Elon Musk: Pied Piper of Tesla Is At It Again !
In one week, June 2024 will be officially over and US companies earnings reporting season reporting, will kick off.
On 13 Jun 2024, $Tesla Motors(TSLA)$ shareholders convened to recast their votes on CEO’s 2018 pay package that according to Delaware court was not carry out with due diligence and compliance, back then.
Investment firm, Vanguard Group’s last minute cold feet was the swing vote that helped sealed the deal, paving the way for the Tesla the company to reapply to the Delaware court on reinstatement of CEO’s pay package.
Obviously, the CEO was elated with the outcome and took to “X” to announced plans for Tesla, code name “Master Plan 4”.
Master Plan - flash back.
Travelling back in time, to 02 Aug 2006, Tesla’s Chief Executive Elon Musk unleashed his then first Master Plan.
In a post entitled "The Secret Tesla Motors Master Plan” (just between you and me)," the CEO had said:
"The overarching purpose of Tesla Motors (and the reason I am funding the company) is to help expedite the move from a mine-and-burn hydrocarbon economy towards a solar electric economy.
"Critical to making that happen is an electric car without compromises, which is why the Tesla Roadster is designed to beat a gasoline sports car like a Porsche or Ferrari in a head-to-head showdown."
The Master Plan called for building a high-performance electric car and using the profits to make affordable EVs.
"When customer buys the Tesla Roadster sports car, they are actually helping pay for development of the low-cost family car".
Other master plans were to follow.
In 2016, the second plan focused on integrating solar energy, expanding the EV lineup, and advancing self-driving technology.
The third plan, released in 2023, addressed scaling vehicle production, investing in renewable energy and enhancing autonomous driving.
On Mon, 17 Jun 2024, after securing the votes required to get back his “(over) promised” pay package, Mr CEO took to X (formerly Twitter), to tease his next marketing campaign (ahem ! ) Master Plan 4 I mean.
Analysts Expectations:
(1) Morgan Stanley, Analyst, Adam Jonas:
While Tesla will still make cars, investors should prepare for "something else" after the sneak preview of Master Plan 4.
AI & robotics are entering an unprecedented phase, unlocking new total addressable markets and pushing the company “deeper into new disciplines”.
Expects Master Plan 4 to be underpinned by Tesla’s commercial ambitions in AI, Robotics and Advanced computing.
Investors should prepare for a plan that will more clearly link Tesla with Musk’s other ventures, including (a) SpaceX [rocket company], (b) Starlink [satellite network], (c) “X” [social media] and (d) xAI [CEO’s AI startup].
Made no change to its “Overweight” rating and $310 price target on Tesla stock.
(2) RBC Capital, Analyst , Tom Narayan:
Lowered Tesla’s price target to $227 from $293, while maintaining an “Outperform” rating on the shares.
Reducing its outlook for Tesla's robotaxi revenue contribution to $414 billion from previous $627 billion, allocating a bigger revenue share to service providers like $Uber(UBER)$ and $Lyft, Inc.(LYFT)$ instead.
Thinks robotaxis will be the biggest reason Tesla's stock is valuable (52%), followed by self-driving cars (27%), energy storage (15%), and electric vehicles (6%).
'Tesla is Musk and Musk is Tesla'
(3) Wedbush, MD, Dan Ives: (long time fanboy):
Believe the next chapter in the Tesla growth story around autonomous and Full self driving (FSD) is now on the near-term horizon, set to take Tesla's valuation to north of $1 trillion in 2025.
Has an “ Outperform” rating on Tesla and a $275 price target.
Blind faith had him believe that "if the pay package proposal went south, a lot of bad things and scenarios could have happened, including Musk beginning a path to not being CEO of Tesla.
Declares - "Tesla is Musk and Musk is Tesla”.
Tesla Q2 delivery figures on tap
Meanwhile, Tesla is expected to soon report second-quarter deliveries.
On Fri, 21 Jun 2024, Barclays analysts reported the followings:
Maintains “Equal” rating and Target price of $180.
Expect Tesla to deliver 415,000 EVs.
This will be down -11% YoYr and -6.53% below consensus estimate of 444,000.
Attributing estimate to weak sales in Europe and modest production increases in China.
Estimate is "somewhat in line with more muted buyside expectations".
Suspects the final Tesla-compiled consensus estimate will end up lower.
** Important to Note:
The soft delivery result could turn investor attention back to the currently challenging fundamental environment for Tesla.
