Name: Here's Tesla's Biggest Issue Right Now
Uploaded: 2016-05-05
Duration: 4 min 3 s
Description: It could weigh down its stock.

Not a great week for Tesla. Earnings came out. They mostly beat, but losses widened on lower- than- expected deliveries. Two manufacturing executives left and Jim [ UNKNOWN ] came out and said he is shorting the company so Aaron, is there a reason for concern? Big reason for concern. They are blowing through a ton of cash Although, having said that, I would be very wary about betting against Elon Musk and Tesla, because the bears have been left by the wayside with what this stock has done the last couple of years. It had a dip late last year that came roaring back. He's PT Barnum, and Steve Jobs, and Albert Einstein rolled into one. It depends on your perspective, which one that he is. He's definitely made it harder on himself by moving that production target back two years .>> Well that was another big piece of new this week almost kind of dwarfs the earnings news Bryan. He's really said we're going to hit this half a million vehicle milestone two years ahead Of plan. I mean, you say it was a bad week for [ INAUDIBLE ] Jim [ UNKNOWN ] short maybe that doesn't look so good but for [ UNKNOWN ] Musk, I think he begs to differ. He says hey, full speed ahead, and he's used to magical thinking. When he started out, this whole thing seemed like crazy, and he's producing these high quality cars. They've got this flood of orders which gave them the confidence To get more aggressive. And I think okay, they lose some manufacturing guys who get new manufacturing guys, and maybe he'll run through a few more by the time the get there, but I wouldn't count it out. I mean, I just think though, I mean, to put that kind of pressure on a company, and now, it's gonna be so public. But he's talking about having a sleeping bag in the office. And I have to say this is how Volkswagen got into trouble. There was so much pressure from the top, we've gotta beat Toyota. I mean there were other issues [ CROSSTALK ] I'm not comparing them to. But I'm just saying sometimes those pressures- Well, he said he's putting his desk at the end of the manufacturers line, right? Right. So that's why he's saying he's all in on this manufacturing The real issue for them is that they're going to have to raise additional capital in order to meet those production targets that they just set for themselves. And so that could weigh on the stock. If they issue more shares or they take on debt. And if the stock goes down, then some of the magic starts to rub off and who knows how that filters out. But again, people have been shorting Tesla for years, get their head handed to them. Jim Chambers is a really smart guy, maybe he's got the timing better But it's just hard to bet against Elon Musk. Also, what's gonna be more difficult. I mean, producing some cars or retiring on Mars. It's all relative with Elon Musk. [ LAUGH ] That's true. You know, he's got a lot of goals that are different from yours. And the hyperloop, right? Yeah, it's all- Good point. The model 3, if it hits the mass market, there's a lot of potential to that, for sure. I think orders are looking good. But we also had this week, April auto sales came out and they were through the roof. They were an 11 year record. So what's driving this so to speak, Brian? I would say it's sort of simple economics really. We've had a long recovery, it's maybe not robust right now, but the fleet of the cars on the road is kind of aging and people need new cars. I think they've Finally saved a little money and they are ready to go and buy a new car. I guess. It just seems so many trends. You have driverless cars. Texting millennials. Ride sharing. And yet we are still selling so many cars. But most of the country still drives. We live in an urban environment. I have two cars, actually. And you know, sub prime lending in the auto sector is a big- the unemployment rate is at 5 %. if you have a job and you have to get there, you feel more confident that you are going to go out and make that car payment and trade your old clunker, and as Brian said, the fleet got really old in this country. Right, it is interesting to look at the valuation, though. I saw a stat that Wall Street is valuing GM at forty eight hundred dollars, per car And Tesla is $ 620, 000 per car. [ LAUGH ] So there are a whole lot of expectations. Future growth. And yeah, that's the thing. It's always been about future growth to Tesla and they just moved the target back two years so now it's easier to analyze the stock. That could be a challenge for them too. It used to be like, well it's five years out. Now it's only two years away. And that could be a challenge for the bulls, for sure. [ BLANK_AUDIO ]