I really like Tesla.
I really like their cars.
I really like the way they push boundaries of innovation.
I really like how they’ve taken a stale industry that fails to innovate – the car industry – and shaken it up.
But I can’t help but feel that Tesla (the company) is headed the same way as fellow hype/tech/money trend of recent years: Bitcoin.
In 3 days of trading, Tesla stock has fallen from $304.18 to $257.78 (over 15%)
(That’s coming from $357.42 – where it sat a month ago – a drop of almost 30%.
The “bears” (those who have been predicting Tesla’s demise and “shorting” the stock with the aim of making money when the stock drops) have never been happier.
John Thompson – one of the few US hedge fund managers who has been betting big on Tesla’s demise – wrote a letter to his investors this week:
“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 finances that 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. We are doubtful that they can raise a meaningful sum in the face of these material issues. If the fall happened quickly, it could add substantially to the Fund (+30 to +50%), in part due to our purchase of put options. Tesla, without any doubt, is on the verge of bankruptcy… As a reality check, Tesla is worth twice as much as Ford yet Ford made 6 million cars last year at a $7.6 billion profit while Tesla made 100,000 cars at a $2 billion loss. Further, Ford has $12 billion in cash held for “a rainy day” while Tesla will likely run out of money in the next 3 months. I have never seen anything so absurd in my career.”
Despite this, I can’t think of a single car that is as cool as a Tesla.
Fellow prestige companies Porsche, Mercedes, Jaguar, Aston Martin and Audi’s offerings are still some time away from being available at your local dealership – and are ho-hum at best.
But as a friend commented recently: “How long until people who drive a Tesla are seen as dicks because they bought one, and the company’s gone bankrupt?”
Tesla’s strong suit isn’t post-sales customer service. In fact, they’re notoriously bad for it.
Keeping a high-tech car that is constantly getting software updates, and needs parts to keep running, on-the-road would be far harder if Tesla collapsed.
And – if buyers start believing the company that made their car is going out of business – how many people will pay their $1,000 USD Tesla reservation deposit to join the queue to get the car?
And what does this do to your resale values?
A little shakiness in stock prices, and the whole Tesla castle might crumble.
I suspect – 30 years from now – Teslas will be what DeLoreans are to us today.
A kinda fun car – built by a charismatic entrepreneur known for attention-getting side projects (Musk with his hyperloops and rocket launches, DeLorean with his monorails and sports teams) – that has a cool backstory – that is impractically difficult to keep running due to lack of parts.
I hope they’re wrong.
I hope the comical Bond Villain that is Elon Musk avoids trouble.
I hope the cars that he makes – that push the limits, and force otherwise conservative car-makers (who sat on inefficient and polluting petrol engines for decades) – keep pushing the limits.
Because I don’t see the likes of Porsche, BMW, Mercedes, Audi, Jaguar, or Aston Martin doing better any time soon.
But I can’t help but imagine Tesla isn’t long for this world.