Tesla Tumbles as Outlook Cut, Loan May Need to Be Amended

The odds are against a start up auto company. Large companies get very heavy goverment subsidies. Tesla is a high risk affair, and a volatile stock. Should be bash it for a bad day? Look at the charts. Say you bought half bonds and telsa instead of an auto company. In the last year tesla is up more than toyota, two years, tesla again. Go out 5 years, and look how much market value most auto companies have lost. Its not a rewarding sector, but if you need to be in it, a little tesla looks much better than a lot of tm, gm, or f.

There is the quality principle that used to be in toyota when it was smaller, that akido toyoda talked about bringing back. Musk seems to take it seriously. Problems with a part, the line stops and it gets fixed. The auto industry is a tough one. I don't think tesla's risk/reward on stock looks good to the general market. That is true about most of the auto sector except perhaps tata motors in india.

Tesla is up 3.4% this morning, toyota down 2.4%, tata up 3.8%, gm down 1.8%, ford down 1.5%, etc.

Should we write the obits for old large car companies? Of course not. Take the long view.

I would say there is great risk that tesla does not have 5000 delivered by end of January. Supplier problems are tough on toyota and GM and they have lots of experience. The question is really can tesla be producing and selling 5000/quarter by next summer. If it does, the stock will shoot up.

 

Petersen update - he says Tesla is doing better than he expected and Tesla got a good deal here.

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He still is very negative about the stock and company, as most analysts are. I disagree with him that all the good news is out, but is more of a chance of bad news than good.

What may be hurting the stock more than slight delays in Tesla S production are these types of news article.

http://www.nytimes.com/2012/10/01/business/global/electric-vehicles-a-low-priority-for-automakers.html?_r=0&adxnnl=1&adxnnlx=1349196665-lM1CL/bbd6JVIruPYaWYwQ

Note it is about vw and volvo building phevs instead, but the first line is misleading. Tesla sales haven't been disapointing, it was manufacturing execution. Nissan/Renault haven't been doing as well as they projected on BEVs.

Any of these autos are not great investments. Tesla does have a bigger upside than most.