Welcome to Investing for Beginners podcast this is episode 36, I’m David Ahern, and Andrew Sather’s here as well. Tonight we’re going to talk about Tesla.
Tesla’s going to be our whipping boy tonight, so I’m going to start off by chatting a little bit about an article that Andrew forwarded to me. He subscribes to the Stansberry digest, and Porter Stansberry is one of Andrews mentors and one of his favorites
He sent me this email a few weeks ago that was kind of awesome, and it talks a lot about Tesla. So I thought that would be a great place for us to start and we’ll just kind of riff off of that.
So I wanted to talk a little bit about just kind of quote here from the article real quick and then we’ll kind of get into it as Porter says.
“As we explained many times. It’s not that we have a problem with the electric carmaker’s products rather it’s Musk’s questionable ethics and the fact that it’s simply a terrible business Tesla has missed virtually every manufacturing deadline and sales target it has ever set.
It loses money on every car it sells, I’m going to say that again it. Loses money on every car it sells. despite forcing taxpayers to subsidize a huge portion of the cost and has burned through nearly 10 billion since 2012, 10 billion, holds another 10 billion in debt and has never ever turned a profit.
And yet somehow we’re supposed to believe the company is worth more than 56 billion today. I believe it is the largest by market cap automaker in the United States as we speak today.”
Which is just obscene, so I think those facts kind of speak for themselves. But I know Andrew has a few things you’d like to say about this, and we’ll get going
Andrew: oh yeah, I mean that fires me up, so it was a very timely email to because one was it back in October 3rd, so that’s when I got this email from them. And then today it’s the 14th when we’re recording this, and it’s big in the news right now that Tesla just laid off 400 workers.
So when you talk about like the whole ethics of Tesla, the company and you know obviously we’re going to get into the financials and the valuation and the stock price and how all of that relates to itself. And so you have to know just like we talked about with snapchat and one of our previous episodes just like we’re always pounding the table about how there are these bubbles.
There’s been bubble mania, tulip mania all these sorts of things that we’ve seen historically and Teslas like a spitting image of that. Today with the way that its stock price has gone and what it’s continuing to do despite the fact that like you just said they are losing money.
Not only from a complete earnings perspective as far as total annual earnings but their car sold. That’s kinda ridiculous, and that’s bad, and a reason that I have such a big problem with it is not only is it against what I how I try to invest.
Obviously, I’m always we’re always talking about going for a margin of safety with the emphasis on the safety. So preservation of our capital is number one, we’re trying to get into these companies that are very strong financially, and Tesla unchecks all those boxes. It’s not in a great strong financial position, it’s not creating lots of earnings and profits and dividends for its shareholders.
Not only that but there’s like the email said there’s like a moral, ethical side to this that that’s not discussed much. And you know I’ll be far from the first person to say that I’m some altruistic guy who has great intention.