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Tesla Makes a Great Car, But Don’t Buy The Stock Until This Happens




<div _ngcontent-c14 = "" innerhtml = " Tesla is suddenly in a lot of trouble. The company is burning money and the short sellers are circulating like a group of hungry vultures.

CNBC& nbsp;reported& nbsp; Morgan Stanley, the venerable investment research and brokerage agency, believes that the shares could be re-quoted at $ 10 in the worst case scenario. The short-term outlook for the electric vehicle manufacturer has been obscured.

It shows how quickly things change at the forefront of innovation.

Honolulu Hawaii, USA US, April 2, 2019: Tesla Motors showroom on Waikiki beach with the Tesla Model S in the foreground. Tesla Motors is a designer and manufacturer of autonomous electric vehicles.

Getty

For what it's worth, I've never been interested in owning Tesla shares and I've never recommended them.& nbsp; They make a great car that & nbsp;customers love, but I've never been able to rationalize all the drama that surrounds the company or understand its path to persistent profitability.

Undoubtedly, the executive director of Elon Musk is brilliant. However, the constant parade of executive exits and public wars with short sellers is disconcerting.

At the same time, I have never accepted the argument presented by the bears. They have been saying since Tesla's successful IPO that it was only a matter of time before the house of cards that Musk built collapsed in a sea of ​​desperation for investors.

For the record, Tesla first issued shares to the public in June 2010 at $ 17. According to my calculations, the current price, $ 190, is much higher than $ 17. The bears have been wrong about Tesla for almost a decade, but who is counting?

What is happening now, and it is important to put this in perspective, & nbsp; is that Musk put the company in danger by growing too fast and taking on too much debt, with an approximate value of $ 13.3 billion.

It's strange, because For a company that was supposed to open a new path in the design, manufacture and marketing of vehicles, Tesla is caught in the clbadic trap of the automaker.

The & nbsp;Financial times& nbsp; He began his "Great Reading" & nbsp;column& nbsp; in January with a fun fact: in 2007, & nbsp;General engines Celebrate its 76th anniversary with $ 25 billion in cash. Only 18 months later, the company was bankrupt.

The point is that automobile manufacturing is extremely capital intensive. Factories capable of producing thousands of cars per week are a license to print money when the demand is solid. However, when the demand softens, those factories become a responsibility.

Musk spent most of 2018 frantically trying to get production rates for Model 3 to 5,000 units per week, only to find out when he finally reached that milestone that demand was decreasing.

Tesla now has too much capacity in relation to demand.

Morgan Stanley notes that the EV market that Tesla started is saturated in all markets outside of China. Worse yet, Tesla loyalists may now be waiting for the & nbsp;Model and, the new Musk crossover sports vehicle revealed in March. Realistically, the newer model will probably not be delivered until the spring of 2021.

To be fair, not all weaker demand was predictable. & Nbsp; The US government UU & Nbsp;cut financial incentives& nbsp; buying electric vehicles, then made it difficult for American companies to do business in China, the largest market for electric vehicles in the world.

And the media has systematically sensationalized all the deaths of Tesla drivers. The company does not claim that its vehicles are self-driven. It warns specifically drivers who are driving the car and should always be alert. Every fatality in a Tesla to date has been caused by a driver error, but readers would never know this based on & nbsp;Headlines.

ARCHIVE: in this archive photo of March 2, 2019, Elon Musk, CEO of SpaceX, speaks during a press conference after the launch of SpaceX's Falcon 9 Demo-1 at the Kennedy Space Center in Cape Canaveral, Florida . Tesla plans to cut its Board of Directors from 11 to seven in a move that, according to the automaker, will allow the board to act more agilely and efficiently. Tesla says that the four directors who will leave will not leave due to any disagreement with the company. Tesla revealed the changes in the regulatory submissions on Friday, April 19, 2019. (AP Photo / John Raoux)

ASSOCIATED PRESS

Teslas always shows up as the safest vehicles on the road.

All these factors contribute to weakening the demand. And a weaker demand, for a car manufacturer, is a very bad thing.

Meanwhile, Musk is out of focus. When he's not talking about colonizing Mars, he's coming out of tunnels under Los Angeles. Tesla needs a leader focused on his survival, not his legacy.

There is some good news. Tesla's intellectual property is valuable. Their cars have been collecting data and transferring that information to data centers for badysis for years. This information helps to train artificial intelligence models that will one day bring true autonomous navigation.

As the actions fade, & nbsp;old stories& nbsp; about Apple Trying to buy Tesla for $ 240 in 2013 have started to emerge. While it is difficult to imagine that Apple would buy Tesla now, the company could be an acquisition target for another company within the automotive sector, probably with a much lower valuation.

The shares are trading at 32x future earnings, but that means that the demand remains relatively stable. The problem for Tesla shareholders is that their CEO is often distracted by other projects, and investors are starting to talk about feasibility. That is not a trusted generator for potential buyers of Tesla vehicles.

