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Mahir Desai, a law and business 
professor at Harvard, wrote an 

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op-ed earlier this month on how 
Elon Musk's business empire may 

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be starting to wobble. 
Now, while a lot has been made 

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of Tesla's stock price halving 
in value since it hit, it's all 

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time high in December. 
If we zoom out a bit, the stock 

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price is still up more than 50% 
over the last year. 

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Stock price alone doesn't 
necessarily tell us much about 

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how a business is doing, as what
Demoterin of NYU has long argued

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that company valuation shouldn't
be approached as purely number 

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crunching exercises. 
In his book Narrative and 

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Numbers, he argues that 
valuation is instead a bridge 

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between stories and numbers, 
where every story becomes a 

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number in the valuation, and 
every number in a valuation has 

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a story behind it. 
Matt Levine has argued in the 

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past that Tesla investors don't 
value Tesla or any of Musk's 

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companies on what they actually 
do. 

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Instead, they think of them as 
venture capital funds run by a 

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guy with a strong record of 
investing in whatever's the hot 

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new thing. 
If the company's profits don't 

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match up with the stock price 
today, that doesn't really 

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matter to them, as next year a 
great new product will be 

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unveiled. 
Solar roof tiles, a robot, a 

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tunnel to Europe, A sports car 
with rockets on it, artificial 

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general intelligence and 
everything out based on Twitter 

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or a colony on Mars. 
And this business, which is just

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around the corner, will be so 
profitable that the naysayers 

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will be proven wrong. 
Now, of course, I'm no naysayer.

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Long term viewers know how 
positive I've been about the 

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Hyperloop at the heart of the 
line city in Saudi Arabia. 

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And if it wasn't for the 
functionality of Musk's 

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Hyperloop, the whole thing would
make no sense. 

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In a totally unrelated side 
note, Elon Musk told Fox News on

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Thursday that the administration
is going to go after people 

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pushing lies about Tesla. 
So just to be clear, I expect 

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all of the above mentioned 
projects to be delivered next 

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year on schedule, and I think 
that they'll be great. 

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Desai in his article, says that 
while Elon Musk built a car 

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company from the ground up along
with a number of other 

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businesses, which is no small 
feat, his wealth is mostly 

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explained by a financial cult 
where Musk has been largely 

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immune from critics. 
He writes that skyrocketing 

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Tesla shares have made fans and 
investors so devoted that all 

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Musk has to do is mention a new 
ambition to goad them into 

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buying even more stock. 
And the larger the stated 

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ambition, the more wealth and 
power they hand to him. 

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He argues that since Musk's 
foray into politics, not just in

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the US but around the world, 
cracks in his empire have 

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started to show. 
He highlights how automotive 

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revenues and profits at Tesla 
have declined and points out 

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that 22 years after the 
company's founding, it remains 

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unclear if it can ever generate 
significant can free cash flow 

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for shareholders. 
He says that Tesla appears to be

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relying more and more on price 
cuts, a practice that can 

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increase sales in the short term
but damages the brand in the 

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long run. 
He says that the political 

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backlash against MASK is now 
hurting Tesla sales, and that, 

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perhaps sensing the shifting 
tides, Musk has been suggesting 

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that Tesla is an AI company to 
further nourish the investor 

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cult in. 
In looking at Musk's other 

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business interests, the Harvard 
Business School professor argues

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that Solar City has atrophied 
since its controversial 

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acquisition by Tesla in 2016, 
that it's unclear if the Boring 

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Company has any revenues or 
prospects of profit, that the 

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possibility of profits for 
Neural Link, the brain implant 

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company, seems even more remote,
and that Twitter is a shell of 

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its former self both 
economically and culturally. 

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Since its acquisition. 
He points out that SpaceX, which

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is more than 20 years old, has 
raised an estimated $12 billion 

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and is only now rumored to 
possibly achieved $12 billion in

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annual revenue, which is not the
same as profit mostly from 

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Starlink. 
Desai makes the point that 

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Musk's wealth is not derived 
from the cash flow his various 

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businesses throw off. 
More money has gone into them 

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than they've returned in 
profits. 

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His wealth is derived instead 
from their stock valuations, 

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which are driven by the hype 
around Musk and the belief that 

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amazing breakthroughs are just 
around the corner. 

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Musk's businesses have not been 
generating much hype of late. 

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Growth seems to have halted and 
competition has grown. 

