Tesla Shares Tumble After Analyst Claims Model 3 Will Be Late In Spite Of Assurances It Was On Target

Here is a handy Q & A (this is not advice, it is meant to be funny) from your good friend and objective observer, Mr E-30...

Q - What does it mean that Goldman Sachs just placed a 'sell' rating on Tesla stock?

A – The Goldman Stock Analyst seems to have said that s/he believes that Tesla stock is trading above the target price they estimated for the stock. In this case the stock is about $250/sh and the Goldman person said their target was much lower (approx. $180/sh I think). Thus the “sell” rating.

A nuance – the three wall street ratings are “buy”, “hold”, and “sell”. Many of the investing public interprets that when an analyst moves from “buy” down to “hold” that really means “sell”. Because since Wall St tries to sugarcoat things and rarely say anything bad about anybody, it would be seem that when a firm places a “sell” rating on a stock, perhaps they mean it?

Q – How does this affect me, as a Tesla fan person ?

A – Maybe one should consider buying Tesla memorabilia on Ebay in case they go out of business (coffee mugs, T-Shirts, nothing with a plug or which requires batteries)? Maybe consider asking Tesla for your deposit back if you are thinking that you might not want that Model X / Model 3 after all? Maybe if you are in the process of getting a Tesla, consider to LEASE it! If you own a Tesla Model S or Model X outright and you don’t really like it, maybe you should consider trading it in and LEASE one instead? If you LOVE your Tesla – maybe you should research and learn what happened to DeLoreans and Fisker Karma’s when they went out of business.

Q – How does this affect me if I host a cable news talk show?

A – You could start by seeking out and booking the automotive luminary Bob Lutz. He is sure to give you and your loyal viewers an emotional and lengthy assessment about all of the more operational issues facing Tesla. If nothing else, you could share a cigar with him after your segment.

Q – Why did Goldman Sachs reach this conclusion?

A – Your guess is as good as mine! Does Tesla consistently accomplish the things it says it will (launch dates, financial/sales targets, model availability, etc)? Have you seen the usual positive signs of a vehicle approaching launch (has Autospies printed any photos of Model 3 prototypes cruising around California strip malls and ‘In and Out’ burger drive-thru’s? Has 001 see any Tesla's doing hot weather testing in the desert by his house? Those are usually signs that a car company is about to launch a new product and they are getting ready to exceed the expectations of their customers.

Corollary to the above post - if you do have a Tesla deposit outstanding on a Model 3 or a Model X and you "ask" Tesla for it back - PLEASE write an Autospies article about the process of getting the deposit back!

It would be fascinating to get your first-hand account of the process of getting your hard-earned money returned to you!

Posting an article it quick and easy. We would all be very appreciative.

The process is requesting a refund by contacting support and getting in credited in 2-3 days. That's it.

The odd thing about all this is that it was easily predictable. Analysts have been talking about it for years. I've been writing about it in forums, and labeled (by some) as a Tesla hater because I expressed concern about the company's fiscal soundness and unsustainable business model of depending on constant injections of cash just to keep operating.

Just as a quick review:

(1) Tesla Motors has always operated at a loss. That one quarter that they declared a profit was due to "creative accounting", which was frowned upon by the SEC.

(2) Tesla has a long history of not being able to meet its own sales targets. This means they over-estimate the popularity of their products, and they can't ramp up production as quickly as they say they can. They ALWAYS miss their own, self-imposed sales projections. Over-promise, under-deliver.

(3) Financial analysts were ringing alarm bells saying they can't figure out how Tesla can continue to operate without tapping capital markets (i.e., selling shares to raise cash). Meanwhile, in late 2015, Elon Musk was boldly proclaiming this was not so. He said they have the money they need to deliver the Model 3. Today, we see the analysts were right (yet again), and Musk was wrong (yet again). Even must is saying they'll have to go to capital markets, but he's not saying, "I was wrong again."

(4) Each new batch of shares Tesla issues dilutes the existing pool. The corporation has a fixed value as determined by real things, like the ability to generate profit (none), cash reserves (none), massive receivables (none), and hard assets that can be sold (assessed on market value, not book value -- what you paid for them). In simple terms, the value of Tesla shares is pumped up because people *believe* it's a great company with a glowing future, not because the accounting proves that Tesla has the assets to back up the pool of existing shares at current market value. It simply doesn't.

(5) Like Blackberry (Research In Motion) -- whose stock fell from its all-time high of US$144.56 in mid 2008 and now sits at $7.10, continues to bleed to death yet refuses to die -- it's very possible that the Tesla house of cards will collapse, too. There simply won't be enough believers willing to buy a share at about $246 (current market price). When that happens, early profit takers will sell, and that'll scare off more investors to sell, and so forth. It took Blackberry less than 6 months to go from their $144.45 peak to about $40, where they appeared to stabilize for about 2.5 years between $40 and $75. It then took them about year to go from $40 to about $6 or $7. That was in 2012. They've never recovered. They're just a shadow of their former gigantic selves... yet they're "not quite dead yet" (a Monty Python quote). They're around, but no longer relevant. Judge for yourself what that means for Blackberry.

Is this the end of Tesla? Nope. Not by a long shot. But it is showing cracks in the armor, and they're significan

Old article, but if anyone is reading this Tesla did just hit an all-time stock high last week, even becoming the most valuable car company in the US for one day, and the Model 3 is actually on-track. The naysayers may want to keep those feet clean, in case they wind up in their mouths.