By Cynical Bear | Sunday 18 June 2017
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
I was going to have my usual weekend dig at one of the many over-promoted pieces of crap on the lower reaches of AIM but thought instead I should lift up my head and look further afield and take a pop at most over-promoted stock in the global markets with a proper superhero at the helm, namely Tesla Motors (NSDQ: TSLA) and the irrepressible Elon Musk.
For those interested in global investing but have living in a cave for the last year or two and missed this story, Tesla has risen incredibly to a current share price of $371 and a valuation of $60 billion. It has recently overtaken BMW to be the third largest global automotive company, now only behind Daimler and Toyota.
This is astonishing for a car company that barely makes any cars but that is ignoring the rallying cry of Elon and the bulls which is that this isn’t an automotive company at all but much more than that as it will solve almost all of the world’s problems, particularly those involving energy and transport, which is why it deserves to be part of the exclusive FANTA club.
Actually, the real reason for writing this article is to be the first financial commentator to coin the phrase “a FANTA stock”. It has been annoying me for a while that the term FANG stocks is continuing, despite the fact that Google was renamed Alphabet in October 2015 and it’s also pretty clunky to read references about Tesla and the FANG stocks.
Well, I’ve solved the problem.
From now on, let’s just talk about the FANTA stocks, and that also enables writers to use drink based analogies or even some of the great FANTA slogans from over the years such as, er, “Drink Fanta, stay bamboocha”!
You get the drift, if you’ve got better ideas, add them in the comments below.
Anyway, back to Tesla. It must be the most commented on stock at the moment globally and if one reads Seeking Alpha, one will note that there are probably about ten articles a week written on both the long and short side.
More recently the bears have been getting themselves into an apoplectic fury as the share price keeps on going up despite them shouting from the rooftops that it is the biggest short ever, but many have been saying that since a share price of about $175 and must be really hurting.
I have been wondering when to put my own short on and largely by luck, well apathy, I’ve not done so yet and saved myself a fortune; however, I’ve just realised that I’ve been looking at it all wrong.
It is all well good knowing all the intellectual arguments about the lack of car sales; the astonishing cash burn; the max-out debt capacity; the shocking related party transaction with Solar City and the list goes on, but being clever doesn’t make one any money.
What I’ve realised is that the bears are fighting a losing battle against the world’s greatest stock promoter and the global Bulletin Board Moron resource.
As one small example of Elon Musk’s skills, The Sunday Times this morning includes a piece explaining why he is planning a one-way trip to Mars! It is just stock promotion on a different level. Combine the skills of Lenigas, Akers, Reynolds and Drummond and multiply by a factor of ten and one might be close. I actually wonder whether the Mars colonisation is because he fears he’s running out of dumb investor money on Earth.
Anyway, why fight it? The same principles apply to Tesla as they do to Audioboom (BOOM) or EVR Holdings (EVRH); at some point, there will be a catalyst; the air will start to seep out of the bubble; and the share price will make its slow and steady descent towards $100 or lower.
Why bother running with the bulls in Pamplona (a race one can only lose or draw at best) when one can wait until the matador has stuck its first two banderillas into the beast’s shoulders and you can get involved in the much less risky escapade of killing a wounded animal that will soon die of blood loss in any event.
Accordingly, I have stopped looking at the Tesla share price on an hourly basis. I am convinced that there will be a moment towards the end of this year, presumably around the announcement of the dismal initial sales of the more affordable Tesla which will precipitate a sharp fall from the heady heights (it will probably have hit $500 by then!) and then I will get stuck in and I will encourage you to join me for the ride at the time, unless the Martians are investing by then of course!
Never miss a story.
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