Tag: Tesla

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Tesla Bubble is Bringing New Short-Sellers

Tesla stock rose an incredible 17% on Tuesday, but Morgan Stanley recommended selling Tesla for the first time since 2012.

UPDATE 07/02/20:

Yesterday 47 million shares of $TSLA traded at an average price of $750/share – equating to a nominal value of $35 billion. The last price was $748.96 on February 7.

Tesla bubble is turning heavy bulls into short-sellers.
The short-seller Andrew Left’s Citron Research tweeted: “even Elon would short the stock here if he was a fund manager.”

Tesla’s (NASDAQ:TSLA) rally has seen the stock double in 2020 alone. The company’s market cap is over $160 billion. Great news to CEO Elon Musk and his bonus.

The surge is getting headlines but what caused this change? Actually nothing. Tesla’s revenue growth dropped in the last quarter. The traders recognized it as a Tesla bubble and it isn’t surprising that a lot of them want to short it.

One is Citron Research as we mentioned.

In a tweet posted on Tuesday, Citron Research said that they were shorting the stock again. Citron changed its mind after the recent run, despite their earlier statement that they would never do it again.

On Thursday, even Morgan Stanley recommended selling Tesla for the first time since 2012. The bank downgraded Tesla to “underweight” from “equal-weight.” This new rating came at the time of a record rally for Tesla. Morgan Stanley also recognized rising downside risks. Shares of this electric-vehicle maker dropped 4% in early trading Thursday. It looks that traders who bet against Tesla’s victory are the ones who have to push the share price higher. What an irony!

Tesla bubble causes fears. How is that? Can you recall bitcoin’s surge back in 2017? Exactly.

The climbing for shares of Tesla provokes some investors to compare this jump to the bitcoin bubble. Tesla’s shares have grown 36% to a record price of around $887 in the last two sessions. This Silicon Valley favorite has jumped 180% during the last three months. Just to give you the right perspective, on June 3 Tesla’s traded low at $178.97, on February 4, Tesla’s shares have gained almost 395%.

And now Andrew Left said he’s betting Tesla will go back down. For the market winner 2020? Also, Michael Novogratz compared the surge in Tesla to bitcoin’s likewise parabolic progress.

The gains have come too greatly, too wild

The parabolic rally put shares up 21% Tuesday, after a 19% increase Monday. That put gains at over 100% for the past 12 months. Bulls are clapping the record run, but short-sellers are also measuring in on what’s next for the electric car-maker.

But Citron Research doesn’t think the company is bankrupt, Andrew Left said Citron is shorting Tesla only because of the valuation.
Citron Research tweeted more: “when the computers start driving the market, we believe even Elon would short the stock here if he was a fund manager. This is no longer about the technology, it has become the new Wall St casino.”

Morgan Stanley downgraded shares of Tesla to “underweight”

Now it is the “sell” rating. Tesla gets this rating from Morgan Stanley for the first time after seven years. According to Bloomberg, in September 2012 Morgan Stanley gave a selling rating to Tesla. This one came after a record rally and amid optimism about Tesla’s China factory. The bank saw the problem in “sentiment around the stock” that is “admittedly very strong, but we ultimately question the sustainability of the momentum.”

Morgan Stanley also lowered the valuation for the company’s mobility unit and increased the expectations for the core auto business. That resulted in a higher target price.

Why Tesla Bubble?

Tesla’s current valuation is more downside risk for the stock than upside. Even the company’s increased price target from $250 to $360 indicates a 30% downside from the last trade price on Wednesday.

Also, the optimism around the China factory had a great influence on Tesla’s stock. The problem is that the risks are not entirely recognized.

Adam Jonas of Morgan Stanley in his Thursday note wrote that investors “continue to harbor concerns whether an auto business commercializing advanced, dual-purpose technology in economically sensitive industries could be a long-term winner in the Chinese market.”

Tesla has entered into the bubble-zone, everyone is following what’s going on with it, even the people who are out of the stock market are reading news about Tesla’s stock price. And cheering. The surge was too fast, too far. That’s why it looks like a bubble. Who is surprised by short-sellers’ appearance now?

What is a bubble?

A bubble is when the fast rise of asset prices is followed by a shortening. It is generated by a surge in asset prices and driven by an enthusiastic market reaction. When fewer and fewer investors want to buy at a high price, a massive sell-off happens. That causes the bubble to decrease. After the new Morgan Stanley’s gave Tesla shares a “sell” rating it is quite possible the stock price will fall quickly. That is the situation with Tesla stock. The share value grows beyond asset value. So, investors withdraw their money faster in fear that supply will exceed the demand. That could cause the share price to drop.

Tesla’s 2020 rally has been strong. The stock was all the time very high and reached new all-time highs each week. But on Tuesday investors assumed that holes may arise whenTesla fell by over $100 just 15 minutes before the closing bell. This drop was followed by a large volume, implying that it wasn’t quite a healthy correction. Yes, TSLA finished the day up 17%, but the mini-drop was visible. It looks like the air is coming out of the bubble.

