developing electric cars, which is great for humanity. We all owe Musk a debt of gratitude. But unlike many other investors, apparently, I’m able to separate these “warm and fuzzy” feelings from an unemotional, rigorous analysis of the company and the likely outcome for the stock. Ironically, I believe that Tesla is about to get crushed by the many competitors it poked into action. While Tesla has an edge in some areas, like driving distance per battery charge, competitors’ cars have many advantages – including better service networks, luxurious interiors, and the “newness” factor. The Audi e-tron, Porsche Taycan, and Jaguar I-PACE represent the biggest threats, followed by highly anticipated offerings from BMW, Mercedes-Benz, and others. To summarize, Musk has taken his company off a cliff. As more investors wake up to this reality, the stock is going to plummet as the company struggles to sell its cars and starts to run out of cash. Recent events – concluding with first-quarter earnings, which Tesla released April 24 (discussed below) – have only reinforced my belief. Lately, it’s almost a full-time job keeping up with all of the major news about Tesla. Here are the recent highlights, with my thoughts... THE SEC VS. MUSK On February 25, the U.S. Securities and Exchange Commission (“SEC”) filed a contempt of court motion against Musk,
saying his February 19 tweet about how many cars Tesla would produce this year was a “blatant violation” of the settlement they’d struck with him last year after his infamous “funding secured” tweet. I attended the hearing in April, where the judge gave both sides a week (later extended another week) to resolve their dispute. In the end, both sides agreed that Musk must “obtain the preapproval of any experienced securities lawyer” before tweeting or posting to social media... an uncertain outcome in light of Musk’s ego and arrogance. Thus, there’s a chance – albeit small – of a bad outcome for Musk, Tesla, and the stock. As more investors wake up to this reality, the stock is going to plummet as the company struggles. Regardless of what happens, Musk’s behavior underscores his negligent and impulsive nature – exactly the opposite of what is needed during this time of extreme stress for the company. CARS CATCHING FIRE A video of a Tesla Model S in a garage in Shanghai suddenly bursting into flames last month has gone viral. One report indicates it was caused by a short-circuit. Tesla is investigating. This comes on the heels of a widely reported crash in Florida in which a 2016 Model S
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