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One of Tesla's most vocal 
investors has even called for 

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Musk to step down as CEO. 
Tesla's stock price nearly 

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doubled in value after Donald 
Trump's election win last 

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November, driven by optimism 
that Musk's alliance with the 

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new president would remove 
business obstacles and possibly 

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pave the way for lucrative 
federal contracts. 

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Tesla at the time faced a 
criminal fraud investigation and

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a related SEC investigation into
exaggerated claims about the 

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full self driving capability of 
its vehicles. 

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It faced a joint investigation 
by the DOJ and SEC into misuse 

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of company resources over plans 
to build a private residence for

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mosque using company funds. 
The US Attorney's Office was 

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looking into whether Tesla had 
deliberately misrepresented the 

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battery range of its electric 
cars to customers. 

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There were 4 NITSA 
investigations into vehicle 

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problems, 7 cases alleging 
unfair labor practices, a racial

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discrimination investigation, 
and an OSHA investigation into a

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worker's death. 
His other businesses faced 

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investigations and federal 
lawsuits, too. 

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President Trump replaced a 
number of government officials 

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who had been overseeing many of 
these investigations and, 

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according to the Washington 
Post, Elon Musk's, which was 

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able to lay off staff at a 
number of agencies that regulate

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his businesses. 
When questioned about the 

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conflicts of interest in a joint
interview with President Trump 

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on Fox News, Musk said I'll 
recuse myself if it's a conflict

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and the president said he won't 
be involved. 

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While the ability to shut down 
investigations into his 

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businesses should have helped 
him out, Elon Musk recently 

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confessed in a Fox Business 
interview that he's running his 

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businesses with great 
difficulty, and that does seem 

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true. 
Tesla erased all of the stock 

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price gains that it saw in the 
wake of the election, and the 

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backlash against his companies 
was so severe that the president

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had to buy one of his cars on 
live TV while singing its 

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praises, presumably to revive 
sales. 

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Everything's computer. 
Musk's social media company 

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Twitter was taken down by a 
cyber attack and two of his 

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Starship rockets exploded 
shortly after their launches, 

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grounding flights in Florida and
the Caribbean and triggering 

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warnings about falling spaceship
debris. 

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According to the European 
Automobile Manufacturers 

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Association, Tesla sales in 
Europe fell for a second month 

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in a row this February, and to 
make it worse, this was during a

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period when EV registrations 
overall on the continent grew. 

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Tesla sales in Europe are down 
more than 40% so far this year, 

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and the company's European 
market share has collapsed. 

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The press blames this on a few 
things, like aging design, 

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rising competition, and 
controversy around Elon Musk. 

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The problem isn't just in 
Europe, either. 

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According to Kelley Blue Book, 
Americans registered 11% fewer 

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Teslas in January than they did 
a year ago, during a period when

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they registered 44% more 
electric vehicles from some 

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rival brands. 
According to the website 

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Futurism, Tesla sales in China 
have fallen 49.2% compared to 

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the previous year, while BYD, 
Teslas biggest Chinese 

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competitor, saw a 90% increase 
in sales over the same month. 

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While sales declines in the 
United States and Europe can be 

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blamed on Elon Musk's political 
activism, the Chinese are less 

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concerned with American politics
and liberal ideology and appear 

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to be buying Chinese cars 
because they believe them to be 

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more advanced and because 
they're significantly cheaper. 

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The Electric Vehicle Council of 
Australia also reported a Tesla 

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downturn, with sales falling by 
70% in February 2025 versus 

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February 2024. 
Interestingly, Tesla sales 

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actually rose 20% in the UK last
month, with the Model 3 coming 

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2nd and the Model Y placing 
third in February 2025 new car 

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registrations. 
Another exception was in Canada,

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where Tesla sold about 8600 cars
in just three days at 4 separate

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Tesla dealerships in Canada this
January. 

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This breaks down as one car 
every minute, 24 hours a day for

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three straight days, even when 
the stores were closed. 

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This burst of sales came as an 
EV rebate program in Canada 

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ended in January after the funds
set aside for the program were 

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allocated earlier than expected.
The weekend before the program 

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ended, there was a massive 
increase in claims from Tesla 

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dealerships as the EV maker 
claimed over half of the 

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remaining funds. 
Canadian news reports that 

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hundreds of Teslas piled up in 
Canadian parking lots after the 

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suspicious sales rush, and the 
Canadian government is now 

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withholding the payments while 
they investigate any possible 

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fraud. 
The Canadian Transport minister 

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has barred Tesla from future 
rebates in other programs until 

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the threat of US tariffs on 
Canada are withdrawn. 

