From a business perspective, Tesla is a catastrophe. But why, despite a myriad of issues, does the company continue to attract investors all of whom are willing to shell out millions for Elon Musk’s vision?
Jim Chanos summarized all of the reasons why during the Reuters Global Investment 2018 Outlook Summit on Tuesday.
“If you wouldn’t be short a multi-billion-dollar loss-making enterprise in a cyclical business, with a leveraged balance sheet, questionable accounting, every executive leaving, run by a CEO with a questionable relationship with the truth, what would you be short? It sort of ticks all the boxes.”
For years, a lot of people have been predicting the electric automaker’s downfall only to be proven wrong time and again. Not that it mattered though as despite a number of problems, from failing to adequately produce its Model 3 sedan to outright failure to turn a profit, everybody still loves Tesla-the-company.
As for Tesla-the-business, well it’s a totally different story. A report from Bloomberg revealed that the company is burning through capital at a rate of $480,000 an hour or roughly a billion per quarter, the same amount as General Motors.
However, unlike GM, which is currently the biggest US automaker, Tesla has yet to turn a profit. Even worse, should the cash bleed continue, Tesla will be drained dry by August of 2018. So why, despite having every financial red flag available, is the company’s stock still sky high with investors lining up to throw their…
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