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Tesla’s shares tank. Again. Car company wants suppliers to refund payments

Written By | Jul 23, 2018
Elon Musk plus Tesla shares

Tesla’s troubled Model 3. (Image via Wikipedia entry on Tesla, CC 4.0 license)

WASHINGTON. Talk about chutzpah. The Wall Street Journal reported this weekend that Tesla (symbol: TSLA) – Elon Musk’s money-bleeding car manufacturing company for the rich – wants its parts suppliers to give the company refunds so it can make a profit. Guess what happened this morning at Monday’s opening bell on Wall Street? Right answer. Tesla shares tank.

Again.

Just like Tesla shares have been tanking for the last couple of months. Month by month, reality slowly lets the air out of Elon Musk’s fake super-green, super-hero reputation. Even CNBC, one of Tesla’s chief cheerleaders, had to report this news straight.

“Tesla shares are falling on a report that the electric car maker has asked some suppliers to refund a portion of previous payments made by the company.




“In its report Sunday, The Wall Street Journal cited a Tesla memo asking a supplier last week to return a ‘meaningful amount of money of its payments since 2016.’

“The memo said all suppliers were being asked to help Tesla become profitable, the newspaper said, but added that it was unclear how many were asked for retroactive discounts.

“Tesla shares are down 3.6 percent Monday.”

We’re shocked. Shocked!

Why Tesla shares tank. And keep on tanking

Tesla has been in deep trouble for a long, long time. Unsurprisingly, Tesla shares have been collapsing all summer. The company’s troubles, particularly with its Model 3, became more obvious, even to Tesla fanboys on the street. But remember: this profitless excuse for a car company happily rode the wave of government grants and special tax rebates. Typically, the previous administration lavished taxpayer money on all things deemed eco-special during Barack Obama’s 8-year reign of economic terror. Including those Tesla rebates. Yet things have changed since 2016.

Tesla’s sporty, all-electric, high-performance, low-reliability autos have remained virtually the exclusive province of virtue-signaling Hollywood types. They could afford the low-production car’s absurdly high price. As if they needed them, the also benefited from those of big, government electric car rebates. These helped lower that price. That, in turn, helped Hollywood stars cut a big, green PR wave whenever they drove their snazzy white elephants around Tinseltown. (Whenever the cars weren’t back in the shop to fix another mechanical glitch.)

Making matters worse for his publicly traded company – which carries an absurdly unjustified premium price per share, given that it can’t make a profit – Musk summarily folded his money bleeding solar company into Tesla a couple of years back, compounding his negative cash flow while retaining government subsidies and avoiding bankruptcy in the process.

The financial press: Tesla fanboys

We’ve railed against the financial press’ fawning, fanboy reporting on musk and Tesla for as long as we can remember, but to little avail. This weekend’s Wall Street Journal exposé is an outlier. It shouldn’t be. There’s a real story here. But it’s one the MSM doesn’t dare report.

Like Trump-Russia collusion, the super-green eco-heroism of Elon Musk is the official narrative for the eco-nuts that run the MSM and used to run the out-of-control Obama era Environmental Protection Agency (EPA). That is, until the Trump administration thankfully gained control over most of it and cut it down to size.

Fake – and faker – bafflegab from Tesla

Typically, WSJ reporters couldn’t get a peep out of the Tesla suppliers they were able to contact. Who knows what the fear factor was here. Perhaps the fear of a sudden Tesla-declared bankruptcy? Tesla management didn’t respond to requests for comments either. Yet looking back, according to the previously cited CNBC report,



“In May, Tesla said it expects positive GAAP net income in its third and fourth quarters.”

And yet,

“[Their] latest report calls into question the state of Tesla’s financial position. The company lost nearly $2 billion last year and burned about $3.4 billion in cash after capital investments. It had $2.7 billion in cash at the end of the March quarter.”

Calls into question? No kidding.

Tesla = Theranos? More or less

Recall if you will the still-unwinding Theranos scandal. Like Tesla, that fake breakthrough health industry company was headed up by another wunderkind – a photogenic, Steve Jobs wannabe woman no less. Male reporters in particular loved to interview the fabulous Elizabeth Holmes. They would promptly write fawning stories about her and her fake company. Until the roof fell in on their fraudulent charade.

Tesla and CEO Elon Musk may be the next highly-touted fake young god of industry to collapse. If so, he and his company will be done in by a combination of massive hubris and the sheer waste of taxpayer money.

We suspect the collapse of Tesla is still only a matter of time. But when that collapse occurs, we wonder if Elon Musk will be as energetic in sending back all those U.S. tax subsidies Hollywood’s eco-creep movie stars used to buy the latest Tesla model as he’s been trying to get his suppliers to kick back the money they already earned and expensed.

Monday’s market action

Meanwhile, back in the wonderful world of stocks, the Dow Jones Industrials are once again in flat-line territory, off 7.6 points (-0.03 percent) as of approximately 1:30 p.m. ET. the S&P 500 and the tech-heavy NASDAQ are slightly up, however, both gaining 0.11 percent on the day, at least at the moment.

In other words, as was true in Friday trading action, an almost pathologically confused market is just wandering around on what appears to be fairly low summer volume right now.

Action like this always makes us nervous. It starts to make everything in the market seem a little toppy. Add to this weirdness in the U.S. dollar, a still-flattening yield curve – another bad sign – and the over all market’s absolute inability to cleanly break out of its current trading range, and you smell a decline.

The media’s continuing 24/7 attacks on all things Trump isn’t helping either. It aids China in its attempt to weaken Trump constituencies prior to this fall’s midterm elections – something both the media and the Democrats clearly want. But it also will make the Republican-led Congress fear to add to last fall’s tax cut victory dance, further de-motivating Republican voters.

It’s clear that the Democrats and their media lackeys put the resumption of power on a higher plane than either the American economy or the American electorate. Why else would they combat Trump and his economic Renaissance so viciously, and without any evidence to support their position?

It’s this negative political aura scares the bejeebers out of investors and traders alike. This simply adds to the increasing potential for a disastrous waterfall market decline, perhaps as early as August.

We remain fairly fully invested. But we also remain fairly nervous about this market.

 

Terry Ponick

Biographical Note: Dateline Award-winning music and theater critic for The Connection Newspapers and the Reston-Fairfax Times, Terry was the music critic for the Washington Times print edition (1994-2010) and online Communities (2010-2014). Since 2014, he has been the Senior Business and Entertainment Editor for Communities Digital News (CDN). A former stockbroker and a writer and editor with many interests, he served as editor under contract from the White House Office of Science and Technology Policy (OSTP) and continues to write on science and business topics. He is a graduate of Georgetown University (BA, MA) and the University of South Carolina where he was awarded a Ph.D. in English and American Literature and co-founded one of the earliest Writing Labs in the country. Twitter: @terryp17