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Some of the global sales decline
has been blamed on customers 

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waiting to buy the refreshed 
Tesla Model Y, which just became

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available this month. 
But journalists are reporting 

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that the new Model Y is showing 
on the Tesla website as being 

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available for same day delivery 
today, which doesn't indicate 

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the demand is awfully strong. 
Another reason that people might

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not be buying Tesla's is that at
the rate that parts fall off of 

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cyber trucks, there's no real 
need to buy one. 

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If you really want one, you can 
just start collecting parts from

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the side of the road and after 
about a year you can just 

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assemble your own one. 
The cyber truck is in many ways 

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like a reverse kit car where 
they deliver you a fully 

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assembled truck, but after a 
while you just have a collection

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of parts in boxes in your 
garage. 

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At an all hands meeting with 
Tesla employees last week, Elon 

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Musk predicted strong demand and
told employees to hang on to 

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your stock. 
His brother Kimball, who's a 

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Tesla board member, sold $27 
million worth of stock last 

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month. 
And the chairwoman of the board,

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Robin Denholm, sold $33 million 
worth of stock, according to 

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regulatory filings. 
So not all employees have been 

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listening to him. 
Around half of Elon Musk's net 

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worth is tied up in SpaceX, 
which owns Starlink, the 

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dominant satellite Internet 
service provider. 

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Possibly due to Musk's political
connections, the service has 

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been installed at the White 
House and Trump's Commerce 

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Secretary has even lobbied 
officials to consider Starlink 

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for the US Rural Broadband 
Access Program. 

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Reports show that the Federal 
Aviation Authority has been 

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asked to find funding for 
Starlink, possibly replacing a 

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$2.4 billion fifteen year 
contract that was already 

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awarded to Verizon to overhaul a
communication system in 2023, 

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according to the FT. 
Musk's foray into politics has 

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also began to hamper Spacex's 
global expansion plans too. 

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They report that the Ontario 
premier, Doug Ford, ripped up a 

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$100 million deal with Starlink 
in response to US tariffs 

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against Canada, and that Musks 
controversial behavior has 

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caused problems for Starlink 
adoption in Brazil, Italy and 

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even in his home country of 
South Africa. 

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They write that European 
countries are so concerned with 

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US threats to cut off Starlink 
access in Ukraine, a service 

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that's paid for by Poland, that 
the EU is proposing to fund a 

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homegrown alternative to 
Starlink for security purposes. 

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While the news reports that 
Twitter is back above the $44 

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billion price that Elon Musk 
paid for it in 2022, many 

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investors are highly skeptical 
about this valuation as user 

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numbers and advertising revenues
have declined significantly 

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since 2022. 
The transaction that values the 

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business at $45 billion was XAI,
another Elon Musk company buying

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it. 
A person who saw the documents 

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described the earning innings 
number reported as being wildly 

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adjusted to the FT. 
It's not obvious that an 

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unrelated party would pay 
anything like that to buy the 

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12th most popular social 
network. 

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This transaction is similar to 
when Tesla bought Solar City in 

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2016, where Musk folded a 
company that's been losing value

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into one that's been gaining 
value. 

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He owned 54% of the AI company 
and used it to buy Twitter which

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he owned 80% of. 
The other investors in XAI 

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shouldn't be too happy with this
as they owned a clean investment

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in an AI company which is now 
saddled with a social media app 

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that has lost its relevance. 
In recent weeks, anti Musk 

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protests have been occurring at 
Tesla showrooms around the 

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world, and they've even been 
incidents of Tesla cars and 

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charging points being vandalised
by protesters. 

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00:14:23,760 --> 00:14:26,840
Politico reports that Musk's 
government role, his 

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antagonistic tweets, his 
boosting of far right 

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00:14:29,800 --> 00:14:33,520
propaganda, and the salute he 
gave at Trump's inauguration 

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ceremony have made him a 
lightning rod for anti Trump 

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sentiment and his products a 
target for protesters. 

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The problem isn't just the 
protests. 

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A recent UK survey found that 
70% of Tesla owners say that 

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they're ashamed of their car. 
It's not necessarily that they 

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00:14:52,120 --> 00:14:55,680
have strong feelings about Elon 
Musk, but just that driving 

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00:14:55,680 --> 00:14:59,280
around in a Tesla leads other 
people to think that they're 

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00:14:59,280 --> 00:15:02,280
Elon Musk fans, which they find 
embarrassing. 

