Tesla makes an excellent car, but do not buy stock until it happens

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<div _ngcontent-c14 = "" innerhtml = " Tesla is suddenly in trouble. The company burns its money and the short sellers are spinning like a group of hungry vultures.

CNBC& nbsp;reported& nbsp; Morgan Stanley, the venerable investment research and brokerage firm, estimates that equities could return to $ 10 in the worst case scenario. The short-term prospects of the electric vehicle manufacturer have darkened.

This shows how fast things are changing at the forefront of innovation.

For what it's worth, I've never been interested in owning Tesla shares and I've never recommended them.& nbsp; They make an excellent car that & nbsp;customers like, but I have never been able to rationalize the whole drama surrounding the company or understand its trajectory of persistent profitability.

Without a doubt, the CEO, Elon Musk, is brilliant. Yet the constant parade of leadership departures and the public war with the short sellers is disconcerting.

At the same time, I have never adhered to the argument put forward by the bears. Since the success of Tesla's IPO, they have said it was only a matter of time before the house of cards built by Musk collapses into a sea of ​​investor despair.

For the record, the first Tesla shares were issued to the public in June 2010 at $ 17. According to my calculations, the current price of $ 190 is far above $ 17. The Bears have been wrong about Tesla for almost a decade, but who counts?

What's going on now, and it's important to put this in perspective, & nbsp; Is Musk has put the company in jeopardy by growing too fast and by leveraging too much, for a value of about $ 13.3 billion.

It's strange, because for a company that was to open a new path in the design, manufacture and marketing of vehicles, Tesla is mired in the trap of the classic automaker.

The & nbsp;Financial Times& nbsp; started his "Great Reading" & nbsp;column& nbsp; in January with a funny fact: in 2007, & nbsp;General Motors was celebrating his 76th birthday with $ 25 billion in cash. Only 18 months later, the company was bankrupt.

The fact is that car manufacturing is extremely capital intensive. Factories capable of producing thousands of cars a week are licensed to print money when demand is strong. However, when demand declines, these factories become a handicap.

Musk spent most of 2018 desperately trying to get the production rates from model 3 to 5,000 units a week, only to find out, when he finally reached that threshold, that demand was declining.

Tesla now has far too much capacity in relation to demand.

Morgan Stanley notes that the market for electric vehicles launched by Tesla is saturated on all markets outside of China. Even worse, Tesla supporters may now be waiting for the & nbsp;Model y, the new Musk sport crossover revealed in March. Realistically, the new model will probably not be delivered until the spring of 2021.

To be fair, the weakest demand was not predictable. & Nbsp; The US government & nbsp;reduce financial incentives& nbsp; buying electric vehicles, it was then more difficult for US companies to do business in China, the largest electric vehicle market in the world.

And the media has always sensationalized every death of Tesla driver. The company does not claim that its vehicles are autonomous. Drivers are specifically warned that they drive the car and must always remain vigilant. To date, all the fatalities in a Tesla have been caused by a misbehavior, but readers would never know from & nbsp;securities.

Teslas is consistently touted as the safest vehicle on the road.

All of these factors contribute to lower demand. And a lower demand for a car manufacturer is a very bad thing.

Meanwhile, Musc is out of focus. When he does not talk about colonization of Mars, he comes out of tunnels dug under Los Angeles. Tesla needs a leader focused on his survival, not his legacy.

There is some good news. Tesla's intellectual property is precious. For years, his cars have been collecting data and transmitting it to data centers for analysis. This information makes it possible to train artificial intelligence models that will someday bring real autonomous navigation.

When actions fade, & nbsp;old stories& nbsp; about Apple trying to buy Tesla for $ 240 in 2013 began to surface. Although it is hard to imagine that Apple is buying Tesla now, the company could be an acquisition target for another automotive company, probably at a much lower valuation.

Equities are trading at 32 times futures, but that assumes that demand remains relatively stable. The problem for Tesla shareholders is that its CEO is often distracted by other projects and investors are starting to talk about sustainability. This is not a factor of trust for potential buyers of Tesla vehicles.

