Billionaire hedgie Ron Baron owns a ton of Tesla, bought at about 25% below where it is now. He told CNBC this morning he’ll make 20 times on his money on the stock.
I think he’s right.
Arguments in favor of electric cars (like Tesla) are enormously persuasive, including:
+ Safety. Safest car ever built.
+ Cost of key raw materials — like batteries — plummeting in price.
+ Cost of service equals zero (except for tires). Tesla doesn’t have to build engines. They’re pricey, pain in the necks.
+ Significant upcoming improvements in production, including just in time manufacture. Much easier to make a Tesla than a Ford F150.
+ Ability to improve Tesla’s software by through the air updates. Think how Apple does it. Software is easier than machining parts.
+ Fun to drive. I drove a Tesla recently. It’s enormous fun. I think Susan and I should buy one.
Other stuff in our portfolio:
+ Amazon’s Echos are selling so well that Americans have stopped naming their babies Alexa.
How to make a cool $2 billion. Last time I published this, I figured $20 x 100 million Amazon Prime Subscribers. Bingo $200 million. WRONG. I got this email yesterday.
$20 x 100 million Prime customers equals $2 billion. That’s a lot of money to earn for a single key stroke!
+ Square will build you a web site for free — so you can sell your stuff. You only pay them when you sell something. Just like you do with the little square white Square credit card machines.
Saying NO.
The economy is speeding up. We’re all being inundated with deals. Most popular: marijuana, bitcoin, ICOs (Initial Coin Offerings), syndicated residential properties sporting IRRs over 20% per year.
Stay also away from offerings with a negative sales pitch, e.g. “We’ll stop you getting a virus.”
Just say NO. Then go play tennis.
Useful stuff
+ It’s always the cable or the plug. Wiggle the plug. Replace the cable. Half busted handset cords sound “scratchy.”
+ Two keys to a happy life: Don’t open any email attachments. Don’t go to any web site you got from an email.
+ The most important doc on your Windows machine is normal.dot. You need it for transferring preferences from one machine to another.
+ Uber is cheaper (and cleaner) than most taxis — any and everywhere.
+ Eat less. You’ll feel better. Skip main courses. Eat appetizers. They taste better, too.
+ Don’t answer “unknown” callers. I started blocking each one on my iPhone. It didn’t stop them. They’re too good at “spoofing” — sending me a caller ID that looks legitimate.
+ Every airline and Amtrak are now demand pricing. A trip two hours later (or earlier) might cost twice as much.
Cutting the cord
They’re pricing cable TV as if the patent was about to run out — i.e. higher and higher. Keys:
+ Call and “Say reduce my bill.” They will. You don’t have to have a reason.
+ How much TV do you actually watch? You can buy over-the-air antennas for as little as $13 (and no monthly fees). Click here.
+ Smart TVs (like my favorite Samsung) have Internet connections. Plug an Ethernet cable from your WiFi router in. Bingo, you can watch Amazon and Netflix — without Roku, Google Chromecast, or Apple TV.
+ You can buy a fine Roku for under $30. click here.
Favorite reader email
Top jokes from the U.K. circuit
+ “If you arrive fashionably late in Crocs, you’re just late.” — Joel Dommett
+ “My wife told me: “Sex is better on holiday.’ That wasn’t a nice postcard to receive.” — Joe Bor
+ “My therapist says I have a preoccupation with vengeance. We’ll see about that.” — Adam Hills
+ “I was in my car driving back from work. A police officer pulled me over and knocked on my window. I said, ‘Wait a minute, I’m on the phone.'” — Alan Carr
+ “Standing in the park, I was wondering why a frisbee looks larger the closer it gets…then it hit me” — Stewart Francis
+ “The easiest time to add insult to injury is when you’re signing somebody’s cast.” — Demetri Martin
+ “Crime in multi-storey car parks. That is wrong on so many different levels.” — Tim Vine
For more, click here.
Recent favorite New Yorker cartoons
Harry Newton. Here are two reasons Susan and I went to Maine for the weekend.
Zoe is 8 months. She has two teeth. Sophie is nearly 4. She lets me read her books.
Stansberry’s May 3rd tesla update: It was not a good day for electric-car maker Tesla (TSLA)…
Shares of our favorite whipping boy plunged as much as 8% following its latest quarterly “earnings” announcement last night.