Bottom line

Everyone should be skeptical when such a massive run in stock in a short time with very few visible reasons, appears. If we have in mind the recent rise of retail ownerships, we must consider that the further drops for Tesla stock are near.

Citron’s current change on Tesla stock can be accurate as the last one was. As an illustration, according to Bloomberg, Tesla overtook Apple as the most shorted US stock and analysts have bearish ratings on the asset. Everyone is predicting TSLA short squeeze. That can be right but on the other hand, it is more likely this stock price will decline slowly. Increasing short selling is more possible than a sharp fall. One of the analysts, Ihor Dusaniwsky said: “This is due to the amount of short hedging that is being done to offset Tesla convertible bond and options exposure.”

Before Tuesday’s rally, Tesla short-sellers had taken a $2.89 billion loss last year and a loss of $8.31 billion from the beginning of 2020.

Tesla shares were trading 12.73% higher at $879.30 on Tuesday.

By the way, analysts that cover Tesla, predict the average price target is $506, which is around 35% below the closing price on Monday.

But who can predict the market’s movement or what Elon Musks’ next move?

6th February 2020
Shares of Tesla Hopped On Monday

Investors are expecting that a draft bill for an updated EVs tax credit could become law.

UPDATE 18/12: Tesla stock closed up 3.74% yesterday and was priced $393.15. It was a new all-time high. Over the past 6 months, TSLA rose by almost 74%, making it up 11% in the last five days alone and up 60% over the last 3 months.
TSLA is on pace for its best quarter.
Last time, the stock was near these levels last year after the “funding secured” failure of last year.

What’s behind this bullishness?

Bloomberg reported Wednesday that the company is planing cutting the price of Tesla’s China-built Model 3 sedans by 20% or even more. The next few weeks will be interesting.
Take a look at the new chart.

Shares of Tesla (NASDAQ: TSLA) hopped on Monday, approaching their all-time high and were up 6.45%.
The stock jumped on the investors’ belief that House Democrats are going to vote on a bill that would renew the federal tax credit for purchasers of EVs. The news triggered the stock price.

General Motors Company (GM) shares marked the rise in price after a sharp decline in November. The stock price rose by 1.29% Monday.

The new draft energy tax package supported by Congressman Mike Thompson would increase the limits on the federal tax credit for EVs.

The current tax credit is not available to buyers when a producer has sold 200,000 EVs in the U.S. That number was reached by both Tesla and General Motors.

The updated credit would begin to phase out after the producers reach 600,000 EV in sales. Moreover, the tax credit deductible would be decreased from $7,500 to $7,000. This would provide this benefit to more EV buyers.

The bill is called the Growing Renewable Energy and Efficiency Now (GREEN) Act. It is expected to increase demand for Tesla and General Motors EVs. But nothing is officially finished yet. The investors should wait for it. But it looks that they are pretty much assured that the renewed tax bill will become the reality.

A tax-credit extension was asked by Tesla

Many of the companies and groups that had earlier lobbied on similar acts of extending the credit, all settled on the “Driving America Forward Act” as their prime goal.

The current tax credit, first passed in 2008 and revised in 2009, increased buyers’ interest in EVs and also urge the production.

But it looks like the industry demands a new portion of the support.

Tesla hit the 200,000 in sales, and without a new tax-credit bill, it is hard for the electric vehicle maker to grow further. Earlier this year Tesla’s sales have dropped since its per-vehicle credit decreased to $3,750. The tax credit was lowered to $1,875 in July again.

Shares of Tesla are rising

Tesla stock is rising, up more than $23, or 6.5%, in Monday trading. That’s a new 52-week high. But why shares are rising nobody knows for sure.

The new U.S. federal EV tax credits law seems to be the only reason for investors’ optimism.

Tesla is a heavily-shorted stock. The investors borrow shares and trade them, speculating on price drops. That could create more stock volatility.

Closing at Monday’s prices was the highest close since August 7, 2018. On that date, shares were closed at $379.57. Moreover, shares are increased by more than 110% from their 52-week lows of $178.97 on June 3, 2019. It has been an extraordinary run.

Shares of Tesla are up about 14% per year but Tesla stock is up nearly 57% over the last three months.

17th December 2019
Tesla Cybertruck: It is not ball proof, but maybe it is bulletproof

Tesla Cybertruck didn’t pass the metal ball test proof
The company has always tried to meet auto-industry standards, which Elon Musk called “production hell.

UPDATE 2019/11/25: Was it an embarrassing public presentation last week or just good marketing? Everything is possible. But one of three investors is sure that Tesla’s Cybertruck has a chance to be successful.
After Elon Musk tweeted that the company received over 200,000 orders for the futuristic truck the stock price jumped for 0,99% on Monday and it is currently $336.34. The rumors increased the stock price. Take a look at the chart.

