I don't invest in individual stocks. I have a keen interest in what is going on with Tesla under Elon Musk though. Whenever I am back from the boonies and get internet, I check in with Tesla.
I expected a big drop after the next quarterly report, but it happened sooner. I am so glad to see it working its way back up, and hope for the moon because it would be the one stock I'd buy puts on.
Tesla has lost money all fifteen years it has been in business. Until recently, it focused on luxury-model electric cars. A small niche market.
Elon Musk though promised to produce a $35,000 eletric car that would be $27,500 after-tax. When he made that pronouncement, the federal government had started a program where a $7,500 tax credit was awarded to any electric car buyer. So the rich people buying electric cars in the $80k to $100K + range got a bit of a price break. If you pay no income taxes, this subsidy is of no use to you. A person needs to have a $7,500 tax liability in the first place in order to make that subsidy fully effective.
One important thing about that $7,500 tax break: it starts being phased out after any electric car producer sells 200,000 vehicles. Tesla already has. After Dec 31 their subsidy is cut in half and eventually to zero by the end of the year.
There are a number of legacy car manufacturers who are entering the electric market now. All of them are fully subsidized, and will be for some time to come. Tesla was strictly EV sales, so obviously he is the first one to run up against the subsidy phase-out.
After his pronouncement regarding the 35K car, Musk took "reservations" for them. The response was incredible. He took on the order of 500,000 deposits for $1,000. This feat alone puts Musk in a class by himself no matter how this affair turns out.
The deposits were refundable. Some have been waiting 2 years for their Model 3. The ones that are being filled first are not the $35K version as promised but rather models ranging from $59K to much higher. Models with larger battery packs and two motors, that's the main difference. He is still selling a luxury model, at least in terms of price.
If I remember correctly they are running at about a 30% refund rate, meaning of people who originally deposit $1K, about one-third of them have asked for their money back. A lot on the list are still just waiting for the original promised $35K car, while others are now getting much higher end model 3's.
I can't say how many buyers will continue to stick with Tesla as they lose their subsidy and other manufacturers come on line with models that are fully subsidized. $7,500 is a lot of money on a $35K car. So it is obviously important.
Musk's core claim about the model 3 was his proposed all-robot assembly line. Virtually no labor. A pristine assembly environment so that paint, sealing, and etc. would exceed industry norms. He said it would be an alien dreadnaught.
This is the one thing I have been following closely besides the quarterly financial reports. Because this is everything. Tesla would use the model 3, with sales in the millions not thousands, to launch itself into profitability. By making a car the masses could afford, at a projected profit of 25% per vehicle, Tesla would revolutionize the auto industry.
So I am waiting for just the thing Musk promised: the $35K car made at a cost of under $24,675 to Musk. In the alien dreadnaught all-robot factory.
Nobody has seen hide nor hair of such a car. Musk himself said that producing one would kill Tesla. He has also reversed himself on the alien dreadnaught all-robot assembly concept. He not only acknowledged his line was over-automated: he constructed a tent next to his only factory (Freemont Ca.) and is assembling model 3's in a far more labor intensive manner under that tent.
That means they are a lot more costly to produce. How much so will start to be revealed at the next quarterly financial report. It will cover through the end of September. Some time in October we'll be hearing about it. Tesla claimed the company would be profitable by then.
I figure it's going to be hundreds of millions in losses. I can already see there is no $35K car, costing less than $24K to make. So it is elementary to me.
Which in my view fosters an extreme fascination with the stock price of Tesla at over $300 per share. We can measure the size of a company in several ways, but one real basic one is market capitalization. Take the share price, times the total number of shares outstanding and you have a value the market is placing on the company.
That's $54.465 billion at the current share price close of $319.27. Which exceeds the market capitalization of Ford, $39.6 billion and GM, $52.76 billion. They have factories worldwide and make millions of cars a year. Tesla made roughly 100k cars last year. GM makes about ten million a year. Ford, about 6-7 million.
So it is extraordinary. Tesla stock is obviously at a market price reflecting a strong virtue signaling component. Like owning stock in companies that promise not to use sweatshop labor, or kill animals, or pollute & etc. The buyer is willing to pay a premium for whatever virtue the company stands for.
