Why I Won't Touch Tesla Shares

It's been a wild year for Tesla- there has been a ton of ups and downs. Any positive news seems to send the stock to the sky and the opposite sends the stock in a downward frenzy. There are a ton of reasons why I won't touch this stock. But for the most part, it comes down to one underlying issue- Production.



The production has been so bad that in quarter three of 2018 they only produced 80,000 cars. To put it into perspective, BMW produces on average 126,000 cars per quarter. 

Toyota/Lexus produce over 10 million cars a year.
Volkswagen is just behind with 10 million a year.

And the quality of Tesla' is so far behind the rest of the "common" cars that are being produced. Sure the technology is nice but if I'm spending $60,000+ on a car, I don't want to have to worry about the car falling apart 10,000 miles in. Tesla's reliability doesn't even crack the top 20. Some notable brands that are known for not being reliable that beat out Tesla are Jeep, Chrysler and Mercedes Benz. Even cars of a similar price range beat out Tesla in the reliability aspect. Such as Porsche, BMW, Lexus and Mercedes Benz.

The lack of production has lead to the lack of sales. 


Their net sales is nearing negative two billion, which is a 500% decrease from just a few years ago.

Sure their total revenue has risen but the cost of revenue has risen with it. 

According to Bloomberg they are spending $500,000 per hour- The majority of which is being used on research and development. When does that number become to much for the company? They are spending money like its going out of style but cant sell a car. 


Aside from th production issues, can you trust anything Elon Musk say's? one day he announces they will be producing 5,000 cars a week and the stock goes up 12% in an hour, the next day he calls a Philippine rescue worker a pedophile and the stock drops 10%. Then he tweets that he's taking the company private and shoots up 20%.. Then he smokes weed on a podcast and it drops 15%.

I like Elon Musk- He is one of the smartest people the earth has ever saw. But that doesn't mean he has the business acumen to run a massive car business. Sometimes the smartest people lack basic common sense.

Over all, if Musk can mature and handle the pressure of shareholders better, as well as fix manufacturing woes and quality issues.. I wouldn't consider this a good investment until I see that 24 billion dollar debt decrease. (Which has actually increased 380% since 2014). 

 

No comments:

Post a Comment

Facebook Massive Earnings Beat

      Could Facebook's earning beat finally be the boost that tech stocks need? They are up 6% today after crushing earnings... Other co...