Chevy Volt a Failure - GM to Layoff 1,300

Elon Musk, Amid Tesla Furor, Tells of ‘Most Difficult’ Year

I am of two minds. On the one hand, I always want to feel empathy for someone who is acing erraticly because they are in over their heads with work and are stressed out.

On the other hand, it's hard to give him the benefit of the doubt that this is anything except crocodile tears. He is in a heap of trouble now, not just with the funding needs of his company, but with the SEC sniffing around, as well as new whistleblowers coming out seemingly every day. I'd actually be more empathetic if he hadn't turned to the New York Times to write something sympathetic. Didn't he forfeit that right when he attacked a bunch of media outlets (including the NY Times) and did his Pravda.com thing?

My guess is that it was self-serving BS. But I do know from others, and how they have behaved, what is like to be stressed because of entrepreneurial stress. Plus, if he is bipolar, or has those tendencies, the way he said, and it's not him just on a PR campaign.

Oh, and as for his alleged drug use? Who knows. I don't care much about that. I do care that he has demonstrated himself to be dishonest. If you read the piece carefully, he was basically sobbing. ... but at the same time, he was retroactively creating facts to justify the tweet that has him in trouble.

 

On any rational valuation metric (and I have posted over and over again), the idea of owning this stock as a long-term buy and hold investor (as in, you believed in the fundamentals and thought it was somehow priced fairly), was beyond nuts to me. But the people who have owned this stock were not Benjamin Grahams. And we are just in a skewed environment that turned our equity markets into a casino rather than an actual discounting mechanism, and this is just an extreme example.

For me, the question was always whether to borrow the shares (which are hard to come by) and short the stock. I have sat on my hands, and I am glad I did, because I probably would have started shorting it at around $70 or so, and I don't have the kind of money to have withstood what happened. But there are some people who have heavily shorted this stock and held their ground, and I believe they are going to ultimately make a ton of money in what will have been the biggest no brainer in history. But we'll see.

 

BTW, the hit the stock is taking today are(I beleive) on some analyst reports warning on Model 3 margins.

I posted about this when he announced the car. It made no sense. He was going to sell a car at a fraction of the price of the Model S, with many of the features of the Model S (and nothing to bring the cost of the batteries down, which is the killer). ... and the margins on the Model S sucked and were getting worse. It's as if people deliberately put their heads in the sand and refused to think rationally. It's as if he had this ability to do a Vulcan mind meld on the masses and make them believe the unbelievable.

 

JP Morgan with a big downgrade of Tesla, and Needham piling on too.

Both essentially said (my paraphrase, which may not be fair), now that everyone is acknowledging Musk as charlatan, you have to value the company on its fundamentals, not on hype, not on a privatization at some huge premium, not at someone buying it at an insane valuation, etc.

Here is a summary of the JPM research from Zero Hedge: Tesla Tumbles After JPM Cuts Price Target By $113 To $195 In Scathing Report

 

When that story about him contacting suppliers and asking them for givebacks hit, the first thing I thought of was the one quarter a year or so ago, when they manufactured a "profit" (I believe they were doing a capital raise, so he was trying to create some smoke and mirrors) and they did all these shifty things to try to make the quarter look profitable. One was pulling forward the sale of ZEV credits that California gives them and that other car manufacturers have to buy from him, which was the only actual profitable product the company had. The other was not paying suppliers. The amount of money they owed that was overdue jumped that quarter. It's why none of this is all that surprising to me. The main thing that has changed is the level of scrutiny.