Tesla Cybertruck didn’t pass the iron ball test. Are the broken windows the cause of dropping TSLA stock price? During the presentation of the new Cybertruck, something went wrong or the producer didn’t test the model enough before it showed it to the public? Anyway, it was hilarious. Okay! Musk tweeted after the reveal of the new model:

“We threw the same steel ball at the same window several times right before the event and didn’t even scratch the glass.”

The demo on late Thursday included hits with a sledgehammer and bullets that the truck could resist. But something went wrong as the windows broke into a thousand pieces when faced with a metal ball. It didn’t pass, though.

And on that very day, the stock price dropped by 6% to $333.04 and Musk’s net worth plunged $768m after glass failure went viral. The launch of the Cybertruck experienced a delay since its “armored glass” windows shattered. And Wall Street was worried on Friday.

The idea of Tesla Cybertruck is good?

It is constructed from stainless steel, a triangular structure and the base-model truck price is under $40,000. That should point out that Tesla is lowering battery costs. If we put aside the math (can be complicated) we will have a simple conclusion: someone is making EVs under $40.000.

There will be three models, the cheapest of which, at $39.900, mid-range model, is priced at $49.900, and the most expensive at $69,900 that will start production in 2022.
Electric vehicles are more costly than classic cars powered by internal combustion engines due to the battery pack.

However, refueling an EV by plugging it in is cheaper than with gas. And here we come to the pricing. The cost under $40.000 is a powerful promise. It looks the high battery costs are dropping.

But Tesla stock didn’t drop just because it had been higher. Over the past 3 months, the stock price has risen by almost 50% because the third-quarter results were better than expected. However, the drop on Friday looks to be related to the presentation of the Cybertruck and broken windows.

The Robert W. Baird & Co.’s senior analyst, Ben Kallo is positive about Tesla stock, he rated it as Buy and set a target price at $355.

“While some may consider the Cybertruck too futuristic of a design,” he wrote in a Friday research report, “we do think strong functionality will eventually win over Tesla loyalists and enable the company to take share from traditional auto OEMs.”

Competition is big

Ford is working on all-electric F-150, General Motors will enter the market in two years. Moreover, Ford and Amazon supported EV startup Rivian that also will bring something in 2020.

The analyst Jed Dorsheimer from Canaccord Genuity kept a buy rating on Tesla stock and a price target of $375.

But Oppenheimer analyst Colin Rusch wrote he expected Tesla stock to fall because the investors might be skeptical of adoption of the Cybertruck.

Yes, this vehicle is very different from current standards. So, what? Is that a problem?

We think it isn’t. The main Tesla problem is that it isn’t a carmaker in, it is an innovator. They really should engage some constructors and workers with experience in the auto industry to build them a producing line. The industry veterans know that. Last year, Tesla’s factory in California couldn’t assemble the Model 3 sedan.

Maybe it is time for Tesla to follow the auto-industry practices and engage the experts in that field. At least, it will give fewer downturns and mistakes in the construction of their cars.

Bottom line

Recently Musk said the goal of Tesla is to create a system that provides “the most amount of fun you can have in a car.
And Tesla added a “Caraoke” library of songs and lyrics, there are more games in Tesla Arcade. A partnership with gaming company StudioMDHR for its game Cuphead is signed. So, full entertainment is here. Where is the car?

Tesla’s Cybertruck obviously didn’t pass the metal ball test. Will the stock survive that hilarious experiment? This EV maker is spending a lot of time on something the other car makers have almost led to perfection.

That can make larger trouble in its business. Anyway, after the fiasco, Musk tweeted: “Guess we have some improvements to make before production haha.” Yes, you have, indeed.

24th November 2019
Tesla Stock Jumped on Thursday the Most In the Past Six Years

Tesla’s stock had its best trading day on Thursday since May 2013.
The third-quarter was profitable and better than anticipated
The investors are sure it is the beginning of rising to $4,000

Tesla’s stock jumped big on Thursday after the company had a surprisingly profitable third-quarter. The turn came from excellent progress in its Shanghai factory and that caused the stock price to rise. Also, the fact that the company is making cash and boosting margin has influence.

Tesla shares rising about 17% during yesterday afternoon’s trading and gain $298 per share. The traders that shorted the stock or were betting it will decrease in price, lost almost $1,4 billion, is S3 Analytics estimation. The closing price was $299.68, and 17.67% of rising was the confirmation of the stock’s best single day of trading since May 2013.

Tesla Stock Jumped Opposite to Wall Street Expectations

This was surprising for Wall Street analysts too, they showed more optimism about Tesla’s future in the light of new stock price.
But even with the opening price of $300 (the last time is seen in February this year) the stock continued negative for the year, down 10% for 2019.

The important fact is that Tesla had good free cash flow in the last quarter. The company had a steady growth in overall earnings and sales. Having in mind that the auto industry is lowering it is a real success.

