Tesla: Musk Tweet Disaster Furthers Our Case That Company’s Communications May Be In Shambles

Tesla’s (NASDAQ:TSLA) CEO could be doing the company more trouble than good with his Twitter account. In the past, we had written articles suggesting that the company may want to begin looking at a succession plan for Elon Musk. Our argument at the time was that a more Wall Street friendly CEO could potentially bolster a little bit of much-needed credibility behind the company and while the company could retain Musk as Chief Technology Officer or a position similar, the big responsible decisions should be left to somebody with significant executive experience and a great relationship to the street.

Last week provided us with a great example of why our theory may hold some water.

We also recently made the argument that it seemed as though communication within the company was cloudy. There have been several instances over the last year where the company and its executives simply don’t seem to be in sync. We postulated that perhaps this is what has made so many executives leave the company over the last year.

The sloppiness that we took concern with was on display in full force last week. Elon Musk once again took to Twitter to disseminate information that may or may not be considered material and may require a proper disclosure through SEC filings and the like.

Tesla: You’re All Missing The Point

Believe it or not, I actually don’t really care about this quarter. In fact, I don’t care about ANY quarter on its own.

So Tesla pulled some levers and juiced its numbers. Lots of companies do that. But what companies can’t do is alter the core economics of their business, and here’s where Tesla falls down.

Tesla is an industrial company that makes cars and batteries (and now plans to offer ride sharing, which, you know, makes so much money for Uber(Private:UBER)…). My view is that cars and batteries generate roughly the same EBIT margins at around 10-12%.

I’ve already modeled this out, and here’s the key: even with massive growth, immediate free cash flow, and higher-than-guided production of its current models, Tesla’s shares are overvalued.

For this reason, it doesn’t matter if it is profitable. In fact, I expect the company will be (at some point). The key is that as a car company, Tesla will never earn huge returns. Cars are a cyclical, highly capital intensive, and unattractive industry. TSLA continues to face competition from competitors who have more resources, and who know they’re behind, and can easily imitate Tesla’s strategy and whittle away any excess returns it has yet to generate.

For the record, I have never disputed that Tesla makes a great product. They’re slick, fast, sexy vehicles, and people love them. I think Elon Musk is humanity’s best hope to colonize mars, and to advance the human race into a more sustainable way of living. That does not mean, however, that one should fall in love with Musk, with Tesla, or with ANY stock for that matter.

What matters is the present value of free cash flow a business generates over its life, and based on the information we have now, Tesla is a long way from justifying its value on that basis.

Elon Musk is ‘risking astronauts lives’ with plan to refuel SpaceX rockets while they are onboard, experts warn NASA

A proposal by Elon Musk’s SpaceX to fuel its rockets while astronauts are aboard poses safety risks, a group of space industry experts that advises NASA has told the U.S. space agency.

‘This is a hazardous operation,’ Space Station Advisory Committee Chairman Thomas Stafford, a former NASA astronaut and retired Air Force general, said during a conference call on Monday.

Stafford said the group’s concerns were heightened after an explosion of an unmanned SpaceX rocket while it was being fueled on Sept. 1.

Is Tesla’s Elon Musk Throwing A Hail Mary For The SolarCity Deal?

Tesla’s Elon Musk tweeted on Friday that he would pay SolarCity’s debt if it came to that. It was in response to a tweet from David Tayar asking about Tesla assuming SolarCity’s obligations after the presentation on the SolarCity acquisition on November 1. There are major concerns about the merger due to SolarCity’s negative (and increasing) cash flows and therefore its ability to service its debt (and then becoming an obligation to Tesla).

This is compounded by the concern that Tesla may not be legally obligated to pay for the debt (even though Musk says they will be one company) since there is language in at least one of Tesla’s filings with the SEC that “the Company and its Subsidiaries shall not guarantee or otherwise become directly liable for any Indebtedness of SolarCity and (b) the Company and its Subsidiaries shall not permit SolarCity to guarantee or otherwise become directly liable for the Indebtedness of the Company or its Subsidiaries.” This is from an 8-K filing on August 1 and you have to go to the EX-10.1 portion to find it.

Elon Musk Is Treating Mars Like It’s a Moore’s Law Problem. It’s Not

Moore’s Law is a product of Silicon Valley, as is the tendency to misapply—with overreaching drama—it to various capital-P Problems. The September, 2013, issue of Time featured a cover story raising the tantalizing question “Can Google Solve Death?” And yet people are still turning up dead. Mark Zuckerberg and his wife, Priscilla Chan, announced a $3 billion effort “to […]

Elon Musk Critic Sues Tesla, Says Musk’s ‘Agents’ Hacked His Twitter

In a bizarre series of events, a former employee of an energy sector services company has claimed that staff or “agents” from the car manufacturer Tesla hacked his Twitter account.

The complaint, reported by The Daily Kanban, is written by attorneys representing one Todd A. Katz, and oil executive, and comes after Tesla filed its own lawsuit against Katz, claiming he impersonated Telsa’s CEO Elon Musk in an email.

According to the complaint, Katz runs a Twitter account with the username “@ValuationMattrs,” which he’s used to criticize Musk and Tesla for various things, including the company’s planned merger with SolarCity Corporation, Musk’s solar energy company. Indeed, much of the document rants about Musk’s business decisions, before actually getting into any sort of formal allegation.

But on August 4, the day after Katz allegedly sent an email to Tesla CFO Jason Wheeler while purporting to be Musk, “Tesla and its agents, on information and belief, accessed Katz’s Twitter account, @ValuationMattrs, without authorization from Katz,” the complaint reads.

At 3:25 PM, a person logged into this account from an IP address used by the two Best Buy electronic stores closest to Tesla’s factory in Fremont, California, which are around seven and 11 miles away respectively, according to the complaint.

As the complaint points out, both of these stores allow potential customers to handle and try out various electronic devices, including Apple iPhones, with an internet connection.

Elon Musk unveils Mars colonization plan, but don’t pack your bags just yet

Elon Musk wants to save humanity. That’s his stated mission. He doesn’t want to get rich for its own sake, he wants to get rich so that he can devote his wealth to the colonization of Mars, which in Musk’s mind is not only an enticing place to live but also an effective backup location […]

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