Tesla is going to have several more stock dilutions, the equity in Tesla is worthless right now, and equity investors are as usual the last to know the writing on the wall.


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greetings this is econ matters it is jun 22nd 2016 going to talk about tesla
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motors and their deal to buy solar city we don’t like the deal
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so company with a negative cash flow business model losing seven dollars in
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83 cents a share is going to buy another losing business model using sixty-three
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cents a share and another cash flow negative business
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forget the conflict adventurous standpoint this just really makes poor
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business sense
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very much reminds us SunEdison and when they started doing these very
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questionable acquisitions that was the beginning of the end
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we think this is probably for telling for Tesla
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I like people like Elon Musk
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I think visionaries and risk-takers and trying to move society forward in in
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very creative ways we all like that but there’s a fine line between that and
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irresponsibility and you do nobody any good if you’re go out of business
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and you implode and this is what I’m really negative on Elon Musk about you’d
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be much better and tempering his ambitions
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so as to actually have much higher probability of being successful at this
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point it looks like he’s headed to crash and burn land
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so if we look at the Tesla very unlike their being valued as a tech company but
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their books remind you more of a manufacturing company so they have 1.4
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billion in cash but 3.4 in debt
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a lot of the text with the high valuations have high cash and low debt
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ratios because they don’t have to have inventory and capex this is the exact
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opposite
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Tesla so they’re going to buy another company that’s even worse
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business shape they only have less than four million cash and over 3.2 in debt
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frankly SolarCity will probably be bankrupt in a year
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this is what I mean about questionable decision making and conflict of enters
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they probably could have bought this for pennies on the dollar let alone paying a
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premium for so they’re not even best in class
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I don’t think so test it would have been much better off to buy a cash flow
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generating company that actually is positive cash flow
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it could then supplement the note the cat it could mean something tej the
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negative cash flow business of the electric car
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risk-taking business you know take a lesson from warren buffett so I wouldn’t
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buy any utilities because they are well over valued because of all the money
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chasing yield and they all have way too much debt but there are plenty of
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positive cash flow generation businesses out there with low debt levels that
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could easily supplement test his portfolio and be much more responsible
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from a business
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standpoint if you notice warren buffett he buys cash flow positive generating
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companies
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this actually reinforces how good these decisions are because they generate
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enough cat but then he can go out and buy another positive cash flow
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generation business just with the pop profits from the cash flow that is
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generated from the previous acquisitions and that’s why every two quarters you
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can go out and buy another 15 billion dollar company that’s cash flow positive
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generating that then brings back more cash into sport photo and then you can
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go buy another positive cash flow business all reinforcing an expanding
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the fact that all these businesses are generating positive cash flow
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what else is he going to do with the money stick it in treasuries or a
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negative interest interest rate bearing instruments
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No so it’s much better even if these companies don’t have wild growth the
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potential they do have good cash flow generation potential and if you’re going
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to do something positive with the money
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why not buy them let them generate the cash and then pay for themselves so you
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can go out and buy another 15 billion company that then just adds more cash to
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the portfolio so Tesla and a lot of the people in the green space could take a
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lesson from warren buffett and learn some sound business decision making
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you have to have at least some some semblance of sound and rational you know
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yeah CFO type of skills in your enterprise or you’re going to go out of
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business . and all your great grand visions are going to go up and smoke
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anyway so
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you know part of the reason in the alternative space and you got to think
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of this sort of like the gold rush
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everybody flow to the gold rush and it attracted a lot of people a lot of risk
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takers a lot of people that wanted to make their fortune and unfortunately
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attracts a lot of incompetent people people that are not very sound when it
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comes to decision making and let alone from a business standpoint is based
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decision making
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so the people who sold the dungarees and the shovels to the gold miners actually
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did better than the gold miners themselves and that’s whenever something
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becomes a fat and attracts a lot of incompetent people you can see it’s
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similar in markets the market Todd attracts a lot of investors who don’t
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know anything about training oil or natural gas or the market and they just
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really make poor decisions
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they’re literally people shorting all that sub 30 thinking this was a good
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investment and you see this all the time in investment and you see it in New sort
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of paradigms where it attracts a lot of incompetent people and there are a lot
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of incompetent people in this alternative energy space that don’t know
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how to run a business
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don’t know anything about sticking on budget don’t know anything about basic
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finance and there’s nobody to hold them accountable until they go bankrupt and
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they all most of these companies are going to go bankrupt because they don’t
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have enough of the people who know how to run a business
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we saw this energy and that’s why David crying got ousted is because all the
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green portion of his portfolio couldn’t stick by it onto a budget by factors of
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10 they were blowing through the budgets and it became so duh irresponsible and
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so draining on from the overall positive cash flow business that a solid CEO who
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had been with the company for a lot of years and had a lot of experience
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it was shown the door and frankly this is very indicated of what could happen
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to you on Musk
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it’s great that you have all these ideas but if you crash and burn all your
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visions are going to go up in smoke
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you’d be much better with having a lower production rate being much more
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conservative but actually with a higher probability rate of being successful
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than taking the risk that is taking now because there’s a fine line between
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grand visionary risk-taking revolutionary and irresponsible
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poor money manager just poor decision maker and this just reeks of poor
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decision-making and so what do we think about this we think this is very
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indicated even if they cancel the deal
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the reaction is test is still going to go down because this just is going to
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reinforce the fact that Tesla is going to be burning cash at a much higher rate
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because they’re actually a manufacturing company trying to build a business which
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doesn’t have a good consumer base and the prices are going to go up for these
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vehicles they’re going to have a lot of
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you know from a quality standpoint that’s going to go down as the
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production levels try to ramp up and the cost of just going to get out of hand
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and this metric is going to get worse
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regardless if they cancel this deal and they’re going to have to do several
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stock solutions over the next two years
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and frankly this ratio here if they don’t buy this company is going to
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really expose itself
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so what do we see for this company so we see in three to six months this is a
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hundred-dollar stock and as this goes down it’s going to get really nasty if
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they stick with this acquisition which we think isn’t best-in-class could
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probably be bought in bankruptcy court and is only going to get worse from a
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you know financial balance sheet perspective
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the numbers are just going to look atrocious every sort of reporting . and
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this company was going bankrupt
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the last thing they needed was a bailout and so this is going to be made clear to
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investors and it’s going to blow through a hundred

Tesla Starting to look a lot like SunEdison (Video)
Source: Pixabay