Distrust in Tesla

Maybe the best example of distrust in Tesla arises on Wednesday just before the Q3 earnings report. ARK Group DMCC sold 150,000 Tesla shares but later they stated CNBC that its “conviction in Tesla has not changed” and that Tesla is still one of the most important holdings in Ark’s traded funds. The selling of Tesla shares was explained as “a portfolio management thing.” There are some rules related to Ark’s funds that say that no single stock can be more than 10% of their portfolio.

You might be interested: The Boys Are Not All Right

Bottom line

Tesla stock jumped on Thursday while investors were amazed by the company’s third-quarter earnings report.
The day before, the automaker reported improved third-quarter earnings per share of $1.86. That is less than $2.90 in the previous year, but it is above Wall Street expectations of a loss of 46 cents. Tesla made a revenue of $6.3 billion for the quarter.
It returned to profitability and recorded positive free cash flow. Tesla reported in its Q3 that operating costs are at the below level since its Shanghai-based factory is fit for production ahead of schedule and since Model 3 production started. CEO Elon Musk said he was “super proud” of the Tesla team.

The current consensus among 33 surveyed investment analysts, according to CNN Money com. is to hold stock in Tesla.

Several Wall Street analysts boosted their price target on Tesla after it reported an unanticipated third-quarter profit and more economical operating expenses.

If Traders-Paradise has good data, Tesla’s stock price could reach somewhere between $315 and $365 to the end of this year with a tendency to reach $2,500 in the next five years. Tesla stock is attempting to recover the 300 price level but the buy point isn’t clearly visible.

25th October 2019
The Boys Are Not All Right

3 min read

History of the Silicon Valley goes as far back to ancient 1951 when the dean of the School of Engineering at Stanford, Frederick Terman, has spearheaded the creation of the Stanford Industrial Park. Place where Stanford University was leasing the office space to nascent high-tech companies. Hewlett-Packard, General Electric, Eastman Kodak, and Lockheed were some of the very first tenants.

It was also a place where the silicon transistor was born, integrated circuits, MOSFET, the concept of the Intergalactic Computer Network, video games, and many other things without which we couldn’t imagine the modern life. Once it was a hotbed of innovation, the forefront of technological progress, today it is a shadow of its former self.

Silicon Valley today is more of a state of mind

Though the southern part of the San Francisco Bay still exists, and towns like Palo Alto, Cupertino, Menlo Park, Mountain View, Sunnyvale, and others of the Santa Clara County; Silicon Valley today is more of a state of mind than a physical place.

Back in the day, it was inhabited by people who had extraordinary talent and knowledge of everything techy and sciency, the geeks. Today, by know-it-all Bros who will from time to time get some very bright ideas.

For example to make a steel one person cigar-shaped submarine for rescuing people trapped in an underwater cave. And to pretend that it can swing around the bend in a submerged tunnel, where a U shaped bend is roughly twice the circumference of the submarine. And when subjected to the public criticism of such an “ingenious” piece of engineering, the Silicon Valley mentality demands that one hurls the most abhorrent insults at one’s critics. After all the Bro knows it all, he’s a software engineer.

We come to Elon Musk

And yes, Elon Musk is a prime example of everything that is wrong about the Silicon Valley mentality. That, born in the primordial soup of buzzwords and overhyped software applications, arrogant attitude that any problem in the world could be solved by a software engineer.

But reality has a nasty habit of rearing its ugly face. Especially when software engineers try to solve hardware problems.

For example Tesla Model 3’s rear wheel arches.

According to Sandy Munro of Munro and Associates, a manufacturing analyst company with analyzing more than 400 models of various manufacturers under their belt, they are made out of 9 separate parts which are welded, glued or riveted to each other. Other car manufacturers make this body part out of a single piece of sheet metal.

Also, Model 3 features some of the body sub-assemblies which are made out of parts joined together in several ways, welding, glueing, riveting or bolting. Sometimes using all four of them. Something which is utterly foreign to other car manufacturers, who prefer to use one joining technique throughout the sub-assemblies as such a solution keeps manufacturing costs as low as possible. Overall, Mr. Munro has suggested 227 practices which are standard for car manufacturing, and which would lower production costs of Model 3 by at least $2,000. “This body is their single biggest problem. It’s killing them.” Those are the words of manufacturing analyst, Sandy Munro.

But, why is it so?

By all appearances because Tesla has a corporate mentality characteristic for Silicon Valley. From what an observer can deduce, they prefer to hire software engineers over car engineers. While in the past five years many big engineering names from the likes of Ferrari, Mercedes, BMW, Peugeot… were poached by their competitors, none of them was snatched by Tesla.

By all appearances, Tesla is throwing software engineers at car manufacturing problems. And those boys lack the old school knowledge of car engineering and production. But they have a quite ample attitude. For example, about their Autopilot system. On the official webpage, it is described quite dubiously capable, even though featuring a warning that the Autopilot features “do not make the vehicle autonomous”.

