Some folks are aware of electric vehicle manufacturer Tesla’s (NASDAQ:TSLA) problems, but insist on investing. Alternatively, maybe they’re just not aware of Tesla’s issues and challenges. Either way, Tesla stock earns a “D” grade and is an asset to avoid.
Why do some people continue to invest in Tesla despite the automaker’s problems? Maybe because the company is in the midst of what we’d call a “slow-motion implosion.”
In other words, there isn’t a single, calamitous event that’s immediately destroying Tesla. Rather, it’s one adverse news item after another, eventually leading to the conclusion that prudent investors shouldn’t consider buying Tesla stock.
Real Talk: Elon Musk Is a Problem for Tesla
Somebody has to say it, so we’ll just come right out with the brutal truth. Tesla CEO Elon Musk isn’t just controversial; sometimes, he’s absolutely problematic for the company.
It’s not just that Musk is often focused on his other businesses, or that he’s been known to make debatable remarks. The main issue has to do with the Tesla CEO’s judgment.
For example, some Tesla stockholders aren’t happy about Musk’s apparent obsession with potentially money-losing robotaxis and Cybertruck electric SUVs.
You may have heard about multiple Tesla executives leaving the company not long ago. Is it possible that there’s unrest brewing at Tesla? Moreover, some notable individuals and firms are openly decrying Musk’s massive proposed pay package at Tesla.
On top of all that, now a Tesla shareholder is suing Musk for allegedly engaging in over $7.5 billion worth of insider trading. Always remember, reputation is everything in the world of business. If Tesla’s CEO has a reputation problem, this doesn’t bode well for the company.
No, Elon, Tesla Is a Car Company
In case you don’t already feel that Musk is “eccentric,” this ought to convince you. Apparently, Musk doesn’t believe that Tesla is a car company.
Of course, that’s absurd. The vast majority of Tesla’s revenue and income derive from vehicle sales. That’s been the case since Tesla’s inception, and will continue to be the case for the foreseeable future.
Nevertheless, Musk insists, that Tesla “should be thought of as an AI robotics company.” Again, the CEO’s obsessions could distract Tesla from its bread-and-butter EV business.
Speaking of Tesla’s EV business — and circling back to the topic of reputational issues — the automaker just settled a second lawsuit reportedly involving a passenger’s death and an alleged Tesla-vehicle design defect. In addition, Tesla has been forced to recall 125,227 vehicles due to a potentially faulty seat-belt warning system.
Tesla Stock: Avoid the Slow-Motion Car Wreck
A forced vehicle recall won’t put Tesla out of business next week. Musk’s robotaxi and Cybertruck obsessions won’t destroy Tesla overnight. Furthermore, Tesla won’t collapse this summer because of the Musk and Tesla’s reputational issues.
However, these are all problems that judicious investors can’t afford to ignore. It’s a slow-motion car wreck in progress, not an immediate implosion for Tesla. There’s really no need to expose your portfolio to Tesla’s issues in 2024, so we’re assigning a Tesla stock a low-confidence “D” grade today.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
