still can’t make it work.

To continue reading: What the Headlines about Tesla, Snap, and Twitter “Earnings” Should Have Said

There Is Just One Thing Preventing Elon Musk’s Vision From Coming True: The Laws Of Physics, by Tyler Durden

Elon Musk will never keep all the promises he’s made, but that doesn’t stop him from making more promises, each more outrageous than the last.  From Tyler Durden at zerohedge.com:

When Elon Musk stepped on stage at Tesla’s product-launch event earlier this month, he knew the market’s confidence in Tesla’s brand had sunk to an all-time low since he took over the company a decade ago. So, he resorted to a tactic that should be familiar to anybody who has been following the company: Shock and awe.

While the event was ostensibly scheduled to introduce Tesla’s new semi-truck – a model that won’t make it’s market debut for another two years, assuming Tesla sticks to its product-rollout deadline – Musk had a surprise in store: A new model of the Tesla Roadster that, he bragged, would be the fastest production car ever sold.

Musk made similarly lofty claims about the battery life and performance of both vehicles. The Tesla semi-trucks, he said, would be able to travel for 500 miles on a single charge. The roadster could clock a staggering 620 – more than double the closest challenger.

There was just one problem, as Tesla fans would later find out, courtesy of Bloomberg: None of it was true.

In fact, many of the promises defy the capabilities of modern battery technology.

Elon Musk knows how to make promises. Even by his own standards, the promises made last week while introducing two new Tesla vehicles—the heavy-duty Semi Truck and the speedy Roadster—are monuments of envelope pushing.

To deliver, according to close observers of battery technology, Tesla would have to far exceed what is currently thought possible.

Take the Tesla Semi: Musk vowed it would haul an unprecedented 80,000 pounds for 500 miles on a single charge, then recharge 400 miles of range in 30 minutes.That would require, based on Bloomberg estimates, a charging system that’s 10 times more powerful than one of the fastest battery-charging networks on the road today—Tesla’s own Superchargers.

The diminutive Tesla Roadster is promised to be the quickest production car ever built. But that achievement would mean squeezing into its tiny frame a battery twice as powerful as the largest battery currently available in an electric car.

To continue reading: There Is Just One Thing Preventing Elon Musk’s Vision From Coming True: The Laws Of Physics

 

Is This The Tesla Killer? by Tyler Durden

A new battery may be on the horizon that is so much better than Testla’s that it will put the company out of business. From Tyler Durden at zerohedge.com:

We all know the story behind Fisker, it was one of the world’s first plug-in hybrid electric vehicles in 2008, and even had a legal spat between Tesla, but shortly after in 2012 the company crashed and burned in bankruptcy. Last year, Henrik Fisker decided to relaunch his brand. He thought that one failure wasn’t enough—-just like Elon Musk’s SpaceX rockets. During Fisker’s relaunch, he made a shocking comment that caught the attention of Musk and it was on the claims of a new breakthrough in battery technology using graphene-based hybrid material that would revolutionize battery storage and make Musk’s batteries appear obsolete.

Thirteen months passed, and Musk wrote off Fisker’s claims, as Musk decided to focus on other things like his Boring company. That might of been Musk’s fatal flaw, because Fisker just came out and dropped a bombshell on the electric vehicle (EV) industry: ‘New Fisker Batteries 2.5x Density, 500 Miles Per Charge & Charging in 1 Minute’..

Musk will shortly developed uncontrollable convulsions with the understanding his Gigafactory producing thin-film lithium batteries could be obsolete.

Autoblog reports the new breakthrough, calling it a solid-state battery revolution:

 It seems that we’re on the cusp of a solid-state battery revolution. The latest company to announce progress in developing the new type of battery is Fisker. It has filed patents for solid-state batteries and it expects the batteries to be produced on a mass scale around 2023.

In the game of electric vehicles it’s all about batteries. Musk’s technology would be considered legacy when compared to solid-state. Here is why:

  • Greater energy density
  • Rapid charging times

Fisker claims the batteries underdevelopment have a density of 2.5x when compared to the standard EV batteries. This should give the range of a Fisker vehicle well over a 500-mile and recharging capabilities in as little as a minute.

Here’s what Dr. Fabio Albano, VP of battery systems at Fisker Inc. claims:

This breakthrough marks the beginning of a new era in solid-state materials and manufacturing technologies.