I expected a big drop after the next quarterly report, but it happened sooner. I am so glad to see it working its way back up, and hope for the moon because it would be the one stock I'd buy puts on.
Tesla has lost money all fifteen years it has been in business. Until recently, it focused on luxury-model electric cars. A small niche market.
Elon Musk though promised to produce a $35,000 eletric car that would be $27,500 after-tax. When he made that pronouncement, the federal government had started a program where a $7,500 tax credit was awarded to any electric car buyer. So the rich people buying electric cars in the $80k to $100K + range got a bit of a price break. If you pay no income taxes, this subsidy is of no use to you. A person needs to have a $7,500 tax liability in the first place in order to make that subsidy fully effective.
One important thing about that $7,500 tax break: it starts being phased out after any electric car producer sells 200,000 vehicles. Tesla already has. After Dec 31 their subsidy is cut in half and eventually to zero by the end of the year.
There are a number of legacy car manufacturers who are entering the electric market now. All of them are fully subsidized, and will be for some time to come. Tesla was strictly EV sales, so obviously he is the first one to run up against the subsidy phase-out.
After his pronouncement regarding the 35K car, Musk took "reservations" for them. The response was incredible. He took on the order of 500,000 deposits for $1,000. This feat alone puts Musk in a class by himself no matter how this affair turns out.
The deposits were refundable. Some have been waiting 2 years for their Model 3. The ones that are being filled first are not the $35K version as promised but rather models ranging from $59K to much higher. Models with larger battery packs and two motors, that's the main difference. He is still selling a luxury model, at least in terms of price.
If I remember correctly they are running at about a 30% refund rate, meaning of people who originally deposit $1K, about one-third of them have asked for their money back. A lot on the list are still just waiting for the original promised $35K car, while others are now getting much higher end model 3's.
I can't say how many buyers will continue to stick with Tesla as they lose their subsidy and other manufacturers come on line with models that are fully subsidized. $7,500 is a lot of money on a $35K car. So it is obviously important.
Musk's core claim about the model 3 was his proposed all-robot assembly line. Virtually no labor. A pristine assembly environment so that paint, sealing, and etc. would exceed industry norms. He said it would be an alien dreadnaught.
This is the one thing I have been following closely besides the quarterly financial reports. Because this is everything. Tesla would use the model 3, with sales in the millions not thousands, to launch itself into profitability. By making a car the masses could afford, at a projected profit of 25% per vehicle, Tesla would revolutionize the auto industry.
So I am waiting for just the thing Musk promised: the $35K car made at a cost of under $24,675 to Musk. In the alien dreadnaught all-robot factory.
Nobody has seen hide nor hair of such a car. Musk himself said that producing one would kill Tesla. He has also reversed himself on the alien dreadnaught all-robot assembly concept. He not only acknowledged his line was over-automated: he constructed a tent next to his only factory (Freemont Ca.) and is assembling model 3's in a far more labor intensive manner under that tent.
That means they are a lot more costly to produce. How much so will start to be revealed at the next quarterly financial report. It will cover through the end of September. Some time in October we'll be hearing about it. Tesla claimed the company would be profitable by then.
I figure it's going to be hundreds of millions in losses. I can already see there is no $35K car, costing less than $24K to make. So it is elementary to me.
Which in my view fosters an extreme fascination with the stock price of Tesla at over $300 per share. We can measure the size of a company in several ways, but one real basic one is market capitalization. Take the share price, times the total number of shares outstanding and you have a value the market is placing on the company.
That's $54.465 billion at the current share price close of $319.27. Which exceeds the market capitalization of Ford, $39.6 billion and GM, $52.76 billion. They have factories worldwide and make millions of cars a year. Tesla made roughly 100k cars last year. GM makes about ten million a year. Ford, about 6-7 million.
So it is extraordinary. Tesla stock is obviously at a market price reflecting a strong virtue signaling component. Like owning stock in companies that promise not to use sweatshop labor, or kill animals, or pollute & etc. The buyer is willing to pay a premium for whatever virtue the company stands for.
via International Skeptics Forum https://ift.tt/2ofU0FO
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