|Tesla Crashes Have Drawn Much Attention|
|Model 3 May Fail To Tantalize Or Underwhelm|
As this is written we are forced to wonder just how much of a downgrade the model 3 will be and how it will be received. Many questions still exist as to whether its roll-out will be on time or delayed by a series of glitches and problems that often plague new models. If the actual car fails to tantalize buyers or leaves them underwhelmed it could be all over. One is born every minute refers to a fool or sucker. There's a sucker born every minute" is a phrase closely associated with P. T. Barnum, Buying stock in Tesla is the same as going to a casino, it will end with you being most likely a goat rather than a hero. Remember the companies Musk is involved with have been on the government dole.
Like many high-flyers before him, Elon Musk has a history of promising more than he can deliver which investors and the market has chosen to ignore. I have written several articles about Musk and Tesla not because I'm wowed by either but because they are both poster children of a market which I feel has discoupled from reality. Do not be surprised if looking back someday in the future we view Tesla's stock which continues trading at incredibly high multiples as a reflection of our historically low-interest rates and the luck of being in the "QE moment" rather than the company's financial success. Bears and those that doubted if the company could hold together ironically have pushed up the stock adding to the image that Musk lives a charmed life.
In the past, I and many others have pointed out the uphill battle Tesla is fighting and the many obstacles that could derail its success. In May of 2015 David Stockman wrote; In a world saturated with excess automotive capacity and dominated by some of the most formidable engineering, manufacturing and marketing organizations on the planet—Toyota, BMW and Ford, to name just three–There is no way that an amateurish circus barker like Elon Musk will ever make a profit selling electric vanity cars to the 1%. Stockman went on to state, You might describe Tesla as $30 billion of capitalized hopium, but that would be too generous. In an honest free market, Tesla would have long ago been carted off to the chapter 11 junk shredder.
Oh, how sweet and challenging the auto industry is, like a fickle mistress it has those in its grasp always on their toes or they will suddenly find themselves crushed by their overconfidence. A marvelous example is how Ford in the 1950s ambitiously rolled out the car everyone was waiting for. Unfortunately, their ambition gave birth to the Edsel, whose name became synonymous with abject corporate failure and while the nascent brand was killed in 1959, its legacy lives on. The Edsel's short history makes a fascinating cautionary tale for anyone in business–not just the car industry. In the end, the name of Elon Musk may be added to a long list of bold men herald and declared to be "gods gift to business," only to find they flew too close to the sun only to crash and burn.
Footnote; The link below is to a prior article that is an overview of Elon Musk and Tesla Motors. It gives some of the background story behind their rise to prominence.
Footote #2; Below is a more recent article highlighting how Tesla's competitors have not been sitting on their hands or surrendered the electric car market to the upstart. A gruesome Tesla crash in Calafornia, production problems, growing debt, and the fact Tesla is burning through cash is causing investors to question Tesla's high stock valuation. The article below delves into these issues.
http://Tesla Update - Model 3 Production And.Cash Burn Worry html