Fake it till you make it

The system is touted as having 40x computing power of the previous system, features the Autosteer+, it is twice this and thrice that, and all “new Tesla cars have the hardware needed in the future for full self-driving in almost all circumstances”. And that is the lingo of Silicon Valley mentality, overstate everything no matter what, and curb the confusing and often misleading language just enough to satisfy the regulators. Convince the potential customers that your widget is the life-changing experience, without which their lives have no meaning.

The Silicon Valley Mentality of Boys.

Disruptiveness, insurgent, start-up, “fake it till you make” it are the epitomes of it. It’s a place where everyone can be miserable. Where working “9 to 5” means from 9 am to 5 am. Place where every CEO is the man who will fundamentally change our world and way of life with his “disruptive app”.

3rd September 2019
Tesla’s Claims Fall Short – Again

2 min read

When ordered to produce evidence of alleged danger presented by a short-seller, Tesla withdraws its request for a court-ordered restraining order. Tesla’s claims fall short once again.

Earlier this year Tesla has filed a request for a restraining order against a member of short-seller community TSLAQ known as “skabooshka”, real name Randeep Hothi, to the Alameda County Superior Court in Alameda County, California. In filing Tesla has claimed that Mr. Hothi has injured a security guard at Giga Factory in a hit-and-run incident, and also nearly caused a traffic accident while pursuing a test model of Model 3 during a test run on April 16. Upon being granted a temporary injunction by the court, Tesla was requested to provide audio and video recordings of those two incidents as evidence.

Surprising turn-over

But, in a surprise move the car producer has withdrawn request for the restraining order on July 19.

In the letter to the court, Tesla’s lawyers have expressed the opinion that the request of the audio and video recordings of the incidents are an undue imposition on the privacy of their employees, stating that such materials contain personal and private conversations. They have expressed a belief that “restraining order against Mr. Hothi is necessary and appropriate to protect its employees at their workplace.” Further claiming that the company was forced to choose between employees’ safety and exposing their personal conversation to the public. Thus, the document states, the company has decided to pursue the safety of its employees “by other means”.

And what those other means could be should make people worried, as the history of Tesla’s retaliation against its critics illustrates.

Tesla’s claims fall short

Shortly after the Reveal from The Center for Investigative Reporting has published a piece alleging that Tesla is under-reporting the work-related injuries, one of the CIR’s insiders have alleged retaliation. Said doctor alleged that a complaint to the relevant Medical Board was lodged against her, while also an anonymous call was placed to state’s Child Protection Service accusing her of negligence to her children and requesting that her kids be placed under the protective care of the state.

But such false accusations look to be the modus operandi of Tesla when handling the critique.

Last year Ars Technica has published a story about the alleged attempt of a mass shooting at Giga Factory by a whistleblower Martin Tripp. At that time the Tesla representative has told Ars that they have received an anonymous call at Giga Factory by a male caller claiming that Mr. Tripp is “extremely volatile” and “heavily armed”. But according to the information provided to Mr. Tripp’s attorney and then to Ars the alleged call was made to Tesla’s call center in Las Vegas and then forwarded to Giga Factory’s head of security, Sean Gourthro. Gourthro then has texted to Story County Chief Deputy Tony Dosen that an anonymous female caller has alerted them that Mr. Tripp is en route to “shoot up Tesla”, per Story County Sheriff’s Office report. According to an in-depth investigation by Bloomberg, when police officers have tracked down Mr. Tripp they have discovered that he presents no danger for Tesla’s employees.

“He said he was terrified of Musk and suggested the billionaire might have called in the tip himself. A sheriff’s deputy attempted to cheer up Tripp and then called Tesla to tell the company that the threat, whoever had made it, was bogus.”

Bottom line

Since we wrote so many times that any news may have an influence on the stock price of some company, it will be interesting to make a comparison in stock price before and after incidents like this one. Do investors take care of how companies treat their employees? Is the company’s public outlook important for them? We will see. Today Tesla’s stock looks like this:

Tesla stock target price: $890.00

Current price: $255.68

Stay tuned and follow the market

24th July 2019
Tesla Shares are Rising on the New Plans

2 min read

Tesla shares are rising. After Tesla (TSLA) reported a record second-quarter car delivers, Jerome Guillen, its automotive president, announced the firm has a plan to make a big jump in production of electric cars. They are opening new hirings.

Bloomberg revealed Guillen’s email to employees: “The electric-car maker is “making preparations” to raise output at its factory in Fremont, California, Jerome Guillen, Tesla’s automotive president, wrote Tuesday. “While we can’t be too specific in this email, I know you will be delighted with the upcoming developments.”

“As we continue to ramp up production, please tell your friends and neighbors that we have lots of exciting new positions open, both in Fremont and at Giga,” Guillen wrote in the email to employees.

