{"id":180012,"date":"2017-08-07T20:30:00","date_gmt":"2017-08-08T01:30:00","guid":{"rendered":"https:\/\/www.panix.com\/~msaroff\/40years\/2017\/08\/07\/elon-musk-naked\/"},"modified":"2017-08-07T20:30:00","modified_gmt":"2017-08-08T01:30:00","slug":"elon-musk-naked","status":"publish","type":"post","link":"https:\/\/www.panix.com\/~msaroff\/40years\/2017\/08\/07\/elon-musk-naked\/","title":{"rendered":"Elon Musk Naked"},"content":{"rendered":"

No, no pictures, I am referring to the fact that the emperor may have no clothes, and Elon Musk, in particular his Tesla Motors project, seems to be increasingly unmoored from reality<\/a>:<\/p>\n

If you\u2019re a hedge fund analyst looking over a public company\u2019s numbers and you see a troubling financial trend making itself evident in the data (like a company burning through cash while booking revenue for a product that is seems perhaps incapable of delivering in the volume promised in the timeframe laid out), you will feel the natural urge to short that company\u2019s stock and wait quietly for the money and praise to roll in. <\/span>

<\/span> But we want you to pause for a moment and look at the top of that file. Does it say \u201cTesla Motors, Inc. (TSLA)\u201d? <\/span>

<\/span> It does? <\/span>

<\/span> Yeah, you\u2019re going to want to rethink that short, homie, because you have not factored \u201cBlind Elon-ic Faith\u201d into your Alpha. <\/span>

<\/span> But you wouldn\u2019t be alone. <\/span>

<\/span> Tesla reported yesterday<\/a>, and from a purely logical perspective it was a mixed bag:<\/span><\/p>\n

Tesla\u2019s reported a net loss of $336 million, or $2.04 per share, compared to a loss of $293 million, or $2.09 a share, a year ago.<\/span>

<\/span> Excluding stock based compensation, Tesla lost $1.33 a share, which was narrower than expected, according to a consensus estimate from Thomson Reuters.<\/span>

<\/span> Revenue climbed to $2.79 billion from $1.27 billion in the year-ago period, and outpacing Wall Street\u2019s estimates of $2.51 billion.<\/span><\/p><\/blockquote>\n

Yeah, we said \u201cmixed\u201d:<\/span><\/p>\n

Heading into the earnings report, analysts expressed concerns about whether Tesla would ramp up production of its Model 3, a more affordable electric car with a base cost of $35,000, quick enough. In the past, Tesla has struggled with production issues. <\/span><\/p><\/blockquote>\n

Musk also said that he hasn\u2019t ruled out dipping a toe back into the debt market. <\/span>

<\/span> See, Tesla is currently promising that it can make 1,500 of these things in the entire third quarter of this year, but Elon is also telling anyone who will listen that he will be able to make 10,000 in a week by the end of 2018. That kind of ramp-up has led a lot of people in the asset management game to doubt Tesla\u2019s long-term strength, what with logic dictating that cash will burn at the altar of Elon\u2019s ambition, and that the fire might rage out of control while he\u2019s busy glancing over at his rockets, his Hyperloop tunnels or putting the finishing touches on his dope-ass new solar roof<\/a>. All those factors are causing David Einhorn and a legion of his fellow traders to go short on TSLA.<\/a><\/span><\/p><\/blockquote>\n

Just to remind you, their plant used to be the joint Toyota-GM NUMMI plant, and the most cars that it ever produced under that management was 428,633 units in 2006<\/a>, or less than 8,500 units a week, and Tesla is saying that it can ramp up from about 120 units a week to 10,000 units a week over the next 18 months.<\/p>\n

For his next trick, Elon Musk will appoint a horse to his board of directors.<\/p>\n

But the underlying story here is that Tesla releases profoundly mixed numbers, reveals that its production ramp up plans are unrealistic, and they get shorted by speculators.<\/p>\n

In response to an awful quarterly report, the stock goes up, and the speculators take it on the chin, because \u2026\u2026\u2026 Elon!<\/p>\n

This is what happens when you short a cult. At this point, R Kelly has nothing on Elon Musk. And the notion that a short squeeze might put a shudder in Tesla\u2019s rise seems \u2013 like all other rational ideas that come in contact with Tesla \u2013 to be neutered by whatever Tesla investors think of Tesla.<\/span>

<\/span> So, here\u2019s our last word of caution to you hedgie analysts out there crunching numbers on TSLA: You\u2019re wasting your time. Tesla isn\u2019t about facts and figures, it\u2019s about belief in the divinity of Elon f%$#ing Musk. You\u2019ll never understand what is happening because the Kool-Aid is the stock and a lot of people can\u2019t stop drinking it.<\/span><\/p><\/blockquote>\n

(%$# mine<\/i>)<\/p>\n

So, Tesla is facing a unionization effort from employees who say that their manufacturing facility is abusive and dangerous<\/a>, and the corporate response has been (I am not kidding here) free frozen yogurt at their Freemont, CA plant.<\/p>\n

So now Tesla is warning its workforce, one that already<\/b> has issues with excessive mandatory overtime ans safety issues that they will be facing, “Production Hell<\/a>“.<\/p>\n

Honestly, I’m half expecting a strike in the next 18 months:<\/p>\n

When Tesla chief executive Elon Musk handed over the first 30 Model 3 sedans to reservation holders last Friday, he warned employees they\u2019ll be in \u201cproduction hell\u201d for the next several months. It was a curious remark, as Tesla employees have been voicing concerns about workplace injuries since earlier this year. Employees reiterated those points in a letter to Tesla\u2019s board Monday, and demanded answers to questions about pay transparency and safety.<\/span>

<\/span>\u201cWe\u2019re tired of suffering preventable injury after preventable injury,\u201d said Michael Catura, a production associate at Tesla, in a statement. \u201cIt impacts morale, it slows down production and it\u2019s of course traumatizing and financially difficult for the affected person. We want to know what the company\u2019s plan is to address this problem, and to see whether or not any progress is being made.\u201d<\/span>

<\/span>The letter<\/a>, signed by the Tesla Workers\u2019 Organizing Committee, said it believes in Tesla\u2019s mission to build a mass-market, emission-free electric vehicle. But the committee cites a number of ongoing issues, and it requests access to a safety plan and clarity on pay and non-retaliation agreements for employees trying to form a union. Earlier this month, a group of 10 factory employees presented a petition<\/a> with questions about how workers are paid and how raises are distributed. BuzzFeed <\/i>reported that about 400 employees had signed the petition<\/a>. <\/span><\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"

No, no pictures, I am referring to the fact that the emperor may have no clothes, and Elon Musk, in particular his Tesla Motors project, seems to be increasingly unmoored from reality: If you\u2019re a hedge fund analyst looking over a public company\u2019s numbers and you see a troubling financial trend making itself evident in …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[473,365,456,524,421],"class_list":["post-180012","post","type-post","status-publish","format-standard","hentry","tag-auto-industry","tag-business","tag-finance","tag-manufacturing","tag-weird"],"_links":{"self":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/180012"}],"collection":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/comments?post=180012"}],"version-history":[{"count":0,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/180012\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/media?parent=180012"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/categories?post=180012"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/tags?post=180012"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}