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00:15:02,800 --> 00:15:07,040
Most people just want a car and 
they don't want it to be read as

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00:15:07,040 --> 00:15:11,440
being a political statement. 
According to Joseph SPAC at UBS,

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00:15:11,720 --> 00:15:15,200
while many American consumers 
approve of DOGE cuts in 

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00:15:15,200 --> 00:15:19,440
government spending, Musk may be
turning off the US consumers 

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00:15:19,560 --> 00:15:23,720
most likely to buy a Tesla. 
He says that among high income 

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00:15:23,720 --> 00:15:27,480
consumers who say they plan to 
purchase an EV in the future, 

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00:15:27,760 --> 00:15:31,760
Tesla now ranks lower compared 
with competitors than it did one

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00:15:31,760 --> 00:15:36,240
year ago. 
NPR reports that the Tesla brand

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has soared in popularity amongst
Republicans and conservatives in

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00:15:40,040 --> 00:15:43,280
the United States. 
But they say that the liberals, 

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00:15:43,280 --> 00:15:47,360
moderates, and independents that
Musk is driving away are more 

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00:15:47,360 --> 00:15:49,720
likely to consider an electric 
vehicle. 

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00:15:50,000 --> 00:15:53,680
They say that Ev's towing 
problems can be an issue for 

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00:15:53,680 --> 00:15:57,240
Republican buyers who are 
significantly more likely to buy

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00:15:57,240 --> 00:15:59,920
a truck and use their vehicle 
for work. 

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00:16:00,240 --> 00:16:04,160
The new fans that Elon Musk is 
winning over might like mask, 

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00:16:04,280 --> 00:16:05,800
but they don't want to buy an 
EV. 

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00:16:06,800 --> 00:16:10,960
So are Elon Musk's businesses in
real trouble or are they just 

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00:16:10,960 --> 00:16:14,880
facing a temporary set back? 
Well, a few years ago, Tesla 

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00:16:14,880 --> 00:16:19,840
investors pitched the idea that 
we were on the path to a 100% EV

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00:16:19,920 --> 00:16:23,760
future and that Tesla had no 
competition in that space. 

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00:16:23,760 --> 00:16:27,800
They is justified in their 
minds, Tesla being worth more 

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00:16:27,960 --> 00:16:32,200
than all other car companies 
combined today, the idea that 

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00:16:32,200 --> 00:16:35,600
ICE and hybrid vehicles will 
disappear is much more in 

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00:16:35,600 --> 00:16:37,720
question. 
Additionally, Tesla has 

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00:16:37,720 --> 00:16:42,040
significant competition from 
both traditional automakers and 

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00:16:42,040 --> 00:16:46,120
new manufacturers from China who
might be beating Tesla on the 

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00:16:46,120 --> 00:16:50,320
tech front. 
BYD recently revealed new fast 

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00:16:50,320 --> 00:16:55,080
charging technology that can add
250 miles of range with a 5 

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00:16:55,080 --> 00:16:59,240
minute charge, significantly 
faster than Tesla and matching 

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00:16:59,240 --> 00:17:01,360
the convenience of a regular 
car. 

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00:17:01,640 --> 00:17:05,440
Tesla recently announced that it
had completed regulatory 

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00:17:05,440 --> 00:17:09,119
approval for a paired back 
Chinese version of its Full Self

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00:17:09,119 --> 00:17:14,119
Driving software that costs 
about $9000 extra per car in 

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00:17:14,119 --> 00:17:17,280
China, causing the stock price 
to rally sharply. 

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00:17:17,599 --> 00:17:21,359
But its biggest Chinese 
competitor, BYD, launched its 

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00:17:21,440 --> 00:17:25,319
own Full Self Driving software 
at no additional cost. 

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00:17:25,640 --> 00:17:29,880
The Tesla software alone costs 
as much as Byds cheapest 

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00:17:29,880 --> 00:17:32,880
vehicle. 
Tesla has been dead money for 

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00:17:32,880 --> 00:17:37,360
investors for quite some time. 
While Tesla investors celebrated

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00:17:37,360 --> 00:17:41,920
in December 2020 when the stock 
was added to the S&P 500, the 

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00:17:41,920 --> 00:17:45,680
stock has just gone sideways 
since then and the S&P has 

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00:17:45,680 --> 00:17:49,040
almost doubled. 
Barons argued a few weeks ago 

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00:17:49,240 --> 00:17:53,280
that it didn't deserve to be in 
the magnificent 7A group of high

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00:17:53,280 --> 00:17:57,240
growth stocks, as unlike the 
rest of the group, Tesla is a 

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00:17:57,240 --> 00:18:01,240
richly valued, highly volatile 
stock that trades on hopes for 

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00:18:01,240 --> 00:18:04,280
the future rather than dominance
in the present. 

