Popping Tesla’s Bubble?

Tesla is proof that our economy is no longer tied to value but brands. For 17 out of their 18 years, Tesla failed to have a profitable year:

Tesla on Wednesday reported its first full-year profit, a feat 18 years in the making.

The electric carmaker, which was founded in 2003, said it earned $721 million in 2020, in contrast to a loss of $862 million in 2019, even though the pandemic was a drag on sales and production in the United States. The company made $270 million in the last three months of the year, up from $105 million in the same period of 2019.

Also, they produce far fewer cars than their competitors:

However, Toyota sold more than 2.7 million units in the North American region during its fiscal year 2020. Likely, this works out to be at least 10% of its target consumer base. On the other hand, Tesla delivered 499,550 vehicles in 2020. Even if we assume all those vehicles went to the U.S. market, that only represents 2.6% of Tesla’s target base.

And yet, the market cap of Tesla stock is more than the combined total of two Toyotas, GM, Ford, and Ferrari (NYSE:RACE). I’m sorry but that’s unreal!

Now, they have a recall for 158,000 vehicles. The models include Model X and Model S:

The move comes after the National Highway Traffic Safety Administration requested a recall last month, saying the touch screen in some models can fail when a memory chip runs out of storage capacity, affecting functions such as defrosting, turn-signal functionality and driver assistance.

The agency said the problem affected roughly 158,000 vehicles, including Model S sedans built between 2012 and early 2018 and Model X vehicles made from 2016 through early 2018. 

The company might face more trouble when the silver price explodes considering Tesla needs quite a bit to build cars and solar panels. That will increase the price for both products, and if silver reaches new highs the economy as we know it would be dead. People would rather hold silver than USD, yet silver’s main usage is for industry not investment so there might be a supply issue. Especially with silver’s above ground supply being rarer than gold.

Despite all of this, Tesla’s stock price has went to the moon:

This proves two things:

1. Elon Musk is a marketing genius

2. Tesla’s stock is a massive bubble.

But Musk being a marketing genius, might have found a solution not only for Tesla but the entire economy. Bitcoin:

“I do at this point think bitcoin is a good thing, and I am a supporter of bitcoin,” Musk said.

“I think bitcoin is really on the verge of getting broad acceptance by conventional finance people.”

This conversation he had on Clubhouse took place after he and Michael Saylor, CEO of MicroStrategy, had an exchange on twitter:

It’s uncertain whether he will, but it seems to me Musk is the man to sway the zeitgeist into the great reset making Bitcoin the new global reserve.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s