In the category of I thought I’d seen it all, on a day when $548B market cap Berkshire Hathaway $BRKA $BRKB hits an all-time high, it is smaller by market cap than $TSLA? The car company is reported as a $500B market cap. No it’s not... 1/
On a diluted basis, accounting for outstanding in the money option shares and restricted shares, it’s actually now over $600 billion. Hmm. A $550B market value, $415B book value conglomerate producing $40B in PROFIT or a $600B market cap car company producing $30B in REVENUES? 2/
It’s not an either/or, but the car company requires a dollar in new capital to produce a dollar in incremental revenues. By contrast, Berkshire produces cash. Lots of it. To date, Tesla has raised $15B debt and $21.6B in common stock, $36.6B combined. 3/
Despite the capital raised and now selling ~500k vehicles this year, cumulative retained earnings are negative $5.7B. Tesla can not internally finance its growth. It MUST borrow or sell more stock if it is to grow. What will it do? 4/
In the past year, with the stock price way “up,” they have sold $8B in shares, not to institutions via road shows with nasty things like required prospectuses, but stuffed off to the public in “at-the-market” periodic sales. Ethical? Who knows? Smart? Yes. 5/
Will they continue selling stock that now trades for 20x sales? Count on it. To whom? Look no further than the S&P 500 committee adding $TSLA to its $30T, enormously passively invested index, in my opinion one of the worst decisions they’ve ever made (the list is not short). 6/
Since the announcement three weeks ago the stock is up 35% and doesn’t come in the index for nearly another month, on 12/21. If you had to find the dumbest money that had to invest at any price, regardless of fundamentals, look no further. 7/
As of today it would be the 6th largest component of the index, ahead of $BRK. It seems both $BRK and $TSLA are the smart money though. Berkshire is BUYING its shares, $18B of them so far this year. $TSLA is SELLING theirs because they need money, $8B so far this year. 8/
Ask yourself, if you are selling your shares TO Berkshire, are you the smart money? If you are buying shares FROM Tesla, are you also the smart money? 9/
It seems to me Telsa has hooked a whale in the $SPX committee, but it will be their passive followers, like Captain Ahab, who will be dragged to their death. @elonmusk may be a charlatan or a huckster, but he’s definitely no fool. 10/10
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