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00:18:04,720 --> 00:18:08,160
It's difficult to know how 
Trump's trade wars will work 

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00:18:08,160 --> 00:18:12,360
out, but for countries who want 
to retaliate, putting tariffs on

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00:18:12,360 --> 00:18:16,200
Tesla cars and cancelling 
Starling subscriptions is an 

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00:18:16,200 --> 00:18:19,360
obvious response. 
While Trump's new tariffs on 

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00:18:19,360 --> 00:18:23,920
imported cars will hit Tesla 
along with all other automakers,

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00:18:24,120 --> 00:18:28,560
as Tesla's contained 30 to 40% 
of foreign source components, 

293
00:18:28,880 --> 00:18:32,600
analysts still report that the 
tariffs will hit its competitors

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00:18:32,600 --> 00:18:36,440
harder and that Tesla will be 
the clear winner in the US 

295
00:18:36,440 --> 00:18:39,720
market. 
Of course, retaliatory tariffs 

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00:18:39,880 --> 00:18:44,120
can be expected, and Tesla still
sells the majority of their cars

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00:18:44,120 --> 00:18:47,200
abroad. 
Valuing Elon Musk's business 

298
00:18:47,200 --> 00:18:50,160
ventures has become much more 
difficult since he became 

299
00:18:50,160 --> 00:18:53,960
involved in politics, as so much
now depends on the evolving 

300
00:18:53,960 --> 00:18:57,600
political landscape. 
For example, what happens to 

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00:18:57,600 --> 00:19:01,160
these businesses if Trump's 
friendship with Musk ends? 

302
00:19:01,760 --> 00:19:05,360
While Elon Musk's cost cutting 
within the US government has 

303
00:19:05,360 --> 00:19:09,000
been proceeding at a furious 
pace, the Washington Post 

304
00:19:09,000 --> 00:19:12,400
pointed out that Musk himself is
one of the greatest 

305
00:19:12,400 --> 00:19:15,880
beneficiaries ever of U.S. 
government largesse. 

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00:19:16,320 --> 00:19:20,080
Over the years, they report that
Musk and his businesses have 

307
00:19:20,080 --> 00:19:24,400
received at least $38 billion in
government contracts, loans, 

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00:19:24,400 --> 00:19:28,800
subsidies and tax credits. 
The US government support they 

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00:19:28,800 --> 00:19:33,560
show stretches back more than 20
years, but nearly 2/3 of the 

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00:19:33,560 --> 00:19:37,080
money was committed in the last 
five years, a lot of it during 

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00:19:37,080 --> 00:19:40,960
the Biden presidency. 
Just last year alone, they show 

312
00:19:40,960 --> 00:19:44,160
that federal and local 
governments committed at least 

313
00:19:44,160 --> 00:19:48,600
$6.3 billion to Musk's 
companies, the highest total to 

314
00:19:48,600 --> 00:19:51,120
date. 
While this number might rise due

315
00:19:51,120 --> 00:19:55,200
to Musk's connections within the
US government, it could equally 

316
00:19:55,200 --> 00:19:57,960
collapse if Trump and Musk had a
falling out. 

317
00:19:58,120 --> 00:20:02,280
Today, Tesla is still valued at 
around 100 times its projected 

318
00:20:02,280 --> 00:20:06,560
earnings, far more expensive 
than other auto manufacturers, 

319
00:20:06,680 --> 00:20:08,840
which suggests that investors 
are. 

320
00:20:08,920 --> 00:20:12,600
Pinning their hopes on new 
technological breakthroughs and 

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00:20:12,600 --> 00:20:15,200
rapid growth. 
And we'll have to wait and see 

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00:20:15,320 --> 00:20:18,520
how that works out. 
Thanks for tuning into this 

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00:20:18,520 --> 00:20:21,680
week's podcast, with special 
thanks to my supporters on 

324
00:20:21,680 --> 00:20:23,960
Patreon who make this all 
happen. 

325
00:20:24,160 --> 00:20:27,080
If you'd like to support the 
channel, you can sign up using 

326
00:20:27,080 --> 00:20:30,080
the link in the show notes. 
Have a great day and talk to you

327
00:20:30,080 --> 00:20:31,280
again soon. 
Bye.