If Tesla's Stock Was a Roller Coaster…

Steph Willems
by Steph Willems
if tesla s stock was a roller coaster

The correct ending to this headline should read “…We’d All Lose Our Lunch.” Especially this month.

Tesla investors are taking a wild ride of late, with CEO Elon Musk’s Aug. 7th “secured funding” tweet and subsequent stock spike giving way to a hands-in-the-air plunge as the funding for his go-private plan remains on the missing persons list. Couple that with a very concerning New York Times interview and increasing skepticism from analysts, and you’ve got the makings of a standout attraction at Six Flags.

While the company’s stock has almost rebounded to the previous close, Tesla shares dropped 5.7 percent at the start of trading Monday. Since end of day Aug. 7th, Tesla shares have fallen 20.4 percent. And that’s after they rose 26 percent over the first week of August, to the highest point in nearly a year.

Fueling that steep climb was an Aug. 2nd earnings call where Musk apologized to analysts snubbed in an earlier call, and more or less came across as a measured, level-headed chief executive with a company on the verge of making money. Then came his tweets (and later blog post) detailing how he planned to take the publicly traded Tesla private at the eyebrow-raising price of $420 a share. Such a buyout would take tens of billions.

Things fell apart when the “secured funding” turned out to be a series of meetings and a good feeling that Saudi Arabia’s sovereign wealth fund might pony up the dough to see the deal through. Over the past week, that scenario began appearing increasingly unlikely.

In his NYT interview, Musk admitted to sending the unapproved tweet, which was never vetted by the company’s board, from his car while on the way to work. The conversation illustrated Musk’s dependence on the sleep drug Ambien — a drug with a notorious side effect of impulsive and erratic behaviour. Sunday brought another shocker. A Reuters report claimed the very same fund courted by Musk might be on the verge of investing heavily in a Bay-area electric car startup — but not Tesla.

According to Bloomberg, JP Morgan analyst Ryan Brinkman told clients that a deal with the Saudis is “potentially far from even being formally proposed.” Brinkman dropped his price target for Tesla from $308 per share immediately after Musk’s now-infamous tweet to $195 (the same price as before).

“We now believe that such a process appears much less developed than we had earlier presumed,” he wrote.

[Image: Tesla]

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4 of 22 comments
  • Healthy skeptic Healthy skeptic on Aug 21, 2018

    Fanboy or hater, if you want to play with Tesla stock, don't buy or short the stock...use options! This is what options were made for. If you want to bet against Tesla, do NOT short the stock (sky-high capital/margin requirements, possibility of unlimited losses). Instead, buy some put options on TSLA that expire in a few months. If the stock fails to fall by then, worst-case scenario is you lose some money with nothing to show for it. But if it collapses in that timeframe, you can make many multiples of you original outlay. BTW, I'm not a Tesla hater at all. I actually really like their cars. I'm probably one of the few TTAC-ers left with a Model 3 res still standing. But I wouldn't touch the stock itself with a 10-foot pole. Not only is the company is valued above GM or Ford, but stock is being driven almost entirely by speculation at this point, plunging up and down like a ship at sea. Place yer bets! (Using options, please.)

    • Master Baiter Master Baiter on Aug 21, 2018

      While I agree in principle, options on a volatile stock like Tesla trade at a significant premium, so it’s not a sure money making strategy.

  • I_like_stuff I_like_stuff on Aug 21, 2018

    Tesla is the Enron of this generation.

    • SCE to AUX SCE to AUX on Aug 21, 2018

      That's clever. Is Tesla breaking laws, and encouraging its employees to invest their whole retirement portfolio in TSLA stock?

  • Tassos Government cheese for millionaires, while idiot Joe biden adds trillions to the debt.What a country (IT ONCE WAS!)
  • Tassos screw the fat cat incompetents. Let them rot. No deal.
  • MaintenanceCosts I think if there's one thing we can be sure of given Toyota's recent decisions it's that the strongest version of the next Camry will be a hybrid. Sadly, the buttery V6 is toast.A Camry with the Highlander/Sienna PSD powertrain would be basically competitive in the sedan market, with the slow death of V6 and big-turbo options. But for whatever reason it seems like that powertrain is capacity challenged. Not sure why, as there's nothing exotic in it.A Camry with the Hybrid Max powertrain would be bonkers, easily the fastest thing in segment. It would likewise be easy to build; again, there's nothing exotic in the Hybrid Max powertrain. (And Hybrid Max products don't seem to be all that constrained, so far.)
  • Analoggrotto The readers of TTAC deserve better than a bunch of Kia shills posing as journalists.
  • Lou_BC How do they work covered in snow, ice, mud, dust and water? Vibration?