The company is likely to face continued negative revisions on 2024 and 2025 estimates,.
My viewpoints: (mine only)
Looks like Mr CEO is not a man of his words.
Regarding his grand “Master Plan 4”, he has not even complete earlier plans and is alreadyonto new ones ? That is refreshing and for a moment it resembles US national debt - just keep piling and piling ! (see below)
He has a “talent” to conjure up a lot of Marketing ideas to keep his fans excited.
Tesla will not get better overtime because the CEO is too busy, catching the next limelight on project/s from his existing list of companies. (see below)
Or create new company and spins new project in the process. (see below)
On 9 Mar 2023, Mr CEO joined in the fray to create artificial intelligence startup “xAI” that he hopes to challenge in his bid to build an alternative to ChatGPT.
Often his mission statement always sound “noble”. However, it is anything but. Eg. push for Tesla EVs are to reduce carbon emission into the environment. Yet he jets around the world in a private jet, that release more carbon into the environment. Ironic, isn’t it.
“Grok” the first generative AI to roll off xAI was touted to be better than ChatGPT, as claimed by Mr CEO.
Which we know is false, after objective tests conducted by independent assessor revealed the winner. (see below)
There are far too many “fake” news incidences to keep track of but his fans just lapped it up without filtering, what is true and false.
The habitual story teller will continue with his vices.
Tesla Will Not Recover.
Rounding off, despite all Wall Street analysts’ target prices north of $220, I do not see that happening anytime soon.
(1) Attention Span spread too thin. (see above)
Competing for his attention will be his 7 companies (xAI included).
Assuming he sleeps a generous 4 hours daily, the leaves 20 hours to be divided amongst the 7 companies.
This works out to be about 3 hours for each company, everyday.
What if he sleeps a little more eg. 6 hours, that means even less time available for each of his venture.
Does anyone (with commonsense) really think this is sustainable?
Question:
Of the 7 companies under Mr Musk’s belt, how many are profitable?
Apart from Tesla (on declining profit), and SpaceX, the rest are in the “red sea”, especially Twitter.
(2) Geopolitical tension in US, China and Europe.
The tense situation between US and China will only serve to dampen trade relations between the 2 giants. This will not go down well for an international company like Tesla, where it is caught between the devil and the deep blue sea.
Lest we forget, the strike against Tesla in Sweden (since Oct 2023) is still on-going even though press coverage has been almost non-existent recently.
(3) Price Slashing Repercussions.
Tesla EVs quarterly deliveries
Tesla began slashing prices for its electric vehicles (EVs) at different points in time.
Notable instances include:
May 2020:
Tesla quietly reduced EV prices by thousands of dollars in North America. This move was in response to an industry-wide decline in sales and demand caused by the coronavirus pandemic.
Were you as surprised as I was? Memory fades I supposed and there’s just too many “unfavourable” happenings at Tesla to keep track, especially sneaky ones.
Year 2023: This is the watershed year where Tesla
made significant price cuts, including reducing the price of the Model Y by almost 20%.These steep cuts had a notable impact on the EV market, causing it to be unstable.
April 2023:
Tesla slashed prices (again), with the Model Y’s variants seeing a $3,000 reduction overnight.
July 2023:
Influenced by Tesla’s price cuts, the average price Americans paid for a new EV fell to $53,3764.
April 2024:
Tesla reduced the starting prices for the Model Y (to $42,990), Model S (to $72,990), and Model X (to $77,9901) in the US.
The incessant price slashing has “damaged” the brand’s equity.
What’s more with a weak demand for big ticket item (like cars and houses), coupled with the discount - profit margin for Tesla’s EVs is razor thin.
Investors will be dissatisfied when Q2 2024 earnings report comes a knocking, somewhere in July 2024 tentatively.
(4) Year 2024 - Staff Layoffs.
Tesla staff layoff - Apr 2024
Tesla staff layoff - May 2024
Tesla staff layoff - June 2024
For any labour intensive business / company, when demand for its products dip - the quickest way to keep costs (overheads) down is to fire the staff.
Looks like Tesla is still practicing the “Hire & Fire” strategy in an attempt to keep expenses down and its books “nicely balanced” for quarterly earnings reporting.
Honestly, this is just creative accounting; the oldest trick Wall Street! practises to smoke out the real situation on the ground.
Just my 2 cents opinion. Not trying to convince anyone reading. Just laying out the facts. Blind faith or do the right thing, be the Captain of your ship !
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Modify on 2024-06-26 21:41
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