Is Tesla going bankrupt? More importantly - is your ecommerce business?



Tesla isn't the Point



Sorry for the enigmatic start. I've just got to get your attention somehow. I'm trying to educate you, but I sneakily got to make it entertaining, I guess. So I was just going through my LinkedIn feed earlier and up pops an analyst talking about Tesla. And what struck me wasn't the fact that he thought Tesla could go bankrupt, that it is "the most overvalued stock in history" and that its business model is broken.



Although if you invest in Tesla, those are important things, that's not the point of today's post.



By the way, just to disclose, I am an investor in Tesla currently, but I may not be soon. I may choose to divest. Now I am not giving you any stock investing advice. God only knows that is not something I'm qualified in or experienced enough to give any advice to anyone about.



So that's not what I'm doing. Do your own homework on Tesla. But the point is this I haven't done enough homework. I didn't do enough homework in the first place when I bought it. I just thought it would be a fun ride and it's educational and it has been both of those things. Sounds a bit playful, but it was only 1, 000 invested.



So I figure I'm not going to lose my life savings or bet my pension on it.



The business model evaluation matters most



But the education component is vital because I think what interests me is not whether this guy is right or wrong, but the way he argued, And talked about the stock and how he thought it was overvalued was for me, the right way of thinking.



Now the results are not always going to be the same as reality. The result of your thinking and calculations all the time. But over time, if you have an accurate mental model, mental models of the world, I think your results should track reality. And over time that will guide you. Well, so what this guy was talking about



Per Lakander's analysis



per Lakander of Clean Energy Transition to give him credit. Sounded Scandinavian. And basically, if I summarize what I understood from it, he's saying that. Whilst Tesla has claimed issues, okay, that the headline is, I guess Tesla is about to report some really bad quarterly earnings publicly listed companies report and its quarterly and indeed all the other financial statements.



Of course, smaller businesses tend to think only in terms of annual reports, although they're mainly broken down monthly. So here's the thing, he said the



The balance sheet and income statement reveal a lot



First of all, there has been a claim that, maybe by Elon Musk, maybe by other people who are more fans of Tesla, that they had some arson, and therefore there was a production problem. But he said, well, but if you look at the inventory, it's excess inventory. They have a huge pile of unsold cars somewhere, in other words, car parts, or work in progress towards cars. Which he says implies that there's excess inventory, that's a demand-side problem, not a supply-side problem. Hard to argue with that.



Competition Analysis is critical



And the other thing he's saying is that the competition such as Volkswagen is coming up with 30 new electric vehicles or mostly electric vehicle models this year.



Tesla has two models and it's going to create a new one allegedly by the end of 2025. And he says, well, realistically probably the end of 2026. And then he talks about the business model, which interested me the most because that's. I think highly relevant, bizarrely, for any inventory-based business, including small FBA businesses, even though it sounds so different to Tesla, doesn't it, on the surface of it?



Understanding the Business model



But he said, okay, the working model was predicated on great growth, very high fixed costs, and thus creating a negative, working capital. What that means is you get paid to sell stuff. And I don't know all the details of Tesla. I probably should as an investor,