According to Guillen’s email, the previous problems with Tesla cars are fixed. In this email, he wrote the Tesla: “hit new records in all production lines for output and efficiency,” and added that “quality is also reaching record highs.”

In the first six months of this year, Tesla sold more than 67,500 new Model 3 in the US market. Tesla’s rivals sold at the same time from 3,500 to 8,500 units of their hybrids.

This new email can be a terrifying moment for them.

As a consequence, Tesla shares are rising on that Guillen’s report that it will boost production.

In the last trading day, Friday, last week Tesla’s shares rose to $245,06 from Thursday’s close of $238,60 a share.

But nothing is so easy with Tesla.

Tesla Inc. and Apple Inc. both assume they were betrayed by an engineer who defected to the same Chinese startup. They both accused an engineer who operated on its Autopilot program of taking the extremely secret files when he quit and start to work for.

XMotors.ai is the U.S. research unit of Guangzhou-based Xpeng.

A few days ago, Tesla asked for Apple’s cooperation in a prosecute. Tesla sued the mentioned engineer.

The lawsuit is filed to a court last week.

Tesla requires insight into the engineer’s emails and forensic examination on his electronic devices. The company revealed that it has also assisted the iPhone maker with a subpoena.

The documents Tesla asks from Apple aren’t specified in the filing, it is obvious that they have a mutual opponent in Xpeng.

Last July, one of Apple’s hardware engineers was prosecuted for similar reasons, he shifted to work for this Chinese company and took the secret data with him. The engineer has declared not guilty.

Guangzhi Cao, the former Tesla engineer, confirmed in a court filing that he downloaded Tesla’s Autopilot-related source code to his private iCloud account, but rejected wrongdoing.

Elon Musk’s automaker overcame Wall Street expectations. Tesla is expected to report second-quarter earnings on Aug. 7.

“While we can’t be too specific in this email, I know you will be delighted with the upcoming developments,” Guillen said.

Tesla Motors increased 2.72% in the last trading day, Friday, 12th Jul 2019. The share price rose from $238.60 to $245.08.

Moreover, the share price increased at 9.98% in the last 2 weeks.

Along with the price, the volume has grown too. In total, 1.62 million more shares were traded in comparison wit the day before.

This exactly means, 9.08 million shares were traded for almost $2 224.42 million.

The bottom line

Tesla shares are rising and Traders-Paradise opinion about Tesla as an investment is positive. Yes, we know, Tesla had some problems.

If you are seeing the stocks with a solid return, Tesla can be a valuable investment choice. Based on their plans we anticipate a long-term gain. For five year investment, your return can be almost 13%, meaning if you invest $100 now, after 5 years your investment will be about $113 worth.

Billionaire investor Ron Baron predicted that Tesla’s stock will touch $1,000 by 2020.

This means that Tesla’s stock could be traded between $500 and $600 next year. This indicates that there is an upside potential of at least 35%.

As we wrote about a month ago Tesla shares drop but it could a 50% grow within a month

14th July 2019
Tesla shares drop but it could a 50% grow within a month

3 min read

Tesla shares were higher 2%, floating around the $200 mark on Thursday.

The day before, Tesla CEO Elon Musk had sent an email to employees, saying that Tesla could gain a new delivery record and had above 50,000 net new orders for the next quarter.

“Based on current trends, we have a good chance of exceeding the record 90,700 deliveries of Q4 last year and making this the highest deliveries/sales quarter in Tesla history!” Musk wrote in the mentioned email.

Tesla last report for the first-quarter was disappointing for Wall Street.

The company missed Wall Street expectations.

And the worries about Tesla short term arose immediately.

Tesla last month announced first-quarter deliveries missed Wall Street expectations. The worries about the company’s short term bloomed.

The consequence was, some Wall Street experts have decreased their expectations for the company.

They expressed their concern, frequently focusing on sale worries and liquidity. The negative criticism arose.

Tesla shares have dropped 30% in the past 12 months and 42% this year.

The big turn over of Tesla’s shares

Shares of the electric-car maker drop at $190. It is for the first time in two years.

Image source: Yahoo Finance

The company got thrashed by a range of negative analyst predictions.

Also, Elon Musk warned the stuff the “hardcore” cost cuts are necessary because the company would be out of cash in 10 months if not doing so.

For analysts, the bad sign was recently price cut on its cars. The demand is lower and there are so many reasons for experts concerns.

But still, some of the analysts claim that Wall Street is “misunderstanding the Tesla story”.

Musk’s successes are internationally recognized. Also, it isn’t a secret that he put himself and Tesla into trouble. All because of a tweet on August where Musk claimed there is a possibility to the company to be taken private with “funding secured”. That caused problems with the government.

According to Yahoo Finance, an analyst for a firm “with a major investment in Tesla said Friday that recent drastic price-target cuts on the stock by others on Wall Street are missing the big picture.”

