Archive for July, 2014

Telsa just got hit with some bad news last week… sales are apparently way down in Norway… which was a pretty hot area last quarter.

Investors freaked on Wednesday, not only stopping forward momentum, but reversing course and sending shares down double-digits.

Here’s the flaw I see with the news reporting:

Telsa isn’t demand constrained… they are production constrained… meaning, they have tons of demand… and are just trying to figure out how to dole cars to all the markets screaming for product around the world.

So if sales are “down” in Norway, they will be “up” somewhere else.  But the negative articles that came out last week didn’t contemplate that.

This reminds me of what happened many months ago when TSLA was hit by one or two people claiming their cars “automatically” caught fire… implying something awful and dangerous about the vehicles.

Despite the company clearly communicating the evidence in each case with the public (that the fires had nothing to do with the vehicles)… the vast majority of Tesla owners backing up the company saying it was the best car they have ever owned… and Consumer Reports reporting it as their best ranked car ever

…these negative news stories drove TSLA downward.  Who wants to buy a car that automatically catches fire?

TSLA was eventually cleared by the National Highway Traffic Safety Administration… well, not just cleared, but when the safety data was exposed, resoundingly applauded for having one of the safest cars on the road.  The artificial dive made the move upward even more impressive, with TSLA eventually hitting its high of $265.

The point of all of this is don’t just read the news — evaluate the news… every news story has the potential to be biased…

… and therefore a potentially wonderful trading opportunity.

P.S.  Regarding Tesla, I don’t worry about sales right now… I worry about production… if we heard news that something has happened on a production line — something that would stop them from meeting/exceeding their stated production levels — now THAT would be concerning.