Tesla! It is one of the most sought out companies in the world with their revolutionary electric cars and their unique ability to seemingly bounce back from every road block, however the electric car company may have finally run out of power. Founded in 2003 by Martin Eberhard and Marc Tarpenning who both financed the company to begin with, until the series A round of funding. Elon Musk then took a lead role in the series A round of funding and this is when Tesla took on the identity that we know today, with its forward looking and futuristic mindset. Despite all the hurdles that Musk and Tesla have managed to jump through, it seems as if they aren’t untouchable and their share price is a reflection of that. Tesla’s share price took a nosedive by 4% on Monday before the bell, all because of a report that suggested that the electric car maker had been in touch with supplies about a refund of previously made payment in an attempt to claw back some cash.
As you could imagine “the company weren’t available to comment”, hmmm I wonder why. Nevertheless, this is just one of a long line of reasons why Tesla’s batteries may have reached the end of their lives, and caused many people to change course and short the stock. Take the analysis that came out that claiming that approximately 24% of the 400,000 reservations of the Model 3 battery-sedan had actually been cancelled, a claim that of course was met with controversy from the Tesla CEO. But, upon closer inspection, there might be another reason for his lashing out which could be because of new orders appear to be unable to keep up with Tesla’s long-awaited ramp-up in production. You see, with all the hype, buzz, promotion and buildup and any other words you can think of that were going round at the time, can only do so much before you start to get people questioning when they will actually get to drive their electric car. Don’t get me wrong, I’m not speaking on behalf of everyone here, there were plenty of people who were anticipating getting in their first electric cars to drop their kids off at school, but a 24% cancelation rate speaks volumes. At this rate, we will likely see supply outweigh the demand for Tesla’s electric vehicles.
Another reason to take the side of the bears is in relation to the ex-Tesla employee turned whistleblower. Martin Tripp was believed to have broken into Tesla’s computer system and carried out extensive damage and caused serious harm to operations. Tesla of course took the necessary actions and sued Tripp believing it to be him behind the sabotage, as well as stealing gigabytes worth of data. Tripp then hit back at the electric car company by claiming to have seen production numbers that had been falsified and damaged batteries being installed in cars. As you can imagine, Tesla unequivocally denied such allegations saying that they were easily disprovable and grossly exaggerated. Musk and Tesla just can’t seem to catch a break, because Tripp even submitted a complaint to the SEC that includes accusations that Tesla had overstated to investors that the number of Model 3 vehicles were being produced each week by as much as 44%.
A positive and happy company should be a reflection of how they make the customer feel when they purchase their product or service. Well unfortunately, more evidence has presented itself that is a cause for concern for the electric car company in relation to the $7,500 federal tax credit that is offered to help the financial burden of purchasing the electric car. But now, customers will start to lose that $7,500 federal tax credit and this all due to Tesla hitting a crucial milestone in the production by producing 200,000 cars. Once a car manufacturer reaches a certain number of cars that have been produced, the benefits such as the tax credits start to fade away and gradually the credits become less and less every 6 months. But there is a glimmer of hope at least, in that the full credit will still be available until December, which is outlined on the Tesla website.
Hype can be a good and necessary catalyst when it comes to generating interest in a company and their products, but some companies get drunk off the hype and believe their own spin on things. Over hyping a company and its products can lead to an overvaluation of what the company is actually worth, this as you can imagine can only result in one thing. An overvaluation of a company will end up collapsing under its own weight of false information and hype that was generated and Tesla is one such company. When compared to other car manufacturers, Tesla is up there with some of the heavyweights like Ford, Nissan, General Motors and Fiat Chrysler, with a Market cap of $48.1 billion dollars. Now you may think that is pretty impressive, and it is impressive but what is most impressive is how they are able to maintain the facade all whilst being the most shorted stock on the US Stock Market. With the evidence that has been highlighted above, I’m surprised more people haven’t jumped on the bandwagon and shorted the Tesla stock.