Vitaliy Katsenelson Explains "Why I Canceled My Model 3 Order"

Take a gander at the Model 3 shopping experience. If you still like Tesla, as a company, you are delusional.

Fund manager Vitaliy Katsenelson explains Why I Canceled My Model 3 Order.

I put a $1,000 deposit on a Tesla Model 3 the day it was announced. At the time I thought of the Model 3 as a smaller, cheaper version of the Model S. So a few days ago I stopped by a Tesla store to check out the Model 3. I was at the store not as an investor evaluating Tesla’s latest product but as a buyer, ready to buy.

The shopping experience ended up being quite odd. Tesla’s Denver store did not have a Model 3 in the showroom or available for a test drive. I was told they will not get one for several months — the Model 3 is infamously behind schedule. But still, Tesla is producing thousands of cars: Why not send 100 to their stores so people can see and drive before they buy?

I thought it was also odd that when I asked a salesman to show me pictures of the Model 3, he did a Google search. He did not even have pictures of the car on Tesla’s internal site (the one he used to show me pricing options). Tesla’s external site also doesn’t have photos of the Model 3, just a few videos.

Also, at $35,000, the basic Model 3 is truly basic. If you want a semi-decent car with leather seats and safety sensors, the price quickly jumps to $55,000 (all-wheel drive won’t be available until late 2018). If you order a Model 3 today, there is a chance you may get tax credits (which could be as high as $12,000 between federal and state), but this completely depends on Tesla’s production schedule, which so far has been disappointing. If your car is delivered after June, the tax credits rapidly decline and then disappear.

Beyond unconscious

It is truly unconscious for a dealer to not have a car on display for people to see.

Tesla goes beyond unconscious to not even having images.

That said, until sentiment collapses, it is very tough to short story stocks. One can easily get blown out of the water.

Krispy Kreme Comparison

Does anyone remember Krispy Kreme Donuts? People were shorting the stock at $10. It rose to nearly $50.

Story Stocks

Story stocks are very difficult to time correctly.

Following a meteoric rise, Krispy Kreme fell to one dollar. The article I linked to said it was undervalued at $18.39. That was in 2014.

On May 9, 2016, Krispy Kreme was sold for $21 a share in cash, or roughly 25% more than the doughnut chain's closing price .

There was plenty of money to be made, long or short. But I ask: How many did?

Moreover, there was far more money to be had by being patient and buying at $1, $2, or even $5 between 2008 and 2010 than being short.

Someone taunted me the other day: "How's your Tesla short going?"

I am not short, but those kind of taunts and this kind of news suggests it may be a good idea.

Mike "Mish" Shedlock

Comments (16)
No. 1-16
joemanc
joemanc

I'm convinced Tesla is the next Enron. Or as Zerohedge has it on their top story right now, the next Theranos. NTSB investigtions, OSHA investigations and even the SEC is looking too. The evidence is all there.

As for shorting, don't, as you can lose an infinite amount of money. What you want to do is use Puts, in conjunction with charts, to limit your losses from any bounce. Musk likes to tweet out lots of silly nonsense, except he's not speaking to investors, he's speaking to the computer algorithms that run the market. Protect yourself with Puts.

Vitos
Vitos

*unconscionable

I made money on the way up on KKD, but in retrospect, that was just lucky timing on a momentum play.

Six000mileyear
Six000mileyear

Let's hope Space-X doesn't fail spectacularly like Tesla is. So far, so good.

killben
killben

"Moreover, there was far more money to be had by being patient and buying at $1, $2, or even $5 between 2008 and 2010"

That the stock market recovered was due to FASB's change to mark to fantasy, ZIRP and QE all over the world for a decade and intervention at every dip in the market - none of which could have been envisaged. Without the kind of massive intervention buying at $1 or $2 itself could have been a costly mistake.

MorrisWR
MorrisWR

You were smart enough to play it correctly. Many people do not.

kram
kram

I keep hearing this, "but IF it had not been for QE, stocks would not have risen".

To which I say, IF that had not happened, the world would be facing much bigger issues than a KKD not rising or going from $1 to $0.50.

Unless a company goes bust, historically, its stock almost always rises back to provide decent returns.

JonSellers
JonSellers

I don't fully disagree, but it is not either/or. In the same situation in the 1929, the feds took no action and the world fell into the Great Depression. The unemployment rate went to 25% and the country was close to adopting full-on socialism. FDR provided just enough help to keep that from happening.

But the opposite of that isn't just handing money to bankers to paper over their bad bets. That's just socialism for the ultra-rich. I could see a situation in which the feds took what were in effect bankrupt banks, liquidated the bad debt, jailed bankers who were performing criminal activities, broke up the big banks and re-implemented Glass-Steagal.

frozeninthenorth
frozeninthenorth

My all-time favorite story stock: (OTCMKTS:GRLD). Yes that was the original Grilled cheese Truck Inc, that raised US$ 10 million on the basis of operating 10 food trucks. Company made huge loeese on a business that was "easily replicable". Absolutely a short target if you could ever borrow the stock. my gues everyone lost their shirt on that sucker. There is enough market insanity to justify almost anything, all you need are believers; look at all the 2017 ICOs -- they all failed rate of success 0%, rate of failure 100%

frozeninthenorth
frozeninthenorth

Well there is one massive difference between Theranos and Tesla -- Tesla's vehicle actually function. Also Enron's crime was to create fake revenues. As far as I know no one is disputing Tesla's production numbers, are they?

vboring
vboring

Feel free to gripe about waiting for your Model 3. Maybe it'll be another year before it is delivered. Or you can wait 5-10 years and hope that any other manufacturer will deliver a comparable vehicle.

The 2013 Model S technology still outshines every new vehicle available today.

aqualech
aqualech

Technology be damned.....TSLA has a EPS of -$14 and astronomical debt which will likely be defaulted on. The acceleration and braking performance of the "S" have no relevance to those facts about the company's EPS and debt levels. The stock price is only elevated by momentum chasing and hype, but I also note that it has rolled over and started ratcheting down to its natural value which will eventually be null.

ReadyKilowatt
ReadyKilowatt

Isn't their primary business selling carbon credits to other automakers? I don't follow it closely but my understanding is they get payouts from oil-burner manufacturers who have to comply with screwball mandates. Until that changes -which given VWG's commitment to electrics might be sooner than Elon would like and hence the pressure to produce vehicles instead of credits- no reason to assume they're going anywhere.

Cocoa
Cocoa

The Theranos comparison is idiotic. The issue with Tesla is Musk. He needs to go, the company needs focus. He is all over the place...rockets, hyperloops and saving kids in Thailand. The model S is really awesome and it's real. The Telsa business model is unreal...it's stupid and the Tony Stark fantasy is a joke. Elon is vaporizing equity and clowning around