Linked by Thom Holwerda on Wed 30th May 2018 15:38 UTC
In the News

Here's the dynamic that explains Musk's Twitter outburst: Tesla is clearly struggling to reach production levels that will justify its valuation. Musk has no facts with which to counter the media reports, and it is illegal for him to lie about these numbers. (Hype is one thing; lying to investors is another.) His Orwellian solution is to convince Tesla fans that what they are reading is not true. The stakes are high. Tesla's $1 billion-per-quarter burn rate makes it very likely that the company will need to raise a couple billion dollars in the fourth quarter of this year.

Musk literally cannot afford for investors to believe a negative storyline. Only his optimistic, visionary narrative will convince potential investors that Tesla is a good bet, rather than a bubble preparing to pop.

Nothing is more dangerous than criticizing Elon Musk, but the cold and harsh facts laid out in this article are very difficult to argue with, other than appealing to some vague sense of Musk wanting to help the planet or whatever, as if that negates Tesla rapidly running out of money and never meeting expectations or failing to keep its promises. We should all want Tesla to succeed, but the recent outbursts from Musk do not bode well for the future of the company.

Twitter randos who could never afford a Tesla might be easily swayed by Musk's Trumpian "boohoo the press hates me" nonsense, but the kinds of billion dollar investors Tesla needs will see right through it.

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RE[4]: Please
by leos on Thu 31st May 2018 17:39 UTC in reply to "RE[3]: Please"
leos
Member since:
2005-09-21

With a net loss of $710 Million, I don't know where the capital will come from. They are bleeding almost a billion dollars a quarter. Not a good investment if you ask me.


Sure, and i'm not investing. But the big picture is much more complex than that. Valuations are based on future expectations, not current situation. Clearly the market expects future profits from Tesla despite current losses.

Reply Parent Score: 0

RE[5]: Please
by dukes on Thu 31st May 2018 18:15 in reply to "RE[4]: Please"
dukes Member since:
2005-07-06

"With a net loss of $710 Million, I don't know where the capital will come from. They are bleeding almost a billion dollars a quarter. Not a good investment if you ask me.


Sure, and i'm not investing. But the big picture is much more complex than that. Valuations are based on future expectations, not current situation. Clearly the market expects future profits from Tesla despite current losses.
"

It was a general statement and wasn't directed at you personally.

Further, the big picture is only "much more complex" if you don't understand it. The expectation can be inflated in a valuation just like any other security, Tesla stock is no different. At some point the mountain of debt, the hundreds of millions in dollars in losses per quarter, and the failure to deliver on its self imposed production rates will catch up to them.

Everything else is just unfounded hope that the company will succeed.

Reply Parent Score: 4