While the company did report better-than-expected revenue of $3.41 billion for the quarter – compared with estimates of $3.22 billion – there was little else to celebrate. As the Wall Street Journal reported…
Tesla burned through cash at a greater rate than analysts expected during the first quarter, intensifying pressure on the Silicon Valley auto maker to raise more capital if it continues to struggle ramping up production of the Model 3 sedan.
The company’s free cash flow widened to about a negative $1 billion after burning $277 million in the final three months of last year, a figure that was unusually low thanks, in part, to delays in spending and customer deposits…
Tesla posted a loss attributable to common shareholders of $710 million, its fifth consecutive quarter of record losses. Tesla’s per-share loss of $3.35 was narrower than analysts’ average expectations, according to FactSet, but those projections were lowered significantly in recent months.
In short, despite repeated promises to the contrary, the company is still falling laughably short of its production targets. Meanwhile, it continues to hemorrhage money at a mind-boggling rate.
Of course, none of this is new…
Tesla and its “Steve Jobs-wannabe” CEO Elon Musk have been overpromising and underdelivering for years. Yet analysts and shareholders alike have largely given them a pass.
That appeared to be the case again this quarter. Shares initially rallied in after-hours trading following the results. But they turned sharply lower during the company’s post-earnings conference call.
During the 90-minute call, Musk was unusually arrogant and dismissive, even by his standards. And suddenly, the world is taking notice. As financial-news network CNBC reported this morning…
Elon Musk’s peculiar post-earnings call was the talk of the market Thursday morning, with one analyst ranking it among the strangest moments of his career.
“Tesla’s 1Q18 analyst conference call was arguably the most unusual call I have experienced in 20 years on the sell-side,” Adam Jonas, equity analyst at Morgan Stanley, said in a note to clients. “Many investors we spoke with post the call agree.”
Amid questions over the electric car maker’s cash burn, its relationship with SpaceX and production of the Model 3, Musk cut off the questioners and in some cases chastised them for asking things he didn’t like…
He dismissed one question from a key analyst as “boring,” then took more than 20 minutes of questioning from a 25-year-old YouTuber. “We’re going to go to YouTube. Sorry. These questions are so dry. They’re killing me,” Musk complained.
In fact, it was so bad, even some of the most-bullish Tesla analysts are now questioning the company’s future. More from CNBC…
Consumer Edge analyst Jamie Albertine, who is bullish on Tesla and has a price target of $385, said… Musk’s behavior on Wednesday’s conference call is a big issue.
“We totally disagree with the way Elon handled himself,” Albertine said on CNBC’s “Squawk Box” on Thursday. “It’s an incredible red flag and we are re-evaluating our stance on the company as a result.”
The ‘bottom line’ is simple…
Tesla is a terrible business… And it is now running dangerously low on cash.
Despite Musk’s reassurances, its only real hope for survival is to continue to raise new capital from investors.
Suddenly, that’s looking far less certain.
stansberry’s view of TSLA: we have every reason to believe Tesla’s margins are headed lower – much lower – from here. Here’s why…
Despite spending millions trying to create the most automated car-manufacturing facility on the planet, Musk confirmed in April that “excessive automation” was causing the company’s production problems.
Tesla is now scrapping much of its advanced automation equipment in favor of old-fashioned manual human labor. The company shut down production for a week in April to retool its line, getting rid of robots and setting up the factory for more human labor.
To meet its production targets, the company now plans to hire thousands of new workers for a third shift. And it wants to run the plant nearly 24/7.
Before this announcement, Tesla was already much less efficient than most other carmakers… Before the company ditched its automation equipment in March, Tesla employed roughly 35 employees for each car coming off its assembly line. This compares with five workers per car for Nissan, and only 3.5 workers per car for Honda. And this will only get worse as Tesla attempts to ramp production in the coming weeks.
As Tesla adds even more manual labor, margins will erode further.
Plus, this frenetic pace will exacerbate the current quality control and worker-safety issues plaguing the company.
What was once viewed as Tesla’s competitive advantage – automation – has become a drag on productivity and margins. The market will soon realize that the only thing separating Tesla from traditional automakers is its lack of experience and structural inefficiency.
When the market shifts its focus from Tesla’s production to its deteriorating margins and cash flows, we expect a rapid decline in share prices.
Tesla might have better products than cars:
https://electrek.co/2018/05/14/tesla-powerpack-project-grid-balancing-europe/