Tesla Stock Surges on Earnings

Another correct prediction on this blog: Tesla stock surges 9% after hours on earnings.

Tesla shares surge as upbeat Musk sees profitable second half

Tesla shares soared as much as 11 percent in after-hours trading. The stock has been under pressure for some time as investors have worried about the cash the company was burning and whether it would be able to sustain its profitability.

Six days ago Steve Eisman, who rose to fame by betting against the housing market as retold in Michael Lewis’ best-selling book and movie “The Big Short”, announced he is short Tesla, citing ‘execution problems’. With Tesla up 10% , his position is hemorrhaging money and if it continues at this rate, his firm may soon be insolvent. This is further evidence that many of these people who purportedly made a fortune in 2007-09 by betting against the housing market, were merely lucky, not skilled. The ‘business model’ of these liberal activist investors (such as Bill Ackman, Dan Loeb, Carl Icahn, etc.) is to lose their client’s money through bad performance and high fees.

That’s why you don’t bet against high-IQ, HBD, Silicon Valley, and America. All these losers who bet against Tesla have collectively, since 2013, lost billions of dollars and will continue to do so. This is a lesson of how narratives that seem obvious (“Tesla is losing money, so therefore the stock should be lower”) are often wrong, or at least there is more than meets the eye. If solvency were an actual concern, the stock would be at $3, not $300. So those who are betting against Tesla are either running on blind faith, ignorance, and desperation–or are privy to some knowledge or information that would justify a $3 target, that all of the collective wisdom of Wall St. is oblivious to. My guess is the former. Yes, there are instances like Enron, where the collective wisdom was wrong, but those are outliers, and one can look at the financials and the business model and see that Tesla is not at all like Enron.

There is huge demand for Tesla cars, huge backlogs. Tesla can access the capital markets to raise money cheaply, by issuing low-yielding bonds or more stock. Tesla is employing the Amazon strategy of deferring profits by spending money on capital expenditures and infrastructure, such as factories. The left fails to realize that Tesla is very profitable after these one-time expenses are excluded…same for Amazon. Tesla has 15-20% operating margins on each car sold, and there is more demand than Tesla can meet. Very few businesses are in such a fortunate position, often selling products at a loss as inventory piles up and expending millions of dollars on advertising. Tesla cars, however, sell themselves…that’s how strong the brand is.

I disagree with Jim that Musk is a ‘serial scammer’…Musk is a high-IQ/HBD American capitalistic success story. From the $500 million loan (which he paid back), he created this highly successful company from the ground-up, that employs 30,000 people. On Twitter, he is waging war against left-wing journalists who are trying to tear him and his brand down. I would say Starbucks and Target, with their left-wing political agendas, are far more deserving of criticism than Tesla.