Chevy Volt a Failure - GM to Layoff 1,300

He is WAY, WAY, WAY below where he had the company producing by now when he was hyping where the company would be by now 4 and 5 years ago. This is a pattern. So you are working off of scaled back expectations to begin with. And even with that, this is shaping up to be the third year in a row that he misses delivery guidance he gave IN the year he then missed his mark. Those numbers he missed were all below the guidance he had previously given when discussing long range plans. Worse, he made loud promises each time. But when he failed to deliver, none of the bluster. Instead, he consistently misses delivering what he promised -- and then promises some new smoke and mirror that gets hyped. It is the hallmark of con men, actually. Make a promise. When you disappoint, promise something bigger and shinier.

Plus, this is not merely 1,000 cars. Although, 1,000 cars would be significant with the small numbers they actually are able to produce, given what is built into the valuation of this company. Their guidance was for between 80,000 and 90,000 cars. Not 80,000 cars. That presupposes something on the higher end of the estimate when someone throws out numbers like that.

What I think you are missing is how much good news is built into the valuation of this stock, and how a company being valued that richly HAS to meet and exceed expectations to justify its valuation. Any other company would be punished for any slight miss at that kind of valuation. If it misses by one car in its guidance, it should a big deal because the company is being valued at growth rates that are insane.

Consider this. Guidance for 2015 was 55,000 cars (a number Musk first threw out in March of that year). By August -- 5 months later -- he needed to scale back expectations, and he revised his guidance to between 50,000 and 55,000 cars. The day he did that the stock dropped 6 percent. Would you have been asking why everyone was holding his feet to the fire over 1 car? In reality. ... Tesla delivered 50,580 cars on the year.

 

I am not David Einhorn of Greenlight Capital Management. Although, I find him to be a very smart guy.

This is how he opened his investor letter that went out yesterday:

I can't imagine how short the stock he is for him to be talking his book that way up top of the letter. It will be months before we might know.

He didn't stop at Tesla, though, and then immediately went onto a commentary about the central bank quagmire I have been posting about on here since the Fed, BOJ, ECB, etc. began a bunch of insane and radical schemes to monetize more and more debt after 2008 -- something that is going to end disastrously. He decided to go tongue-in-cheek.

Ah, good times.

 

Can't really respond the way I would like right now. ... Don't know anything about solar roof panels yet. I'd just point out that every time Elon Musk's CAR company fails to deliver on his BS. ... he tries to get everyone talking about some other shiny new thing. The "gigafactory" that was going to revolutionize the world is not on any schedule he promised, and will never produce batteries at the costs he was talking about to bring down the cost of EV cars. So now he comes up with some other shiny new thing that is going to be the new greatest? OK. As I said, it's the mark of a con man. They make ridiculous promises that fool some of the gullible masses. They fail to live up to what they promised. So they come back with an even bigger, more incredible promise to try to keep their thing going. We'll see if this is more of the same. I just don't know enough about it yet to say much in an informed way.

As for the Solar City deal, I have strong opinions. He has three companies that have blown through large amounts of capital (raised through subsidies, excessive borrowing and endless equity dilutions). Solar City was on the brink of failure (and contrary to what a lot of lay people think, it is not really an energy company -- it is a garden-variety financing scheme). It could no longer raise capital, because it ran out of suckers willing to finance the Titanic. So he proposed using his other company that still has people willing to provide capital and fall for all of the hype, to bail out Solar City. From a corporate governance perspective. ... I'll leave it at saying that it's shady beyond belief. I could say more, but I am knee deep in stuff right now. Here are a few videos of Jim Chanos talking about it, if you care:

 

@bigpern23 , BTW. ... I didn't say this in that post. Three weeks before Tesla shareholders are slated to vote on the merger w/Solar City that Musk desperately wants, Elon Musk suddenly steps forward with loud hype about some nebulous product that he is calling "the future of solar."

Given his history of manipulative bullshit and hucksterism, what would you honestly guess was going on with that?

 

Yes, it would tied to the acquisition. Tesla used to be an EV business. ... until it failed to make itself into a financially successful one and burned through a ton of cash and continues to (despite all of the government subsidization).

He is trying to push through the Solar City acquisition, despite the fact that it makes zero sense strategically, will overwhelm Tesla with debt it can't afford (because it is already drowning in its own debt, even if it isn't insolvent yet the way Solar City is), and it will put it among the walking insolvent (as Chanos said) when you weigh it down with the mess that is Solar City.

There was an uproar over the proposal to buy Solar City because it is a hair away from being out of business and Musk was essentially using Tesla to bail himself out -- and he wants to do it at his shareholders' expense. From a corporate governance standpoint it is criminal (not literally, but he has balls the size of watermelons trying to do it given the conflict of interest). But if they vote for it, I can't blame Musk. Shame on the mindless institutions that own the stock.

In any case. ... then. ... hocus pocus. A big event with "solar roofs." Magically, three weeks before the vote. They look so cool!!! Never mind that the market for solar is small (because of its prohibitive cost) and its growth rate is declining as early (and only) adopters have already largely signed on. He's trying to do a typical Musk mindmeld to seduce his shareholders into voting for something that benefits Elon Musk, but is against their interests. He is trying his typical PT Barnum act to get it done. When in doubt, have an event, make lots of promises, make it sound futuristic or green or some other "cool." Then try to manipulate the suckers into doing what benefits Elon Musk.

 

Shareholders just approved the Solar City deal.