That firm is Ark Invest. Last year its founder forecasted on CNBC that Tesla could score $4,000 per share. They still stand by that call, even now when Tesla’s stock lost almost 40% of its value.

To buy or to sell Tesla shares?

Tasha Keeney, Ark analyst, stated Ark hold so firmly in Tesla that its five-year, bear-case scenario is $560 per share.

That would be almost triple the value of the price where the stock closed, at $195.

Also, the fact is the company raised $2.7 billion. The first quarter was finished with $2.2 billion in cash.

So, bankruptcy appears very doubtful. Almost impossible. The opinion that Tesla will easily run out of money in the next period and close its complete business looks a bit absurd.

The company could raise more capital as Musk already showed they are able to do so.

Also, they could change its business model and sell battery packs to some other carmakers. Or something else, Elon Musk is able to do very unexpectable things to maintain Tesla and exits as a winner.

Tesla could also sell more stock and convertible debt. The last has a lower interest rate than regular loans. Tesla recently raised a convertible debt with an interest rate of 2%. So, who says they cannot do it again?

Tesla is a global leader in two businesses: cars and renewable energy.

Tesla has a really great opportunity in the sector of electric cars. Especially in China, for example.

Its stock could easily produce a return of more than 100% in the future.

Okay, there was some disturbing situation with their autopilot when one man was killed in a traffic accident while using autopilot. He simply and sadly hit the truck. But the company announced that their new cars have the hardware for full self-driving abilities and the software is ready.

Tesla can meet its near-term production goals, that is for sure. It can manage the cash crisis. So it is more realistic to expect it will have a good future. This brand is not going to easily disappear.

Yes, its CEO Elon Musk can be questionable but at the same time, no one can say he isn’t a very capable man. Controversial but capable.

So, Tesla stock can be attractive for risk-tolerant investors.

risk disclosure

26th May 2019
Tesla’s stock hit a new 52-week low

2 min read

Tesla’s stock has fallen another 6% yesterday. It is now down 40% in comparison with last year, according to CCN.

Tesla’s stock is falling more and more every day and Wall Street predicts a total disaster.

Image source: Yahoo Finance

At the same time, Tesla’s car price is falling down too.

The company announced that it is going to lower prices on older model S and X cars. Merrill Lynch announced that selling on those models is lower than ever.

Critics have the opinion that Tesla’s stock has always been a bet for naive traders.

Morgan Stanley reduced its lowest-case scenario price target to $10:

“Our revised bear case assumes Tesla misses our current Chinese volume forecast by roughly half to account for the highly volatile trade situation in the region, particularly around areas of technology, which we believe run a high and increasing risk of government/regulatory attention.”

The Tesla golden era is likely over

Tesla’s stock had confronted pressure for a long time. It had problems with the installations of its car. It had delays and deficits of components. But Tesla and Elon Musk somehow managed to cover all of these problems.

The company had to report a huge loss of $702 million in the first quarter this year, just a few weeks ago. The consequences were they had to draw extra funding. This loss was caused by a decrease of 30% in selling cars.

Also, their tax credit of $7,500 was cut in half meaning the government subsidies are lower. That’s really the bad position for the company and Elon Musk itself.

Tesla rivals are more powerful than ever

For example, BMW progress the development of their own electric cars.

Tesla shares continued the slump falling 6% to close at $192,73.

Citigroup analyst Itay Michaeli lowered the price target on the clean-energy carmaker’s plans by nearly 20% to $191 per share.

Michaeli stated the company’s recent capital growth of $2.7 billion provides the balance sheet defense against a 2019 downturn.

“The recent capital raise was a positive step but won’t necessarily get the balance sheet out of the woods if Tesla cannot achieve FCF targets,” Michaeli formulated.

But, at the same time, he said the company has to solve its serious cash spending rate.

Tesla and Elon Musk tried to guarantee the investors their investments are safe. They claimed the company developed a new driving automation system and self-driving vehicles which should increase the safety. Obviously, the investors have no trust as the consumers don’t have.

Tesla’s claims are not supported by the data, they look more just hollow promises.

Musk tries to avoid criticism and keep a good status, it is obvious.

But it looks the Teflon chief position doesn’t belong to him anymore since his reputation likely not stays intact.

Moreover, he and Tesla seem will have more problems in the future.

With competition and investors both.

Elon Musk was putting all of Tesla’s difficulties under the rug.

Declarations on how Tesla should be prized as a tech stock and not as a business with unlimited problems fall into the water.

Banks warned to a Tesla’s disaster

Bank of America Merrill Lynch and Citi analysts each declared critical statements evaluating the stock’s recent pull-backs by investors. They both concluded it is a sign that should concern.

Their analysis is based on intense selling pressure, with shares falling 16% during the past week.

And also, there is a leaked email from Elon Musk that refers to employee expenses.

