"My name is Jonas." The lyrics from that track on Weezer's seminal 1994 Blue Album were pulsating through my head as I read Morgan Stanley analyst Adam Jonas' note on Tesla (TSLA) Thursday morning. In the midst of Tesla shares' remarkable run, I have been steadfast in my insistence, that, no, this company is not worth more than Ford (F) and General Motors (GM) combined.
So, Adam -- whom I knew when he was a cub analyst and I was an established sell-side auto-thought leader at DLJ and UBS in London at the turn of the century -- finally added some actual analysis to the fire that has been Tesla's stock price. As the shares have plummeted in the last few days, after more than doubling since October, the media were falling over themselves trying to heap praise on found Elon Musk and heap scorn on analysts who "missed" the stock's move.
Just as a primer, let me note that analysts don't sit in front of crystal balls, reading the entrails of sacrificed oxen and measuring the lines on each others' hands. It is not about predicting the future. It is about analyzing data, and in Tesla's case, there is either a little or a lot. If you only relied on Tesla management's reported data via press releases, conference calls and Securities and Exchange Commission filings, you would not have much to go on. That is exactly the practice that led to the phenomenon of Tesla shares adding $50 billion market capitalization in four months.
But Tesla makes large, discrete products. A sharp analyst could count cars coming out of Tesla's Fremont, CA factory and installations of the company's vaunted -- and incredibly rare in the marketplace -- solar roofs from its legacy SolarCity business. But that's not what I see on CNBC.
I see, with the exception of Adam's appearances, a progression of ignorant blowhards who are so busy making futuristic proclamations about the electric car revolution that they can't even be bothered to do the most basic part of their jobs.
Just count the damn cars.
So, it's left to entities like a one-man band toiling out of a windowless office on Manhattan's 5th Avenue (yes, that's me) and a few others to note the cold, hard facts about Tesla.
Tesla sold fewer cars in the U.S. in the fourth quarter of 2019 than it did in the fourth quarter of 2018. Not only is Tesla's home market weak, but its environmentally friendly home state -- according to excellent analysis provided Thursday morning not by Wall Street but by Dominion Cross-Sell -- was incredibly weak in the fourth quarter, with Tesla registrations in California at 13,584 in the fourth quarter of 2019 vs. 25,402 in the same quarter of 2018.
Demand for Tesla's vehicles is heavily influenced by tax credits (which declined to zero in both the U.S. and the Netherlands on January 1) and first-adopter demand spikes. It is not steady. That is the one adjective that is most necessary for creating meaningful--in excess of cost of capital--profitability in the auto industry. Tesla has never done that in seven years of volume production.
Tesla lost market share in the fourth quarter in the U.S. to the rest of the luxury segment (Audi (AUDVF) , BMW (BMWYY) , Mercedes (DDAIF) , Lexus (TM) ) and to other types of electrified powertrains, especially Toyota's red-hot hybrids.
Fads come and go. To believe that that will not be the case in China, where Tesla has recently begun volume production its facility in Lingang, is to ignore the obvious.
So, you can listen to numbers-blind, quasi-futurist bandwagon jumpers or you can analyze the numbers. It's your choice. Just don't make the expensive one.