PLS (ASX) Lithium Demand surge

Originally posted by eshmun ↑

If Elon Musk is complaining about stock markets he really has some nerve. These markets he is complaining about have delivered him a $57 billion dollar market capitalisation based on a record second quarter 2018 loss of $718 million (doubling the loss made in the previous quarter) and after dipping into credit lines to boost end of quarter cash and to pump out more model 3s.

This is what you get with inflated stock market valuations.

In the end the success of lithium and hence lithium miners comes down to having successful car makers making EVs. Tesla has been living off credit all its life.

If you look at its car sales before the recent quarter they went from 24,500 per quarter in Q3 2016 to 29,998 per quarter in Q1 2018. That isn't an exceptional growth rate, only 13% pa increase in world wide car deliveries over this period, and that's for the poster child of the EV industry. The record quarterly production in Q2 of 2018 resulted from the company burning $739.5 million cash to pump out Model 3s.

Without the over inflated stock markets and the credit lines available due to US (and global) record government debt creation that caused a hot money low interest rate environment to exist for so long, there wouldn't even be a Tesla car company.

Now with interest rates rising the pressure will be on consumers in the US and the company's debt book and they need to make the model 3 a success. $35,000 plus add-ons doesn't sound like a game changer to me, that's A$45,000. Hardly the VW beetle that took the world by storm with 16 million cars sold.

I could make anything seem like a dream come true by assuming a 50% growth rate.

Reality as I've noted above is that Tesla world wide car deliveries actually fell by 2,500 cars/quarter between Q3 2016 and Q2 2017 and only rose by 13% over the 7 quarters before the recent quarter and it's still a loss making business.

This new term hater I don't like at all. A hater apparently is someone who doesn't share your opinion.

It's not about hate it's about recognising the facts behind the speculation that has driven the price of ASX lithium miners up and recognising how these same facts have the potential to drive their prices down. It's already happening but people just want to put it down to "shorters". Not everyone who sells a stock is a shorter, some people sell to reduce their exposure or to take profits. The danger IMO is the cult mentality that's developed around this sector which is still in its infancy and could end up failing altogether if the stock markets bursts and companies like Tesla have to stand on their own two feet.

Eshmun

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My analogy is more like the school yard. Tesla is the popular, attractive kid that gets all the attention but the brains and future dollar making potential usually lies elsewhere.

Everyone wants to be the cool kid when they are young until they mature a bit and realise it was never that important.

It will be the weird nerdy kid (some Chinese EV company) that grows up to take the world by storm and shock everyone at the 10 year reunion.

Or I could just be spinning a good story, as always we don't know yet....

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(20min delay)
Last $3.01		Change 0.050(1.69%)		Mkt cap ! $9.059B

Open	High	Low	Value	Volume
$3.03	$3.04	$2.96	$47.61M	15.86M

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