If you look at the largest of the large cap stocks, you will notice that all of them serve millions of customers around the world, with diverse product lines and huge revenues. Except one. Tesla (NASDAQ:TSLA).
This company, which has the fifth largest market cap in the entire U.S. market, hasn’t even delivered 1 million vehicles in a year. It’s been delivering cars for 14 years now and still hasn’t hit that mark.
Do you think the market would be so generous to any other company that couldn’t ramp up production or sales faster than that?
For comparison, Volkswagen (OTCMKTS:VWAGY) has a market cap about one-sixth the size of TSLA stock and it delivered 4.9 million cars last year. The Big Three are an order of magnitude-plus smaller than TSLA’s market cap.
Toyota (NYSE:TM) delivered more than 10 million cars and has an almost $230 billion market cap.
Not only that, but these car companies have been doing this for generations. They have extensive supply chains to support older models, and almost any repair shop has access to parts.
What’s more, these companies also have after-market parts suppliers that keep prices down on parts as well as allow DIYers to work on the cars themselves, which is a big deal if you expect a robust secondary market for your cars.
There’s also the fact that since the pandemic a number of new EV makers have joined the game. Usually, when competitors join an industry with one leading player, that player is under greater competitive stress, since added competition means greater margin pressure.
Not TSLA stock.
TSLA Stocks Killer CEO
In the tech world you have killer apps. In the EV world it seems, you have one killer CEO, Elon Musk. He’s part genius, part showman, and Tesla doesn’t even have a PR or marketing department because its CEO does all the talking.
It’s certainly entertaining. But now that the decade and half of quantitative easing is over and billionaire worship is waning, is he really the guy you want tweaking the U.S. Securities and Exchange Commission, taunting government officials and changing the subject whenever a question about one or more of his business ventures gets bogged down?
I believe the people that fawn over Musk are the same people that still have Steve Jobs quotes on their walls. Apple (NASDAQ:AAPL) do or die is now TSLA do or die.
And the same unquestioned belief in the black turtleneck-clad CEO is now being transferred to the next enigmatic billionaire with a good idea and guru-status deflection skills.
What many of AAPL faithful forget is that AAPL almost disappeared from the fact of the Earth during Jobs’ early run as CEO. Its ascendency was a 21st century one. Its early days were a mess.
The interesting thing is how the press generally falls in line with these uncrowned barons of industry. They can be willing apologists for these types of CEOs. And when blindly labelling everything they do as genius goes out of fashion, they simply move on to the next genius billionaire or captain of industry that craves attention.
Idle Hands Versus Focus
Many see Musk as the next Thomas Edison. He’s running a space company, a car company, a tunneling company and a solar company all while tweeting his views on every conceivable subject, fighting the SEC, and launching a controversial bid for Twitter (NYSE:TWTR). He holds forth on blockchain coins and anything else that comes to mind.
And after his grandstanding TWTR move, analysts are starting to rethink their view of Musk. TSLA stock has dropped. TWTR stock has dropped. And as his tweets continue, it’s starting to look like Musk isn’t finding any traction.
Now, he’s backing out of the TWTR deal for not doing proper due diligence before his grandstanding bid for the company. And of course, he’s blaming it on Twitter.
This kind of erratic behavior isn’t attractive when you have a company with a $700 billion market cap.
Just below TSLA stock’s market cap is Warren Buffett’s Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B). Do you ever think he would pull something like this? Bill Gates? Jeff Bezos? Tim Cook?
TSLA has very little short interest against it, so current shareholders can breathe easy, for now. But if there’s another down leg to this market, which seems very plausible, it’s a good idea to take profits soon.
As for aspirational TSLA lovers, logic has defied you up to now. But if you haven’t bought in, I would wait a quarter or two.
On the date of publication, GS Early did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.