News of a Tesla Model S’s catching fire near Seattle after
being struck by roadside debris, and the inevitable accompanying YouTube video
thereof, has helped send Tesla shares (TSLA) down more than $20 from their all
time high close of $193.00 on September 30.
The company is looking into the incident (I’ll bet it is!) and, so far,
has emphasized that the fire was caused by road debris, not spontaneous
combustion, and that no one was hurt.
The design of the car, the company further points out, prevented the
fire from spreading as quickly as it otherwise would, helping to protect the
driver of the vehicle.
This fire may be much ado about very little. Cars burn up all the time. And every conventional car contains a fuel
tank filled with, in most cases, gasoline, which is about as flammable a
substance as one can imagine. But the
Tesla fire has caught people’s attention for several reasons. First, this is new technology. People are leery of new technology and new
technology, almost be definition, holds more unknowns than older, more
conventional technology. Second, there
are plenty of people gunning for Tesla for whatever reason…they are scoffers at
the new technology and/or they are short Tesla stock. Third, and more disconcerting, is that
firefighters reported that they needed several attempts to extinguish the blaze
because the car kept reigniting. Marry
this to the fear of technology, and one can see why people, or at least
investors, are jittery.
Regular readers know that I am no big fan of Tesla, or, more
properly, of TSLA stock. See
and
Despite my antipathy toward the stock, I am not at all
gloating, as doubtless some are, about the fire. This is serious business and people could
have been hurt. Further, the technology
behind Tesla is both intriguing and promising; it is good obviously for the
company and its shareholders but also for the entire car industry and for the
nation as a whole. I am thus pulling for
Elon Musk and his cohorts, as we all should be.
From a purely financial standpoint, having been burned by
betting against Tesla stock (I owned, and watched expire, puts on TSLA at $85,
more than $100 below its peak price. Sheer genius. Fortunately, I wasn’t betting serious money on
this proposition!), I am no longer short the stock or long puts on TSLA. It’s too risky to take such positions, the
financial equivalent, so far, of standing in front of an oncoming freight
train.
However, the fire has reminded me of something I wrote back
in that 5/23 piece…
Maybe a GM, Ford, Toyota
It’s fashionable to bash Detroit ,
and maybe its Japanese and German equivalents, as a bunch of old line metal
benders hopelessly out of touch with the newest trends in technology, luddites
mired in the miasma of another age of belching dinosaurs and antiquated
ideas. The contrast, in this view, with
the forward, modern, next century thinking of the likes of Elon Musk could not
be more stark. Such thinking, however,
is flat out wrong. There are a lot of
very smart people working in Detroit
specifically and in the global auto industry in general. It is therefore very difficult to believe
that Mr. Musk, as bright as he is, has figured out something that his
competitors haven’t.
Simply put, the technology behind the Model S and its
upcoming corporate brethren cannot be as flawless and perfect as its most
ardent adherents believe it to be or the guys in Detroit ,
Hiroshima , Munich ,
Wolfsburg , and Toyota
City Detroit and
its competitors have not embraced this technology, and it isn’t obtuseness on
their part.
Maybe the fire will lead us to that fly in the
ointment. Or maybe it’s something as
simple as the Tesla’s being, for the foreseeable future, a car for the relative
handful of people who can afford to spend $70,000 on a third car; hence the enthusiasm
for it on Wall Street and in Silicon Valley.
Or maybe everything people say about the car is true; it is the modern
day equivalent of the perpetual motion, or perhaps the time, machine. But the fire outside Seattle
has people thinking…and looking for possible chinks in Tesla’s armor.
At any rate, even if the car is what its most ardent
acolytes believe it to be, TSLA stock is still expensive. However, betting against it has been a
chastening experience for those of us who have tried it. So I can’t be accused of talking my
position…at least not at this juncture. If
I can find an attractive entry point, I might place a prudent bet against TSLA
again, if such a thing becomes possible.
TSLA: $170.64
No comments:
Post a Comment