They make beautiful cars, but Musk has been inconsistent and are burning a lot of cash. Musk needs somebody who can actually run a car business. Musk is a visionary, but he needs to run a business, like Steve Jobs at Apple needed somebody. He will likely do an equity issue and dilute the stock. If Tesla keeps missing numbers, competitors will slowly catch up.

He wants to have confidence in a company’s CEO, but Musk is erratic. Entrepreneurs often build a company well but stay too long. That is a pronounced problem at Tesla at this time. Also, until recently, Tesla had the luxury electric vehicle market to its own. Now major manufacturers, such a Mercedes, are announcing that they will make these types of vehicles within the next few years. This competition will work against Tesla.

The problem is that it is a car company run by a guy that doesn’t understand the manufacturing aspect. A high cap ex industry. It has overpromised and underdelivered. The CEO has been very erratic. Burning too much cash. 

During the time of the show, Elon Musk tweeted a potential buyout of Tesla at $420 and the stock started rallying. Hurst’s comment was that the Tesla price fluctuations this summer are an illustration of the problem of signal and noise. There is all sorts of irrelevant noise about this stock, and investors are over-focused on the production numbers for Model 3. He thinks there is tremendous embedded value in the company and that SpaceX alone might be worth this much. Tesla’s cash burn is important, but the embedded value is being missed.