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Why Cramer Is Right To Call Tesla A 'Sell'

Discussion in 'News' started by NigelM, Sep 13, 2011.

  1. NigelM

    NigelM Recovering Member

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    #1 NigelM, Sep 13, 2011
    Last edited: Sep 13, 2011
    There was another article about how electric ars will never take off, here on Seeking Alpha.

    I highlight here the gist of the arguments about why Tesla shares should be a "sell" but read on to the much better (and very funny!) reply from a Tesla owner John James Lord in the comments section:

    Here is the answer from a Roadster owner:

    Round of applause to John; wonder if he's a forum member?
     
  2. ckessel

    ckessel Active Member

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    Cramer is a complete moron. I suspect you'd do better just generally doing the opposite of whatever he suggests.
     
  3. Doug_G

    Doug_G Lead Moderator

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    Okay, I'm commenting here just because I feel like it...

    Yeah, and that article was poorly researched, too.

    Yeah, as planned and explicitly stated by Tesla from the outset. Why do you think they went to the stock market if they weren't planning to spend all that money on something?

    Uh, relevance??? "The apple market is down, so we expect oranges to do badly, too."

    That is a short-term trend. Oil prices mid-term and long-term are going way up as supplies get restricted and demand from India and China booms. That is unavoidable.

    Probably because poorly-informed people like you keep talking it down. Keep at it! Maybe if it drops enough I'll be able to pick up some shares.
     
  4. Larry Chanin

    Larry Chanin Model S Perf Sig 1055

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    Hi,

    Well, some folks must agree with your point.

    Didn't Tesla stock just go up a full 5.24% today? :wink:

    Larry
     
  5. richkae

    richkae VIN587

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    Cramer's job is to create churn, keeping him in a job. If his advice was actually good he would take it and be rich and stop giving advice.

    1. The auto industry is scared of electric cars because they won't wear out and need replacing, nor have high maintenance costs - generating service revenue.

    2. We won't know til at least 2013 or later if Tesla is successful - even when Tesla sells all the cars, their margins depend on execution and long term quality.
    If you expect to profit on Tesla shares in 2012, you bought the wrong stock.

    3. In any new industry there will be faliures and successes. Failures are good because it means new things are being tried.

    4. Despite short term volatility, oil can only go up until it is replaced as an energy source. Demand exceeds supply.

    5. See #2
     
  6. hcsharp

    hcsharp Active Member

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    I agree with all your points except that one about oil prices. I don't think oil will go up in price any faster than the general rate of inflation. Why? First, I think the current price already reflects the scarcity of oil. Second, I think new technology will reduce demand for oil. That will be true globally including the emerging economies you mentioned with short-term rising demand. Oil will continue to be volatile, but I don't see the long-term price curve deviating much from general inflation after smoothing. As a Roadster owner, I hope I'm wrong!

    The current price already appears higher than the market will bear. After several years of average 15 to 20% price increases, the market is reacting. But reducing oil use takes time, so most of the change doesn't happen overnight. Other than starting to drive less, there isn't much that you can do right away. It takes time for people to replace their cars with smaller more efficient models and to install solar panels and insulate buildings or build new ones. That's my .02 on oil prices. Most people disagree with me on this and frankly I hope they're right!
     
  7. Norbert

    Norbert TSLA will win

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    Don't you think the scarcity of oil will increase? If not, what are your sources?
     
  8. Norbert

    Norbert TSLA will win

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    Aside from not being clear which effect you see this as having on the stock, they are surely also scared to loose the advantage of having a know-how that's not easy to achieve: the know-how of mass-producing ICE's.

    Lots of industry experts are still saying that Tesla won't be able to build the Model S for the price, not well, or not on schedule. That skepticism is built into the current stock price. I'd expect this skepticism to resolve 3rd quarter 2012. We'll learn in those quarterly reports what the actual margins are. Will the stock market response wait until "long term" quality is proven?

    Which means? There are also failures in old industries, see necessary bailouts. Those companies can get into trouble again, once they will be allowed, again, to follow their own stubbornness.

    That and more: Washington and Military seeking independence, the economists seeking to improve the trade balance.
     
  9. richkae

    richkae VIN587

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    #9 richkae, Sep 13, 2011
    Last edited: Sep 13, 2011
    Oil price is up an average 8% per year over the last 10 years and 10% average per year over the last 6 years ( I averaged the yearly percentage increase compared to 10 years ago for each day of 10 years and 6 years recpectively ). This is significantly higher than inflation and there is no indication that this will slow down - it will most likely increase.
    This is because supply has peaked and demand is still increasing.

