Tesla Sell-Off Worsens After Elon Musk's Surprise Store Closings

hank

“(Bloomberg) -- Tesla Inc. shares continued a steep sell-off in the wake of Chief Executive Officer Elon Musk’s surprise move to close most of the electric-car maker’s stores and shift to online-only sales. Many sales personnel first found out about the decision when Tesla published a public blog post Thursday afternoon, said three people familiar with the matter, who asked not to be identified discussing sensitive matters. A Barclays analyst cut his price target on the stock Tuesday, adding to a chorus of concerns raised by some investors also caught off guard.”

Like the car. Admire Musk as a visionary. Don’t know about this company. Some short sellers have been negative for a while. Does your fund own this company?

https://finance.yahoo.com/news/elon-musk-blindsided-tesla-staff-015340567.html

Old_Skeet

I'm thinking there is more to this than meets the eye. Most cars are sold through dealers and or factory branches. With no sales force (or dealerships) this lowers the value of used Tesla's for both trade in and resale. I'm thinking something is not good at Tesla for it to be closing its retail dealerships.

Now ... Do you really want to buy a Tesla? I don't.

Next they will be closing service centers ... and, going to mobile repair. And, some services and repairs just can not be done in the field.

Now ... Do you really want to buy a Tesla? Again, I don't.

hank

Thanks for commenting @Old_Skeet. Only in my wildest dreams do I want to own either the car or the stock.. I notice that Price’s TRBCX had a small slice when the Yahoo list was published.

Fund Mojo: Top 25 Mutual Funds Impacted by TSLA http://www.fundmojo.com/mutualfund/fund_stockimpact/stock/TSLA

Yahoo Finance: Top Institutional Holders / Specific Funds That Own TSLA
https://finance.yahoo.com/quote/tsla/holders/

Ted

@MFO Members:
Regards,
Ted
M*: TSLA Ownership
https://www.morningstar.com/stocks/xnas/tsla/quote.html

Old_Skeet

Yikes ... I've got some funds that own more of this than I first thought.

So, is it Buy, Sell or Hold?

msf

I bought a car about a year and a half ago. Had I known then that I could wire my garage spot for charging (at my expense, of course), I would have considered all-electric cars, and yes, specifically the Model 3.

From an investing perspective, the concern I'd have would not be resale value but rather that with unique brands like this, when you buy the car you are investing in the company. You're betting that the company will be around so that parts will be plentiful, that demand grows and it builds out a support network.

As it turns out, there's a Telsa recharging station about a mile from me (for which Model 3 owners have to pay). Again, I'd be betting that this station (and the company) would be around for many years. A related concern is driving range. Here's Telsa's map of charging stations. Notice the sparseness in the corn belt, and how many stations are in grey (planned).

Given the (now fading) tax credit, I might have gotten an entry level Model 3 for "just" several thousand dollars more than I paid for my car.

Like buying mutual funds, different people look for different things in buying cars. For me, it's handling (fun) and safety. So the test numbers I look at are skidpad and braking. The numbers for the entry level Tesla, at least according to Car and Driver, don't impress.

Here's their writeup on the 2018 entry level Model 3, and for comparison, their writeup on a 2017 mid-level trim GTI ("practically perfect in every way"). I went with a higher trim level for extra safety features and more creature comforts.
https://www.caranddriver.com/reviews/a19642264/2018-tesla-model-3-test-review/
https://www.caranddriver.com/reviews/a15096088/2017-volkswagen-golf-gti-tested-review/

Derf

msf said: "Notice the sparseness in the corn belt, and how many stations are in grey (planned).
Ethanol rules the rooster here !
Derf
P.S. Maybe the Chinese will buy heavily into them as I saw or heard they 're going to go into electric cars in a big way.

MikeM

Appears if you own American Funds, you own quite a few shares of stock in Tesla based on the M* link Ted posted.

BenWP

Tesla owners, according to an article I read, can't get replacement parts and repairs can take a long time. The example of a body part was cited; if you have a minor accident requiring a new bumper or fender, you may be out of luck. A network of dealers with service departments cannot be easily built or replicated.

Starchild

Here in Jersey, Teslas are everywhere.

Investor

I own a Suzuki Equator truck. This is a rebadged Nissan Frontier. Most Nissan parts fit identically but front bumper headlights and panel are different styling. The problem is that Suzuki has left the US auto market in 2010 closing all dealerships, a year after my purchase leaving my vehicle pseudo orphan. Had I known this would happen I would buy a Nissan instead.

Well, last year I had a small accident. Insurance company paid me the amount the shop has estimated but the shop refused to fix it. After talking to several body shops I got a couple of really high estimates for repair (with no guarantees to actually fix it) a small shop told me that they cannot obtain the front bumper and the bumper mounts from their channel. I did go on the web, found a truck parts store which had the part, ordered and got probably the last of the few available bumper assembly for the vehicle and delivered to the shop which fixed the truck. In the end, I had an extra $100-200 in my pocket leftover but the fact that I may not be able to acquire any of the bagged parts in the future is disturbing. The vehicle with $120K miles still runs very strong. In fact except for oil change I did not do anything else to the engine.

If Tesla gets out of the market Tesla owners might have trouble. Maybe there is already sufficient aftermarket parts for it but some parts will soon run out. I would definitely not buy a tesla but lease it instead and at the end of the lease return to the company.