In the end, Tesla shares are still too expensive and too risky for most investors because there is too much distraction at the top. Tesla shareholders need a focused leader.

"> Tesla is suddenly in trouble. The company burns its money and the short sellers are spinning like a group of hungry vultures.

CNBC Morgan Stanley, the venerable firm of research and investment brokerage, believes that the actions could return to $ 10 in the worst case scenario. The short-term prospects of the electric vehicle manufacturer have darkened.

This shows how fast things are changing at the forefront of innovation.

For what it's worth, I've never been interested in owning Tesla shares and I've never recommended them. They make a great car that customers love, but I have never managed to rationalize all the tragedies surrounding the company or understand their persistent profitability trajectory.

Without a doubt, the CEO, Elon Musk, is brilliant. Yet the constant parade of leadership departures and the public war with the short sellers is disconcerting.

At the same time, I have never adhered to the argument put forward by the bears. Since the success of Tesla's IPO, they have said it was only a matter of time before the house of cards built by Musk collapses into a sea of ​​investor despair.

For the record, the first Tesla shares were issued to the public in June 2010 at $ 17. According to my calculations, the current price of $ 190 is far above $ 17. The Bears have been wrong about Tesla for almost a decade, but who counts?

What's happening now, and it's important to put that in perspective, is that Musk has put the company in jeopardy by growing too fast and by leveraging too much, for a value of about $ 13.3 billion.

It's strange, because for a company that was to open a new path in the design, manufacture and marketing of vehicles, Tesla is mired in the trap of the classic automaker.

the Financial Times started his "Big Read" column in January with a funny fact: in 2007, General Motors was celebrating his 76th birthday with $ 25 billion in cash. Only 18 months later, the company was bankrupt.

The fact is that car manufacturing is extremely capital intensive. Factories capable of producing thousands of cars a week are licensed to print money when demand is strong. However, when demand declines, these factories become a handicap.

Musk spent most of 2018 desperately trying to get the production rates from model 3 to 5,000 units a week, only to find out, when he finally reached that threshold, that demand was declining.

Tesla now has far too much capacity in relation to demand.

Morgan Stanley notes that the market for electric vehicles launched by Tesla is saturated on all markets outside of China. Worse yet, Tesla supporters may now be waiting for the Y model, the new Musk sport utility crossover, unveiled in March. Realistically, the new model will probably not be delivered until the spring of 2021.

In fairness, the lowest demand was not predictable. The US government has removed financial incentives for the purchase of electric vehicles, and has made it more difficult for US companies in China, the largest electric vehicle market in the world.

And the media has always sensationalized every death of Tesla driver. The company does not claim that its vehicles are autonomous. Drivers are specifically warned that they drive the car and must always remain vigilant. To date, all the fatalities in a Tesla have been caused by a misbehavior, but readers would never know based on the headlines.

Teslas is consistently touted as the safest vehicle on the road.

All of these factors contribute to lower demand. And a lower demand for a car manufacturer is a very bad thing.

Meanwhile, Musc is out of focus. When he does not talk about colonization of Mars, he comes out of tunnels dug under Los Angeles. Tesla needs a leader focused on his survival, not his legacy.

There is some good news. Tesla's intellectual property is precious. For years, his cars have been collecting data and transmitting it to data centers for analysis. This information makes it possible to train artificial intelligence models that will someday bring real autonomous navigation.

As actions fade, old stories Apple trying to buy Tesla for $ 240 in 2013 began to surface. Although it is hard to imagine that Apple is buying Tesla now, the company could be an acquisition target for another automotive company, probably at a much lower valuation.

Equities are trading at 32 times futures, but that assumes that demand remains relatively stable. The problem for Tesla shareholders is that its CEO is often distracted by other projects and investors are starting to talk about sustainability. This is not a factor of trust for potential buyers of Tesla vehicles.

In the end, Tesla shares are still too expensive and too risky for most investors because there is too much distraction at the top. Tesla shareholders need a focused leader.