Tesla is best thought of as a public venture capital play with a visionary CEO who can’t be bothered with something small like managing the business for profits and cash flow. After all, he is in it to Change The World Through Innovation. His habits of over-promising and under-delivering plus his distaste for economic moats don’t bode well for the stock price in the long term. Not to mention his hostility toward analysts asking reasonable questions about the long term viability and funding needs of Tesla the business.

In the end, if it doesn’t generate cash, it’s not really a business. I see his chances of success by this metric at maybe 1 in 8. With his non-business attitudes he should be running a nonprofit with his own money. Luckily for him, there are plenty of sheep willing to give him seemingly unlimited funds with blind faith. Although if you look at your “investment” more as a donation with a call option attached, maybe it can provide psychic rewards no matter the financial outcome. And just maybe the lottery ticket will pay off.

Elon Musk is a brilliant guy and a visionary, although his genius doesn’t excuse him for continually issuing unrealistic guidance that is all but impossible to meet. What he has done with SpaceX is very cool. I hope he succeeds in his endeavors at Tesla. But he won’t do it with my capital.

See also:

Consumer Reports raises concerns over Tesla Model 3 braking

The Last Temptation of Elon Musk

The Information: Oracle’s aggressive cloud sales tactics push away customers

“The optimal payout ratio for a corporation is one that provides for a realistic rate of growth at a high return on equity, with the rest of profits returned to shareholders.”
— Josh Peters