All of this was very important for BAML and Citi.

“With fundamentals deteriorating, specifically deliveries/production that are starting to stall as well as losses/cash burn that are not turning a corner on a sustainable basis, some of these optimists now appear to be taking a much more pessimistic stance, with the stock breaking down in recent days,” BAML analysts headed by John Murphy addressed to clients on Wednesday.

The analysts told the current tension on the stock seems to be inspired by “shorts pressing aggressively, as the stock (and story, to some extent) was already breaking down.”

risk disclosure

23rd May 2019
Elon Musk made a deal with SEC: pay $20 million and quit as Tesla chairman

2 min read

Elon Musk agreed Saturday to quite as Tesla’s chairman of board and pay a $20 million fine in a deal to settle charges brought this week by the US Securities and Exchange Commission, alleging fraud and making “false and misleading statements” when he tweeted claims of having secured the funding for taking the company private at the share price inspired by marijuana culture.

This settlement requires court approval, and the main point of agreement is that Elon Musk will be allowed to stay as CEO but must leave his position as chairman of the board within 45 days. He is unable to be reelected for three years, according to court filings. Elon Musk accepted the deal with the SEC “without admitting or denying the allegations of the complaint,” according to a court document.

Who has to clean after Musk?

Also, Tesla agreed on Saturday to pay $20 million to settle claims it failed to clean up after Musk’s tweet. According to some sources, terms of this settlement are less favorable for Musk and Tesla than the SEC’s initial offer of a nominal fee and 2 years ban on acting as a chairman of the board.

“The $40 million in penalties will be distributed to harmed investors under a court-approved process,” the SEC said in a press release.

The company also agreed to nominate two new independent directors to its board. And establish a board committee to oversee Musk’s communications.

A Tesla’s spokesperson confirmed Musk will be permitted to remain a member of the board.

SEC Chairman Jay Clayton said in a statement that “the prompt resolution of this matter on the agreed terms is in the best interests of our markets and our investors, including the shareholders of Tesla.”

Following news that the SEC had filed the suit, Tesla’s market share dropped by about $7 billion to $45.2 billion by Friday. But the agreement which allowed for Musk to remain CEO may have prevented even more disastrous consequences.

Ivan Feinseth of Tigress Financial Partners described the agreement as a “slap on the wrist” for Musk. He added that “the fact that he can remain CEO is very important for the company.”

This announcement from the SEC came two days after the agency filed a lawsuit against Musk, contending he defrauded investors. The decision is based on tweets Musk sent on August 7. In that tweet, he claimed that he has had secured fundings to take Tesla private at $420 a share. That has caused the company’s stock to soar. He had not secured the funding and knowingly made false statements, alleges the SEC.

The lawsuit asked for banning Musk from serving as an officer or director of any publicly traded company.
But Elon Musk told Tesla’s staff, to “ignore the distractions”, and hinted at being profitable.

He also called the SEC’s suit “unjustified.”

He assured staff that the company was close to “proving naysayers wrong.”

With Sunday being the end of the quarter, Musk said that Tesla must go “all out” on production. In order to “achieve a victory beyond all expectations.”

Last few weeks problems culminated for Tesla, and now the company is expected to report third-quarter production numbers this week.

The Electrek reported that Tesla has already broken its record ahead of the third quarter’s close. They wanted to suggest it would exceed production projection of 50,000-55,000 of Model 3. Tesla has already met an ambitious benchmark for its Model 3. After setting a new quarterly production record in the second quarter.

UPDATE 23th May 2019: Tesla’s stock hit a new 52-week low

The investors on Monday will also review Tesla’s settlement with the SEC.

Once again, this agreement is not official; a court must approve it. Reports from Reuters on Friday marked that Musk “could settle with the SEC but was ready for a court fight.”

That means the situation did turn out differently.

The question is whether Musk’s companions on the board decide to bring in a really strong chair. The one who will stand up to Mus

Jay Dubow, a partner at Pepper Hamilton and a veteran of the SEC’s enforcement division, says it is “unusual” that the SEC gave agreement to let Musk stay on as chief executive but exit the chairman role.

Dubow said:

“The CEO is certainly more involved than the chairman in day-to-day operations.” SEC may have determined that removing Musk as CEO would cause more harm to Tesla’s share price, and thus harm investors.

“I have always taken action in the best interests of truth, transparency, and investors,” Musk said. “Integrity is the most important value in my life and the facts will show I never compromised this in any way.”

It’s still unclear whether or not the Department of Justice will file criminal charges against Musk.

Tesla confirmed earlier this month that the Department of Justice was investigating whether Musk’s comments about taking his company private constituted criminal activity.

No matter what the outcome of the DoJ inquiry be, Elon Musk, for now, will stay on as Tesla’s CEO and its public face which equally causes controversies and reassures investors in the bright future of the business.

Risk Disclosure (read carefully!)

1st October 2018