Is the Tesla Model S, the new Ford Pinto?

BACKGROUND ON FORD PINTO:

In May of 1968, the Ford Motor Company, based upon a recommendation by then vice-president Lee Lacocca, decided to introduce a subcompact car and produce it domestically.  In an effort to gain a large market share, the automobile was designed and developed on an accelerated schedule.  During the first few years sales of the Pinto were excellent, but there was trouble on the horizon. 

SOURCE: Leggett, Christopher. “THE FORD PINTO CASE:  THE VALUATION OF LIFE AS IT APPLIES  TO THE NEGLIGENCE-EFFICIENCY ARGUMENT.” THE FORD PINTO CASE: 1999, https://users.wfu.edu/palmitar/Law&Valuation/Papers/1999/Leggett-pinto.html

THE FACTS:

Tesla has been getting pounded by Analysts, and although I don’t generally agree with them, it is going to take a little more than just leaked e-mails to bring this stock back above $200. I am so bearish, I honestly see this crashing to below $170.

First blow: An article released by Business Insider - Life, death, and spontaneous combustion — here's why the debate about Tesla fires just got more fierce.

Second Blow: An article by Bloomberg - Morgan Stanley Slashes Worst-Case Price for Tesla to $10.

Now why do I think the Tesla Model S is the new Ford Pinto? 

Elon Musk and Tesla have not directly addressed the fires (aside from a tweet), and a recent law suit filed in Pennsylvania. Instead Elon Musk wants to speed up the pace (sound familiar?) to 1,000 Model 3’s per day.

These e-mail leaks are all diversions to this failing stock. It is going to take a lot more than just e-mail leaks to fix this problem.

Elon Musk in response to the Business Insider article:  

Chris Brown of Aristides Capital, summarized it perfectly using data from the National Fire Protection Association (where the most recent data available is from 2015).

  • From 2011 to 2015, 325 people in the US on average died each year in internal-combustion-engine vehicle fires.
  • That's out of 263.6 million registered vehicles in the US.
  • That means there were, on average, about 1.23 fire deaths per million vehicles annually from 2011 to 2015. Most of them, 58%, started with a vehicle collision or overturn.
  • Tesla has yet to build 1 million total cars, but it has grown its fleet substantially in the past few years. In 2016 it had only 183,000 cars on the road. In February of last year it produced its 300,000th car.
  • At the start of 2019, Tesla had about 530,000 cars on the road all over the world, the vast majority of those being in the US.
  • "Thus, if Tesla were an average car, we would have expected 0.23 Tesla fire deaths in 2016, 0.35 in 2017, 0.45 deaths in 2018, and 0.16 deaths in 1Q 2019," Brown wrote. That's a total of 1.19 fire deaths over three years.

 

THE UGLY:

If you’re short $TSLA this is great news. It could not hold $200, but it did pull back to $188.


5 Day 30 Minute Chart 

We will have to see how it opens up on Monday. A bounce off $188 will be a bullish indicator, considering the bounce off $181 on Thursday.

DISCLAIMER: Please note that I do not ask for any information. I always encourage people to trade ONLY what you understand and never based on anyone's opinion.

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