Wondering What to Do With Tesla Shares? Sell, Sell, Sell

 | Jul 31, 2017 | 10:57 AM EDT
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Get the heck out of the stock of Tesla's (TSLA)  , people. What in the world are you thinking here?

Yours truly sat up past midnight on Friday to watch Tesla's big "handover party" to 30 people that plunked down a good chunk of change on the Model 3. The event was ridiculous in and of itself -- this is an electric car, not a device that could be rocketed into orbit and solve global world hunger. Then there's Elon Musk, not exactly an eloquent Apple (AAPL) Steve Jobs-like thinker, taking digs at Volvo and trying to get his point across on the magnitude of the day. 

For rational thinkers such as myself, the event should have reinforced how over-hyped Tesla in fact is. And being over-hyped into a quarterly announcement this week that will show a ton more red ink isn't a good place, from an investor standpoint. 

Here are several other reasons to reassess your position on Tesla right now:

  • Tesla has shared zero specifics on how it would magically ramp up producing 5,000 Model 3 autos a week "some time" this year and then to another 10,000 a week "some time" in 2018. Oddly, analysts still haven't pressed Elon Musk on this, but it's important. Tesla shares trade on future production hope, because earnings are non-existent. If these goals can't be met, then the stock deserves to crash hard. Seeing as details have been absent, it's time to truly ponder if Tesla could reach its targets. The company's track record has been inconsistent, at best.
  • Tesla will need another cash infusion, probably sooner than the market expects. Morgan Stanley recently estimated that Tesla could burn through $3 billion in cash over the next three years. 
  • Musk is unlikely to inspire the investor base. Frankly, someone else should be leading the conference call. The last earnings call was fumbled by Musk, and the stock took a hit after as a result. 
  • The company is running out of government subsidies. Big issue here that not many are discussing.
 Drive away from this one, as Goldman Sachs proclaimed on Monday
 
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