Tesla: Elon Musk And The Art Of Hype

Nov. 14, 2017 3:56 PM ETTesla, Inc. (TSLA)17 Comments
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Tech, Growth, Solar

Contributor Since 2013

Author of Beyond the Hype, a comprehensive emerging technology stock analysis and discussion service on Seeking Alpha Marketplace. Currently, we focus on identifying and investing in the semiconductor, renewable energy, storage, EV, autonomous vehicle, CPU, and GPU markets.

Beyond the Hype is different because it is dedicated to cutting through management and Wall Street commentary and providing fresh and insightful perspectives from a mid-market M&A consultant specializing in the technology and energy industries who's also been an individual Investor for over 25 years. The platform is about growth oriented investments primarily in market leaders and technology leaders. Investment philosophy is long term buy and hold with average holding time of several years.

Beyond the Hype is different because it is dedicated to cutting through management and Wall Street commentary and providing fresh and insightful perspectives on companies and investments. We see through hype, show the true value of companies, and make investments safer. A lot of views tend to be controversial, against the grain, and remarkably accurate.

In investing, people typically talk about high risk, high reward. At Beyond The Hype, we would like to do a little better. Our motto is: Low Risk, High Reward

Tesla (TSLA) is about to unveil a semi truck on Thursday. As such, we believe the truck makes no economic sense for Tesla. More so, given the Model 3 quagmire that the Company is in.

So, why unveil a truck now? Especially given that trucks have very little synergy with cars?

To get to the root of this, it serves readers well to understand Elon Musk’s modus operandi. The MO here is to hype the next generation products wildly without much basis in reality. Over the course of time, as the product development nears completion reality comes crashing on the hype. As the product prospects and returns do not live up to expectations, it becomes clear to investors that more capital is needed for the survival of this cash burning Company. As the day of reckoning nears, Mr. Musk artfully moves the discussion to a next generation product and begins the hype cycle all over again.

As can be seen in the image below, Elon Musk has mastered the art of hype by consistently hyping unattainable goals to raise spectacular amounts of capital (base image from here). Given the MO, it should be no surprise that Mr. Musk is now on the fourth generation of automobile products at Tesla – Roadster, Model S, Model X, and Model 3 – and has nothing to show in terms of ability to make a dime of profit.

With Model 3 increasing the cash burn, it is clear that Tesla needs to raise cash in 90 days to avoid a cash and credit crunch. A well planned truck unveiling serves this precise function.

In the coming days and weeks, we will be sharing more about the economics of Tesla truck.

Watch the space.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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