We are addressing all of the hurdles that solid-state batteries have encountered on the path to commercialization, such as performance in cold temperatures; the use of low cost and scalable manufacturing methods; and the ability to form bulk solid-state electrodes with significant thickness and high active material loadings. We are excited to build on this foundation and move the needle in energy storage.

To continue reading: Is This The Tesla Killer?

The Udder Runs Dry? by Eric Peters

The electric car industry has been sucking at the government teat, but at least for Elon Musk and company, the milk of human subsidies may be running out. From Eric Peters at ericpetersauto.com:

There must be a rube in the House.

A recent Republican who does not understand how the game is played – much less why it is being played the way it is played. He and perhaps some of his fellows not-yet-initiated publicly wondered why the federal government is underwriting the sale of luxury-performance cars that happen to be electric.

It is a curious thing.

They suggested rescinding the $7,500 tax inducement which the government has been using to “help” electric car manufacturers like Tesla, which sell electric cars that start around $40,000 and which emphasize not economy but performance and style and technology.

Some might look upon the robbing of Peter – who probably drives an eight-year-old Camry in need of front end work – so that Paul can drive a brand-new, $40,000 electric luxury-performance car – as somewhat obnoxious.

But not everyone.

There is, for example, Genevieve Cullen – who is the head shill for the electric luxury-performance car lobby, styled the Electric Drive Transportation Association. She practically squealed the collective indignation of her clients, who are alarmed very much by the prospect of having to make an honest dollar:

She and they “ . . .continue to believe that a reformed tax code should include a robust set of incentives to support the electrification of transportation,” Cullen wrote to House Republican Rep. Kevin Brady of Texas, who is the chair of the Ways and Means Committee – which is the government gaggle which weighs how to dispose of our means.

But Cullen is not being straight with Brady – or with the means providers (who haven’t got much choice about that).

The issue on the table is not whether Uncle should “support the electrification of transportation,” as she shysterishly misdirects. It is whether wealth transfers from working people to affluent people ought to be continued.

Elon Musk, for instance, is a billionaire. The idea that anyone who files a W2 ought to be made to fund his operations is haltingly offensive.

To continue reading: The Udder Runs Dry

When Will The Tesla Stock Promote Finally Fail??? by Harris Kupperman

The wheels may finally be coming off the long running scam known as Tesla. From Harris Kupperman at adventuresincapitalism.com:

The history of industry leading consumer tech products has not been kind to investors who overstay their welcome. You need look no further than all the hundreds of notable recent failures, to realize that these companies almost always flame out. The list below (in no particular order) is a nice trip down memory lane of former favorites, that are now either bankrupt or shells of their former selves—often consumed by some other entity that fortunately put them out of their misery. Of course, the list below, is just from the past decade or two;

Palm, Gateway, Research In Motion, GoPro, FitBit, Heelys, Handspring, Compaq, BlueRay, Garmin, Delorean, Casio, Sega, Tamaguchi, TiVo, Betamax, AOL, Walkman (Sony), Set Top Boxes (Scientific American), Kodak, Atari, Napster, Netscape, Polaroid, etc.

Let’s just say, it’s hard at the top. You must guess each change in technology, each generation of improvement and design it for fickle consumers, while constantly outlaying capital for research and development that may never go anywhere. All the time, others are constantly trying to overtake you.

If you look at the lifecycles of these companies, they often follow a similar trajectory from ingenious creation with huge margins, to a few generations of new products with smaller margins, to massive competition as deep pocketed competitors and venture capitalists try and emulate your product, to missing a product cycle, to becoming obsolete. These consumer product companies rarely last more than a decade; often just a few years. In the end, consumer focused tech is vicious and Darwinian, with very few long-term competitive advantages.

Of course, Tesla (TSLA – USA) is something of an anomaly here. While the companies in the above list, all produced prodigious cash while they were industry leaders, Tesla seems to incinerate cash while in the lead—using repeated equity and now debt offerings to plug the hole. While other companies had a huge stash of cash to fall back on when others overtook them, Tesla’s cash balance leaves it only a few quarters from insolvency. Add in a host of questionable related party transactions, convoluted financial statements (what the hell is pro-forma revenue?), the inability to ever hit company guidance, deceptive disclosures and a business that seems to lose more money with each vehicle it produces, is it any wonder that Tesla is one of the most shorted large-cap stocks today? If I had to choose the most obvious pending bankruptcy of a large-cap stock, it is clearly Tesla.

To continue reading: When Will The Tesla Stock Promote Finally Fail???