Elon Musk's Tweets Can't Save Tesla AnymoreTSLA) has never traded on the basis of its fundamentals. In fact, in the recent past, Elon Musk’s Tweets had more to do with Tesla’s share price movement than its fundamentals. Tesla has been trading at significantly bubbly valuation for quite some time now. However, the day investors decide that fundamentals do matter will be the doomsday for Tesla as I can see the stock heading to even $100 in a very short span of time. And given that Musk’s Tweets are no longer having any positive effect on Tesla, I think the doomsday may be a lot closer than you think.
In a recent article that I wrote, I highlighted the fact that Elon Musk is scamming Tesla investors by agreeing to acquire SolarCity (SCTY). I argued that SolarCity was on its way to bankruptcy and Tesla only agreed to acquire SolarCity so as to protect Musk’s image as a revolutionary since the bankruptcy of SolarCity would probably have started a snowball effect and hurt Tesla too.
Clearly, the acquisition did not make any sense and it appeared that Musk was acting in self-interest rather than thinking about investors.
The recent e-mail leak fiasco further highlights the fact that Musk is trying all he can to keep the bubble from popping.
Image by Ben_Kerckx / Pixabay
Bloomberg reported on Friday: "Elon Musk sent an e-mail to employees at Tesla Motors Inc. urging them to cut costs and deliver "every car we possibly can" in a push to show positive cash flow in the third quarter.
The chief executive officer of the electric-car company said it would be his last chance to show improved financial numbers before he tries to raise more money. The third quarter is crucial to Tesla’s future because the company is trying to acquire SolarCity Corp. and preparing to roll out the Model 3, its lower-priced sedan, late next year."
The e-mail says that Tesla is "on the razor’s edge of achieving a good Q3, but it requires building and delivering every car we possibly can, while simultaneously trimming any cost that isn’t critical, at least for the next 4.5 weeks."
Tesla longs may not consider this email to be harmful as he’s only asking his employees to cut costs. However, the leak is very bad for Tesla investors as it highlights the fact that Musk was ready to mislead investors by asking employees to cut back on cost just for the next 4.5 weeks and just before the capital raise.
I strongly believe Elon Musk did scam Tesla investors buy acquiring SolarCity. Given the overwhelming amount of losses, and debt, it won’t be long before Tesla finally starts to trade on the basis of its fundamentals. And, as mentioned above, the stock could crash almost 50% in no time once that happens.
Disclosure: No Position
Published on Sep 9, 2016By Ayush Singh