The average rating of Tesla, according to FactSet data, is a “hold,” though estimates show its average target price of $243.53, about 23 percent above its current price.
Johnson said if investors are looking for names that will outperform in the last few months of the year, Tesla won’t be among them.
“I would move on to other names that look more attractive, like Apple, for example.”
Read more "Tesla shares are primed to mark a grim milestone"Still, many analysts warn Musk’s entities have to find a firm base of support before they can be counted on the long term.
Ross Gerber, chief executive officer of Gerber Kawasaki Wealth & Investment Management, for one is souring on Tesla’s fortunes even as his company holds a $5 million position in Tesla and has recently been selling shares.
“He’s got guts, I’ll give him that,” Gerber told reporters, adding: “He really pushes it out on his companies, but Elon could implode.”
Read more "Elon Musk’s Fortune Plummets $779 Million As Tesla-SolarCity Flops"But should a potential investor or customer engage their System 2 before buying Tesla stock or a Tesla vehicle, the case for buying the car — which is expensive, attractive, and seems to work fine as long as the driver can keep the battery charged – is far stronger than the case for buying the stock.
This comes to mind in considering the ginormous cash crunch facing Tesla due to its $2.6 billion merger with SolarCity — the solar energy service run by his cousins. (I have no financial interest in the companies mentioned in this post).
This merger offers investors four compelling reasons to bet against Tesla.
1. Strategic Rationale Is Weak
2. Musk Is Gripped By Delusions of Grandeur
3. Combined Companies Can’t Grow Out of Their Cash Conundrum
4. Tesla Has Weak Corporate Governance
Read more "4 Reasons To Bet Against Tesla"Elon Musk failed to disclose his purchase of SolarCity stock.
Musk bought 570,000 shares of SolarCity stock on February 11, evidently near the time he discussed the possibility of a merger with cousin Lyndon Rive.
The per-share purchase price ($17.56) was significantly below the implied valuation of SolarCity stock in the merger; hence, Musk will realize a profit of several million dollars if the merger is approved.
Again, EnerTuition’s article has an excellent and nuanced discussion of the stock purchase, and the questions it raises, so I skip over it here except to note Musk’s stock purchase further taints a deal that already has a bad odor.
If you are a Tesla shareholder (or, indeed, a SolarCity shareholder), and deciding how to vote on the merger, would any of these topics be important?
If you believe any of this information might be useful in considering the merger proposal, too bad for you. The S-4 is silent about all this.
Read more "Tesla & SolarCity: This Deal’s Getting Worse All The Time"Thursday started badly for Elon Musk when one of his SpaceX Falcon 9 rockets exploded on the launchpad, days before it was set to take a payload into orbit. Things got worse when Mark Zuckerberg discovered his $95 million satellite was sitting on top of the rocket, and took to Facebook to express his “deep disappointment.”
But as it turns out, blowing up a multi-million-dollar rocket was not Elon’s most expensive mistake yesterday.
As Bloomberg reports, share movements and regulatory filings related to Tesla and SolarCity, two of Musk’s other companies, cost him $779 million yesterday. The stock in both those companies (which are set to merge) took a sharp drop yesterday, with Tesla down 4% and SolarCity dropping by 9%. According to Fortune, the drop was due to cash concerns in Tesla, and ongoing worries from investors over Tesla’s merger with SolarCity.
Read more "Yesterday, Elon Musk lost a rocket and $780 million"In short, the cash being counted isn’t really cash from operations. “What they’re really saying is that they hope to get the full amount from the guarantees,” says Ciesielski. If the used car market suffers from a dearth of buyers or a glut of green vehicles, Tesla will be forced to cover the shortfall when the banks sell vehicles for less than the guarantee price, or shed the inventory it’s obliged to repurchase from the banks at a loss. In either case, it will be returning a lot of the cash that it wants investors to believe is a sure thing. “Cash flow” that’s subject to a large contingent liability, to major uncertainty, shouldn’t be classified as cash-in-hand generated from running the business.
Tesla has attracted a legion of true believers who love the vision and don’t fret much over the numbers. Non-zealots should follow the conservative reporting that the official rules require, and ignore the pro-forma stuff. That’s the best way to track Elon Musk’s progress in molding an epic vision into the greatest green profit-maker the world has ever seen.
Read more "Why Tesla’s Cash Crunch May Be Worse Than You Think"
Rapidly rising prices aren’t good for everyone though.
“The potential losers in this situation are folks who live locally and work locally, but aren’t making the higher wages and may not be able to afford the higher prices,” said Blomquist.
Read more "How Tesla caused home prices to soar in this Nevada town"