By Justin Spittler, editor, Casey Daily Dispatch

Tesla is running out of time…

This shouldn’t surprise regular readers. You see, I’ve been warning about Tesla’s problems for months.

In October, I told you how the electric car maker was having major problems with its production line. I also explained why its share price could soon fall off a cliff.

A month later, I doubled down on this warning by telling readers “Tesla shareholders are in danger.”

If you didn’t take my advice, I urge you to read this essay closely.

As you’ll see, it’s only a matter of time before all of Tesla’s problems come to a head. I’ll explain why in a second. But first, let me tell you why I continue to write about this…

• Tesla has been one of the hottest stocks on the planet…

It’s surged more than 800% since 2013.

After a run like that, most investors would take some chips off the table.

But many of Tesla’s shareholders haven’t. That’s because they’re a different breed.

They don’t care that the company’s bleeding cash. They don’t care that it’s drowning in debt. They don’t even mind that its stock is trading at a sky-high premium.

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• Tesla shareholders are dreamers…

They live in a world of pure imagination. They think nothing can go wrong just because Tesla’s a pioneer in the electric vehicle (EV) industry…and Elon Musk is a genius.

Now, these things might be true. But you cannot ignore major problems just because of a company’s grand ambitions.

Yet, that’s what many Tesla shareholders are doing. But they won’t get away with this for much longer.

• Tesla’s problems are getting worse by the day…

Even Tesla employees can’t stay quiet about them.

CNBC published a story yesterday that outlines major problems at Tesla’s Gigafactory. This is where Tesla produces batteries for its vehicles.

If you haven’t read that article yet, I encourage you to do so. But in short, here’s what you need to know…

Current and former employees are saying Tesla’s production is far worse than reported.

Apparently, the company’s building some batteries “by hand.” There are also reports of Tesla borrowing employees from one of its partners to help out with production.

Worst of all, some employees now believe batteries are leaving the factory with “potentially serious” defects.

• Tesla denies these claims…

But I don’t buy it.

That’s because Tesla has a history of overpromising and underdelivering.

For instance, Musk said in August that the company would produce 1,500 Model 3s for the third quarter. But as I showed you in this Dispatch, it only delivered 260 vehicles. That’s an 83% shortfall.

Then in November, he scrapped the company’s longtime goal of eventually producing 10,000 Model 3s per week.

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• Great companies don’t miss deadlines like this…

This tells me Tesla is desperately trying to buy itself time.

But the market seems to be losing patience with the carmaker. Just look at this chart.

You can see that Tesla hasn’t set a new high since September. It’s treading water.

At this point, it’s likely one production whiff away from tanking. I’m not the only investor who thinks this, either.

• JPMorgan thinks Tesla shares could plunge this year…

JPMorgan is one of the largest banks on Wall Street. And it’s bearish on Tesla for the same reasons I am. CNBC reported last month:

“Tesla will face several milestones in 2018 relative to the ramping of production of the Model 3, which we believe will be difficult for the company to meet, particularly if its substantial miss to volume targets in 2017 are to be any guide,” wrote [JPMorgan analyst Ryan] Brinkman.

But JPMorgan didn’t just issue this warning. It encouraged its clients to short (bet against) the high-flying stock. That’s because it thinks Tesla’s stock could plunge 40% over the next 12 months.

That would be a brutal sell-off. But Jim Chanos is even more bearish.

Chanos is a legendary investor who made a fortune shorting (betting against) Enron in 2001. In December, he told CNBC that he thinks Tesla’s stock is “worthless.”

That’s right. Chanos thinks Tesla’s stock will hit zero.

These are not people you want to bet against. So, I’ll repeat what I’ve been saying since August: Avoid Tesla at all costs.


Justin Spittler
Tulum, Mexico
January 26, 2018

Reader Mailbag

Today, another reader chimes in on our recent essays on marijuana and cryptos:

You can demonize or belittle Jeff Sessions all you want. He's just doing his job, which is to uphold existing laws. We've had too many years of those in power selectively enforcing the law, and evidently you are OK with that when it suits your purposes. I'm not big fan of Jeff, but he's not the problem nor the solution in this particular issue.

On the subject of crypto (I'll not call it currency, because it's not) it's obvious that they can and have been manipulated, stolen, hacked, created out of thin air, etc. So why should I trust them as an alternative to the existing government-controlled system?


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