Were it not so tragically representative of what’s wrong with our financial market, the demand for Tesla Motors IPO offering would be laughable. Indeed the beautiful people are all agog with what they believe is the hottest stock prospect since Starbucks found a market for three dollar coffee flavored whipped cream.
What’s all the fuss about? Tesla Motors, the latest darling of Hollywood, political leftists, and amateur Wall Street enthusiasts. Anybody who’s anybody wants to be in this game. Tesla is the electric roadster car made in Great Britain designed to sell for a mere $109,000.00. Names like George Clooney and Brad Pitt top a list of 998 people with orders in for them. It is the stuff that anti oil, life is good when living off the government, environmentalists dream of. For them it is answered prayer to gas guzzlers. For mainstream America however, it is an unrealistic and unworkable alternative.
Similar to Fannie Mae and Freddie Mac, which never seems to make money but enjoys government subsidies, Tesla, a British company, is politically popular. Enough to have garnered 465 million dollars from the US government in loan guarantees. Also similar to Freddie and Fannie the government insists that the names of campaign donors that coincidentally matches the names of the Tesla principals wasn’t a factor in their decision. This of course is the same denial about the 529 million in government loan guarantees issued to Fisker Automotive, a Finnish car which coincidentally boasts Al Gore’s group as investors. The rest of us are scratching our heads trying to figure out how high priced electric prototypes outside America benefits America.
While admittedly lacking a degree in automotive engineering or economics, I none the less hold the view, counter to our government and the political left, that a car designed to sell for over 100 thousand dollars is probably not going to be the breakthrough to resolving oil dependency. What it is going to do, in my opinion, is make a few insiders a car trunk full of money…, and then go broke.
With all the insider elements in play, the initial public offering is getting incredible interest in the financial district. Apparently everybody thinks those early in are going to make a pile of money buying Tesla stock and they may be correct. Stock is strictly a demand driven product. When a lot of people want the stock, even if the company has no prospect of making a profit, share prices rise. Similarly in a financially healthy company that is making a profit, such as BP, when a lot of people don’t want the stock, the share price goes down. Still, in the long term however, when a company has no chance of making money or surviving, the stock collapses. That stated, I for one would not be buying Tesla with a long term view.
One big problem with Tesla is that it is mired in debt on the front end. All they’ve done with the massive start up loans is manage to lose money. Hundreds of millions. Moreover the car can’t become popular because it is priced beyond reach for the average American. Even among those who can afford one, does anyone seriously think they are going to be trading in their Roadster ever year for a new one?
The founder and CEO Elon Musk is admittedly broke, in the process of a messy divorce, and desperate for cash. Tesla has already lost 246 million dollars in the first three years. None of this suggests optimism.
Recent history suggests the politically connected insiders will pocket millions and walk away rich when the company fails. Those with arms linked to Washington power will move on to new government deals and contracts. That’s how the game is played. It’s important to remember that at a casino, the dealer always works for the house while the players go broke.
My prediction for this latest hundred grand fad is that like all fads, it will run it’s course and fade away, along with the money of many small investors. Before you get too caught up in Tesla-mania, my advice is to think, “DeLorean.
About the author
William Burton wrote 26 articles on this blog.
A political junkie with a home spun view of politics, passionately conservative. Published writer (short stories, political essays, poems), and public speaker. Profiled in, "The Ridiculous Race" by Steve Heely.
“Tesla-Mania” Sweeps Wall Street
Were it not so tragically representative of what’s wrong with our financial market, the demand for Tesla Motors IPO offering would be laughable. Indeed the beautiful people are all agog with what they believe is the hottest stock prospect since Starbucks found a market for three dollar coffee flavored whipped cream.
What’s all the fuss about? Tesla Motors, the latest darling of Hollywood, political leftists, and amateur Wall Street enthusiasts. Anybody who’s anybody wants to be in this game. Tesla is the electric roadster car made in Great Britain designed to sell for a mere $109,000.00. Names like George Clooney and Brad Pitt top a list of 998 people with orders in for them. It is the stuff that anti oil, life is good when living off the government, environmentalists dream of. For them it is answered prayer to gas guzzlers. For mainstream America however, it is an unrealistic and unworkable alternative.
Similar to Fannie Mae and Freddie Mac, which never seems to make money but enjoys government subsidies, Tesla, a British company, is politically popular. Enough to have garnered 465 million dollars from the US government in loan guarantees. Also similar to Freddie and Fannie the government insists that the names of campaign donors that coincidentally matches the names of the Tesla principals wasn’t a factor in their decision. This of course is the same denial about the 529 million in government loan guarantees issued to Fisker Automotive, a Finnish car which coincidentally boasts Al Gore’s group as investors. The rest of us are scratching our heads trying to figure out how high priced electric prototypes outside America benefits America.
While admittedly lacking a degree in automotive engineering or economics, I none the less hold the view, counter to our government and the political left, that a car designed to sell for over 100 thousand dollars is probably not going to be the breakthrough to resolving oil dependency. What it is going to do, in my opinion, is make a few insiders a car trunk full of money…, and then go broke.
With all the insider elements in play, the initial public offering is getting incredible interest in the financial district. Apparently everybody thinks those early in are going to make a pile of money buying Tesla stock and they may be correct. Stock is strictly a demand driven product. When a lot of people want the stock, even if the company has no prospect of making a profit, share prices rise. Similarly in a financially healthy company that is making a profit, such as BP, when a lot of people don’t want the stock, the share price goes down. Still, in the long term however, when a company has no chance of making money or surviving, the stock collapses. That stated, I for one would not be buying Tesla with a long term view.
One big problem with Tesla is that it is mired in debt on the front end. All they’ve done with the massive start up loans is manage to lose money. Hundreds of millions. Moreover the car can’t become popular because it is priced beyond reach for the average American. Even among those who can afford one, does anyone seriously think they are going to be trading in their Roadster ever year for a new one?
The founder and CEO Elon Musk is admittedly broke, in the process of a messy divorce, and desperate for cash. Tesla has already lost 246 million dollars in the first three years. None of this suggests optimism.
Recent history suggests the politically connected insiders will pocket millions and walk away rich when the company fails. Those with arms linked to Washington power will move on to new government deals and contracts. That’s how the game is played. It’s important to remember that at a casino, the dealer always works for the house while the players go broke.
My prediction for this latest hundred grand fad is that like all fads, it will run it’s course and fade away, along with the money of many small investors. Before you get too caught up in Tesla-mania, my advice is to think, “DeLorean.
About the author
William Burton wrote 26 articles on this blog.
A political junkie with a home spun view of politics, passionately conservative. Published writer (short stories, political essays, poems), and public speaker. Profiled in, "The Ridiculous Race" by Steve Heely.
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