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The Weekend Edition is pulled from the daily Stansberry Digest. The Digest comes free with a subscription to any of our premium products.
The Trouble Is Just Getting Started for This $60 Billion Market DarlingBy
Saturday, October 7, 2017
The concerns continue to mount for one of the market's most beloved companies...
We're not fans of electric-car maker Tesla (TSLA) and its "visionary" founder Elon Musk... It isn't that we have a problem with the products. Rather, it is Musk's questionable ethics, and the fact that it is 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, despite forcing taxpayers to subsidize a huge portion of the cost.
It has burned through nearly $10 billion since 2012... holds another $10 billion in debt... and has almost never turned a quarterly profit. And yet, somehow, we're supposed to believe the company is worth roughly $60 billion today.
Of course, you've likely heard all this before. But if you thought Tesla had problems now, just wait... A virtual tsunami of new competition is coming soon. As Bloomberg reported this week...
This last point is important... Economics 101 tells us surging supply combined with tepid demand is a recipe for lower prices. This isn't great news for any electric-car maker, but it's especially bad for Tesla.
Worse, more competitors – including Audi, Porsche, BMW, and Mercedes-Benz, among others – are now targeting the luxury segment of the market where Tesla largely operates.
If Tesla can't make money with practically no competition today, what hope will it have when the competition really gets going? In the meantime, Tesla continues to fall short of Musk's lofty goals...
When the company launched its new, lower-cost Model 3 sedan in July, Musk promised that production would ramp up quickly.
He said Tesla would produce 100 units in August, 1,500 in September, and a huge 20,000 per month by December. From there, Musk said production would really take off... He said the company plans to make 500,000 Model 3s in 2018, and 1 million in 2020.
So how is his big plan coming along? More from Bloomberg (emphasis added)...
You'd be a fool to believe Tesla will produce 1 million Model 3s per year anytime soon... According to Karl Brauer, executive publisher for Kelley Blue Book and Autotrader, that ramp-up rate is unprecedented among experienced, high-volume automakers. (Tesla is neither.)
But Musk couldn't even meet the first of these projections. Worse, Tesla produced just 25,336 total vehicles across all its models last quarter. This is less than it produced in the three months ending in June.
In other words, Tesla is actually producing fewer cars just as it has promised to begin making exponentially more.
Maybe Musk is on to something... After all, when you're losing money on every vehicle you produce, making fewer cars doesn't sound so bad.
Before we wrap things up today, we need to pass some exciting news along...
Earlier this week, TradeStops founder Dr. Richard Smith sat down for an exclusive interview that was broadcast from Stansberry Research headquarters...
In it, Richard shared the same compelling research he recently presented to a standing-room-only crowd at our private Stansberry Conference in Las Vegas, including...
No matter how long you've been investing... and no matter the size of your portfolio... if you're even a little worried about the markets today, you owe it to yourself to review Richard's work. Watch a brand-new video presentation he put together – and learn about a special, limited-time offer – right here. Regards,
Justin Brill
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