The bottom line is that Tesla shares are still too expensive and too risky for most investors because there is too much distraction at the top. Tesla shareholders need a focused leader.

"> Tesla is suddenly in a lot of trouble. The company is burning money and the short sellers are circulating like a group of hungry vultures.

CNBC He reported that Morgan Stanley, the venerable investment research and brokerage agency, believes the shares could be re-quoted at $ 10 in the worst case scenario. The short-term outlook for the electric vehicle manufacturer has been obscured.

It shows how quickly things change at the forefront of innovation.

Honolulu Hawaii, USA US, April 2, 2019: Tesla Motors showroom on Waikiki beach with the Tesla Model S in the foreground. Tesla Motors is a designer and manufacturer of autonomous electric vehicles.

Getty

For what it's worth, I've never been interested in owning Tesla shares and I've never recommended them. They make a great car that customers love, but I've never been able to rationalize all the drama that surrounds the company or understand its path to persistent profitability.

Undoubtedly, the executive director of Elon Musk is brilliant. However, the constant parade of executive exits and public wars with short sellers is disconcerting.

At the same time, I have never accepted the argument presented by the bears. They have been saying since Tesla's successful IPO that it was only a matter of time before the house of cards that Musk built collapsed in a sea of ​​desperation for investors.

For the record, Tesla first issued shares to the public in June 2010 at $ 17. According to my calculations, the current price, $ 190, is much higher than $ 17. The bears have been wrong about Tesla for almost a decade, but who is counting?

What is happening now, and it is important to put this in perspective, is that Musk put the company in danger by growing too fast and taking on too much debt, with an approximate value of $ 13.3 billion.

It's strange, because For a company that was supposed to open a new path in the design, manufacture and marketing of vehicles, Tesla is caught in the clbadic trap of the automaker.

the Financial times He started his column "Great reading" in January with a fun fact: in 2007, General engines Celebrate its 76th anniversary with $ 25 billion in cash. Only 18 months later, the company was bankrupt.

The point is that automobile manufacturing is extremely capital intensive. Factories capable of producing thousands of cars per week are a license to print money when the demand is solid. However, when the demand softens, those factories become a responsibility.

Musk spent most of 2018 frantically trying to get production rates for Model 3 to 5,000 units per week, only to find out when he finally reached that milestone that demand was decreasing.

Tesla now has too much capacity in relation to demand.

Morgan Stanley notes that the EV market that Tesla started is saturated in all markets outside of China. Worse yet, Tesla loyalists may now be waiting for the Model Y, the new Musk crossover sport vehicle unveiled in March. Realistically, the newer model will probably not be delivered until the spring of 2021.

To be fair, not all weaker demand was predictable. The US government UU It cut financial incentives to buy electric vehicles, and then made it difficult for US companies to do business in China, the largest market for electric vehicles in the world.

And the media has systematically sensationalized all the deaths of Tesla drivers. The company does not claim that its vehicles are self-driven. It warns specifically drivers who are driving the car and should always be alert. Every fatality in a Tesla to date has been caused by driver error, but readers would never know it by the headlines.

ARCHIVE: in this archive photo of March 2, 2019, Elon Musk, CEO of SpaceX, speaks during a press conference after the launch of SpaceX's Falcon 9 Demo-1 at the Kennedy Space Center in Cape Canaveral, Florida . Tesla plans to cut its Board of Directors from 11 to seven in a move that, according to the automaker, will allow the board to act more agilely and efficiently. Tesla says that the four directors who will leave will not leave due to any disagreement with the company. Tesla revealed the changes in the regulatory submissions on Friday, April 19, 2019. (AP Photo / John Raoux)

ASSOCIATED PRESS

Teslas always shows up as the safest vehicles on the road.

All these factors contribute to weakening the demand. And a weaker demand, for a car manufacturer, is a very bad thing.

Meanwhile, Musk is out of focus. When he's not talking about colonizing Mars, he's coming out of tunnels under Los Angeles. Tesla needs a leader focused on his survival, not his legacy.

There is some good news. Tesla's intellectual property is valuable. Their cars have been collecting data and transferring that information to data centers for badysis for years. This information helps to train artificial intelligence models that will one day bring true autonomous navigation.

As the actions fade away, old stories about Apple Trying to buy Tesla for $ 240 in 2013 have started to emerge. While it is difficult to imagine that Apple would buy Tesla now, the company could be an acquisition target for another company within the automotive sector, probably with a much lower valuation.

The shares are trading at 32x future earnings, but that means that the demand remains relatively stable. The problem for Tesla shareholders is that their CEO is often distracted by other projects, and investors are starting to talk about feasibility. That is not a trusted generator for potential buyers of Tesla vehicles.

The bottom line is that Tesla shares are still too expensive and too risky for most investors because there is too much distraction at the top. Tesla shareholders need a focused leader.


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