Published on July 10th, 2018 | by Kyle Field0
Reality Check: CNBC’s Analysts Can’t Get Facts Straight For Heads Up Tesla Debate #Pravduh
July 10th, 2018 by Kyle Field
Tesla is used to taking it on the cheek in the mainstream media, but CNBC has made an absolutely mockery of itself by making itself a platform for ‘analysts’ who claim to understand the company but resort to flat out lies to make a point.
The latest chapter in the farce pits two analysts against each other, who get into an emotional exchange when Gordon Johnson, a financial analyst from Vertical Group starts off with an attempt to validate his position, stating that, “I’m a financial analyst and what I do is analysis.” It’s great that he was able to get that in early because it is not evident in the balance of the heated exchange.
The bear in the discussion, Gordon dives in with the same dry platform that Tesla’s cashflow is negative and that it is struggling to ramp up production of the Model 3. He then references Business Insider, which has a reputation for not only getting a bit too friendly with leading Tesla stock shorts, but of building on those friendships with inaccurate articles about changes to Tesla’s internal vehicle testing practices. That’s a house built on sand if I’ve ever seen one, but hey, I’m no financial analyst.
Gordon then compares Business Insider’s statements about Tesla’s production numbers being around 2,000 vehicles per week to the numbers shared by Tesla’s CEO Elon Musk on Twitter that mentioned 3,500 vehicles per week. Anyone who follows Tesla knows that its Model 3 production numbers have been under intense scrutiny, with Bloomberg even going so far as to create a full blown Model 3 Tracker that compiles information from VIN registrations, official company statements and individual deliveries to estimate week to week production numbers.
Gordon isn’t having any of it, and casually insinuates that Tesla and CEO Elon Musk should be investigated by the SEC, noting that ‘maybe the SEC should look into that’. Make no mistake: these are the tactics of biased media outlets and analysts looking to smear Tesla by propagating fear, uncertainty and doubt about the company’s performance. The reality is that he is comparing data points from two different dates in an attempt to undermine trust in the company. If it’s unintentional, he’s incompetent. If it’s intentional, he is an embarrassment to the network, his employer, and himself.
He continues to show his ignorance of Tesla’s business or the disruptive nature of electric vehicles by stating that, “they’re not creating a new industry.” This gross mischaracterization again reveals his true colors by putting all cars on the same playing field. At their core, companies that build and sell internal combustion vehicles are motor companies. They research, design, and build motors and transmissions as the heart and soul of their businesses. The cab, suspension, and wheels they roll on are nice garnishes to this main course, but make no mistake where their money goes.
Nixing the soul of the vehicle for a new technology is a category-defining shift that changes the majority of the vehicle. To understand this, we need only look at the Chevrolet Bolt. It was designed and brought to market in record time — especially considering it was packed full of batteries and an electric motor. To do this, Chevrolet HAD to outsource the development of the heart and soul of the Bolt to LG. LG knows batteries, motors, infotainment, and all the juicy parts that keep them singing in chorus, and it applied that mastery to the Bolt, with great success.
Not content that he had sufficiently created uncertainty about Tesla, Gordon took his position to the next level while simultaneously grinding his credibility into the ground by stating that, “You realize they recently cancelled their Supercharging network, nationwide?”
He finished off the exchange by questioning his colleague Tripp Chowdhry’s capability: “You’re a financial analyst. You’re supposed to look at the numbers and do analysis.” On top of the incessant interruptions, this was the final straw.
Tripp, on the other hand, relentlessly stood by his position that Tesla is redefining multiple industries and referenced the early years of Amazon’s stock. When Amazon launched, many analysts missed the disruption and pushed for low valuations of the stock until it had sufficiently defined its position in the market. Trip boldly posited that, “You’re looking at the wrong numbers.”
Gordon’s relentless focus on only the most basic of metrics in most companies — cash flow — is all but irrelevant in a company growing as rapidly as Tesla is, where cash flow is absorbed and typically exceeded by capital expenditure. Tripp continues to resist, noting that Tesla has ‘multi-dimensional competency’ in a reference to Tesla’s distributed businesses in energy storage, solar and automotive as further differentiators from traditional automotive manufacturers.
I have attempted to spare you the pain of watching the full exchange but if you’re a masochist, you can watch the full cringe-worthy debate below.