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Letter by Elon Musk about the accident:

 

http://www.businessinsider.com/model-s-fire-elon-musk-2013-10

 

Yeah, I'm glad he made this point:

 

Had a conventional gasoline car encountered the same object on the highway, the result could have been far worse. A typical gasoline car only has a thin metal sheet protecting the underbody, leaving it vulnerable to destruction of the fuel supply lines or fuel tank, which causes a pool of gasoline to form and often burn the entire car to the ground. In contrast, the combustion energy of our battery pack is only about 10% of the energy contained in a gasoline tank and is divided into 16 modules with firewalls in between. As a consequence, the effective combustion potential is only about 1% that of the fuel in a comparable gasoline sedan.

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Sometimes what happens is that a company will continually do equity offerings. 

 

After an equity offering, the underwriters want to see the stock go up in the short term so that their clients get immediate gratification out of buying the shares.  They may put pressure on their analysts to promote the stock, either publicly or privately.  This can turn into a self-reinforcing cycle where the higher share price attracts more investors, makes the company want to sell more overpriced shares, etc. etc.  That behaviour is pyramid scheme-like and is ultimately unsustainable.

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I think Tesla should do a followup offering...if buybacks below IV are accretive to shareholders, shouldn't dilutions above IV be accretive as well?

 

It's accretive for the company and for long term shareholders who bought at a low enough value, but for all other shareholders it is destructive when the price of the company is largely built on hope of future earnings growth that won't accrue to them now that they're sharing profits with s many more people.

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I think Tesla should do a followup offering...if buybacks below IV are accretive to shareholders, shouldn't dilutions above IV be accretive as well?

 

Yes

 

It's accretive for the company and for long term shareholders who bought at a low enough value, but for all other shareholders it is destructive when the price of the company is largely built on hope of future earnings growth that won't accrue to them now that they're sharing profits with s many more people.

 

Do you disagree that a stock issuance at a price significantly above per-share intrinsic value will increase per-share intrinsic value?

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Letter by Elon Musk about the accident:

 

http://www.businessinsider.com/model-s-fire-elon-musk-2013-10

 

Good information, thanks!

 

I was thinking about this discussion last night when I saw the movie Rush.

 

Nikki Lauda would probably rather crash in a Tesla if he were going to do it again.

 

It also made me think about the fires in the Ferrari's of recent years:

 

http://jalopnik.com/5914282/ferrari-ff-catches-fire-on-polish-freeway

 

http://wreckedexotics.com/articles/056-458-brazil.shtml

 

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I think Tesla should do a followup offering...if buybacks below IV are accretive to shareholders, shouldn't dilutions above IV be accretive as well?

 

When a company's stock is this overvalued and the company can really use the money to pour into R&D, I'd agree. Long term it will be better for even the current shareholders.  At these prices they should be looking at diluting the stock 50-100% and really raise some cash.

 

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  • 3 weeks later...

Tesla Retreats After Sales Miss Some Analysts’ Estimates

 

http://www.bloomberg.com/news/2013-11-05/tesla-posts-third-quarterly-profit-on-model-s-boost.html

 

Model S deliveries totaled about 5,500 in the third quarter, the company said in a statement yesterday on its website. Brian Johnson, an auto analyst at Barclays Plc, had expected 5,820 Model S sales. Dan Galves of Deutsche Bank AG estimated the company would ship 5,850 cars in the quarter.
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There has not yet been a fire that was not caused by collision and physical damage to the battery pack.

 

It has not yet, for example, demonstrated the ability to set itself on fire when just driving along -- primarily because it does not have this extremely hot thing called an internal combustion engine:

 

http://www.mibz.com/13968-shocking-a-porsche-911-turbo-caught-on-fire-suddenly-in-usa.html

 

The driver of a Porsche 911 Turbo has encountered problems while commuting to the office. His car caught fire and the flames were quickly extended to the model cloth roof after they have expanded rapidly in tight engine compartment of athletes from Stuttgart. It appears the fire started to the engine, but its exact causes are not known yet.

 

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Good post by Elon Musk on the safety of Tesla S and bad journalism...

 

http://www.teslamotors.com/blog/mission-tesla

 

Thanks for posting. It's interesting that a car company can be worth $24 billion in October and $15.5 billion in November because of three car fires. I imagine it has something to do with over-optimism and a failure to understand base rates.

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http://www.theatlantic.com/technology/archive/2013/11/why-you-might-buy-electricity-from-elon-musk-some-day/281824/

 

"Attached to the wall is a charging station for Krapels’ Tesla Motors Model S electric sports sedan. And next to the charger are two metal boxes that effectively render Pacific Gas & Electric, the 108-year-old utility that serves Northern California, irrelevant. One box channels electricity generated by the SolarCity photovoltaic panels on the house’s roof. The other, a 10-kilowatt Tesla lithium-ion battery pack, can store up to three days’ worth of carbon-free electricity generated by Krapels’ solar array. "

 

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http://www.theatlantic.com/technology/archive/2013/11/why-you-might-buy-electricity-from-elon-musk-some-day/281824/

 

"Attached to the wall is a charging station for Krapels’ Tesla Motors Model S electric sports sedan. And next to the charger are two metal boxes that effectively render Pacific Gas & Electric, the 108-year-old utility that serves Northern California, irrelevant. One box channels electricity generated by the SolarCity photovoltaic panels on the house’s roof. The other, a 10-kilowatt Tesla lithium-ion battery pack, can store up to three days’ worth of carbon-free electricity generated by Krapels’ solar array. "

 

 

The utilities are clearly scared.  And I think with good reason.  Maintaining a huge network of power lines running everywhere and fixing them every time there is a snow storm or a windy day just isn't going to be economically feasible someday.  And I have a feeling that this someday is going to be closer than most people think.

 

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