If you are tempted in the least to buy Tesla (TSLA) shares, lie down someplace comfortable until that feeling goes away.  If that doesn’t work might I suggest an “adult beverage” or a pharmaceutical?  Do what you have to do to resist the temptation to buy Tesla stock.

Let’s set aside the fact that TSLA CEO Elon Musk’s erratic behavior would have gotten him fired from the company if he weren’t also its largest shareholder, and focus on Tesla stock’s business.

First, motor vehicles are one of the most complex products to manufacture even under the best of circumstances. History is filled with stories of entrepreneurs like John DeLorean and Preston Tucker whose grand plans to build their own vehicles failed.  

There is a reason why there are only a handful of automakers around the world.

TSLA hasn’t earned a dime in profit and is up to its eyeballs in debt.  As of June 30, the company had an outstanding $10.91 billion in an aggregate principal amount of indebtedness.

In the first six months of the year, TSLA lost more than $1.4 billion — more than double the $666 million a year earlier! — from costs to bring the Tesla Model 3 sedan to market.

 Even worse, even though Musk recently told employees on Sunday that TSLA was “very close to achieving profitability and proving the naysayers wrong,” he was short on specifics about his claim. Regardless, this turbocharged TSLA stock price on Monday — a sure sign of the shaky ground Tesla stock stands on.

Profitability Questions Linger for Tesla Stock

Savvy investors know that “profitability” much like beauty is in the eye of the beholder.  I doubt that Musk was referring to GAAP Net Income (AKA The Bottom Line.) Perhaps he means one of the non-GAAP metrics that companies favor when they are trying to put a positive spin on otherwise negative numbers such as “adjusted earnings.” 

Regardless, it’s another red flag and part of a pattern of behavior that long-time observers of Musk have noted. 

Legendary auto executive Bob Lutz told CBS MoneyWatch a few years ago:

“You know, Elon Musk is a wonderful guy. He’s a visionary. He’s personally charming. He’s the eternal optimist. [However,] he does make a lot of claims and a lot of statements that as time goes by prove to be not to be quite accurate. Every time somebody tries to focus in on the here and now, he dangles another grand vision in front of them. “

Tesla Cars Are Cooler Than TSLA Stock.

To be sure, Tesla has legions of fans, some of whom placed deposits on their Model 3 and waited for months for it to be delivered to them.

Fans of Tesla stock, however, often fail to separate their feelings for the company, which is innovative, and its stock, which is often the captive of Musk’s whims and not a reflection of the company’s potential value.

For instance, another reason why it spiked Monday is that investors were relieved that Musk settled his insider trading case with the Securities & Exchange Commission — which would have been grounds for termination at most companies.

Anyone tempted to hitch their wagon to Musk’s star should realize that there are legions of other investors betting that he will fail.  Roughly 28% of TSLA stock is held by short sellers, a huge amount for a company of its size. If that doesn’t put the breaks on your plans to buy Tesla stock I don’t know what will.

As of this writing, Jonathan Berr doesn’t have a position in any of the stocks mentioned here.