    Consumption:
    Consumption in China is increasing at over 7% per year. China will pass the U.S. as the number 1 consumer of oil in the world by 2020 if U.S. demand stays flat.

    The U.S. only turns over about a small percentage ( less than 5% ) of the car fleet every year. Even if the average fuel economy of new cars doubles over the next 10 years, any reduction in total demand is too little - too late.

    I don't think that technology can slow consumption - non-western world demand ( driven by China and India and others ) will increase faster than technology can reduce consumption.

    Production:
    World production capacity is falling. Production in Mexico, Norway, UK, Venezuela, Nigeria, Indonesia is falling fast. Indonesia joined Opec in 1962 but ceased to be an oil exporter in 2004, many other countries will follow suit soon.
    In fact Saudi oil production is in danger of falling ( read Twilight in the Desert by Matthew Simmons )
    We are using up the cheap to produce and refine light sweet crude, and bringing new expensive heavy oil to market.

    Full disclosure: I am long in oil stocks and intend to profit from the rising price, while driving electric and using none.
     
  10. richkae

    richkae VIN587

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    I was just trying to respond to Cramer's whining that Solyndra failed - and his claim that that was a big failure of green jobs.
     
  11. vfx

    vfx Well-Known Member

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    "Every electric car you sell is a combustion car you don't sell."

    "And every creamy eclair that Winchell's sells is another chocolate glaze they don't sell."
     
  12. AnOutsider

    AnOutsider S532 # XS27

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    I see this point brought up often and I wonder how valid it is. Many manufacturers offer free service on their vehicles and are getting more reliable and efficient. I'm not sure I see service revenue as a huge threat, especially when dealerships can adapt and sell battery swaps, charging time, service on things like tires and wipers etc
     
  13. Doug_G

    Doug_G Lead Moderator

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    The manufacturers probably don't care all that much. It's the dealers who would be concerned, as they make almost nothing on the sale of the car. Their profit is all in the service.

    Of course pundits will make this point and then out of the other side of their mouth point out the huge cost of battery replacement, or the risks of an untried technology.
     
  14. doug

    doug Administrator / Head Moderator

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    Yeah, way to try to turn a positive into a negative...

    I'm sure manufacturers love to be able to claim high reliability regardless of technology used.
     
  15. qwk

    qwk Model S P2681

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  16. dadaleus

    dadaleus 4GETOIL P85#S70,FdrX,S85D

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    I dumped all of my stocks and stock funds several months ago when the writing seemed on the wall about our supposed 'recovery'... all that is except Tesla. I still have my IPO stock and I think it's a great investment. I just think the common wisdom on EVs isn't very wise, and I plan to (and already have) profited handsomely as a result.
     
  17. VolkerP

    VolkerP EU Model S P-37

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    replacing car sales

    Going back to Cramers statement:
    I would never acquire a luxury ICE, in spite of dreaming of supercars when I was a little boy. Gas consumption and emissions is prohibitive in my green mind. This surely is a minority position!
    Currently we use a small Toyota to haul the family around. Next car will be a Model S with >= 230 mile pack.
    Conclusion: In my case, selling a $67k EV replaces a $15k ICE. Which car maker would not jump on that?
     
  18. AnOutsider

    AnOutsider S532 # XS27

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    To play devil's advocate: An automaker that doesn't think the consumer would jump on that (and let's face it, most won't).
     
  19. Cobos

    Cobos S60 owner since 2013

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    Actually I'm not quite sure that isn't the truth in some places. Here in Norway it seems quite a few are willing to jump on higher value EVs than ICE cars. Partly that's because of our incentives it's possible to get a good brand new EV for a much smaller price than a similar ICE vehicle. And access to HOV lanes is worth almost 2 hours each day in reduced commute for some areas of Oslo. Hence many that have usually bought a 5-10 year old ICE vehicle as their secondary car is trading that for a brand new MiEV or LEAF. I'm probably trading my $3500 1996 Civic for a Model S when it's available, that's a huge leap in cost. I would never buy another new ICE vehicle though if my current ICE clunker dies it will be replace with a 1998-1999 Civic I suppose :)

    So in Europe there seems to be a few that will stretch far for a functional/good/luxury EV but wouldn't want to sink that much money into any regular ICE car. After all in Norway a VW Golf TDI with similar equipment as the Leaf costs almost $12 500 more than the LEAF.

    Cobos
     
  20. AnOutsider

    AnOutsider S532 # XS27

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    That's insane. Yes, market conditions would definitely play a part. In the US ICE cars tend to be cheaper even with the incentives. At the same time though, we don't have many pure EVs here
     

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