is surely what those poor TSLA shareholders must think with the share price going down faster this year than the number of Twitter advertisers – minus 63% and counting
Then again, the largest shareholders don’t think
Because they’re the poor S&P500 #etf investors a.k.a. driverless car passengers
Remember when Tesla was added to the S&P500 as the 5th largest company on 21 December 2020 at a price of…
~$220?
Just after it had jumped nearly 40% since the announcement that it would join the index
as traders gamed the “dumb money” ahead of the inclusion?
Do you want to know what the current price is?
$129
ouch, Grinch!
I took a look at the shareholders’ register on Bloomberg to see the latest change of the largest holders
Musk Elon Reeve -21.995m shares
Vanguard Group +25.678m
Blackrock +5.75m
State Street +4.284m
So Elon has effectively been selling to the world’s largest Passive fund providers
The boss, the main guy who knows everything, has been selling to the computers
Now, who do you think is the smart money and dumb money in this trade?
Oh well, at least those Passive investors saved a few basis points of management fees and performed in line with their benchmarks…
But I’m afraid the bad news doesn’t stop there because I think the game for TSLA is well and truly over
It is all a game to Elon, with his daily Twitter polls, don’t you think?
Unfortunately, the news today that Tesla is offering a discount of $7500 per vehicle isn’t funny for shareholders
or people who bought a car last month..
Because last quarter they made a Gross Profit of $5.4bn on 343k deliveries
Equal to $15,700 of Gross Profit per car
So, a $7500 discount wipes out ½ the gross profit per vehicle!
And announcing that now, just prior to quarter end, suggests demand is weak
I don’t know why,
Perhaps it’s because electricity prices are high and EVs no longer make as much financial sense
Or because recessionary fears have caused people to hold fire on discretionary items like Teslas
Or because the fierce competition we all knew was coming, has arrived
Or because his Twitter antics have alienated half the world and probably more than half their potential customers
It doesn’t really matter
What does matter is that if sales haven’t been as robust as “forecast”
operating leverage will be lower (before any discount)
and inventories will have risen
sucking up cash flow
Analysts think Tesla will make $4.13 per share this year
But doesn’t all the evidence suggest that’s a wish?
So I don’t share Cathie Wood’s “faith” in Tesla (Ark bought yesterday)
and I certainly don’t have any “faith” that they will make $8.31 in 2025
What I do think is more likely, is that Tesla will fall 50% over the next year
As I said in my recent BizNews interview – see playlist on Ranmore Fund Management’s Youtube channel
And in case you’re wondering, I have no position