CNBC: $4,000 Tesla shares. Why that will never happen
I have been involved in the global financial markets for a long while. For example, I vividly recall the 1987 crash, when the Dow Jones Industrial average plummeted 22% in a few hours as clearly as if it were yesterday. U.S Markets are down 11% in the past few trading sessions.
One day before Tesla’s earnings were announced, a Fund manager appearing on CNBC, boasted that Elon Musk’s Tesla shares were “the biggest position we have” and “I expect Tesla’s stock will trade as high as $4,000 per share.” That’s 1,100% higher! Easy money, right? That statement may have driven thousands of impulsive retail stock buyers to purchase Tesla stock, to find only one day later that their new investment has plummeted by $60 a share. So, if you purchased 100 shares of Tesla two days ago you have lost $6,000.00.
Once again, Elon Musk is big on promises yet short on delivery. I have lost count on the number of times Musk has changed the Model 3’s delivery schedule. Another quarter, another delay, another story. Tesla’s cash burn is hotter than his SpaceX jet engines at lift-off and Tesla will undoubtedly need to raise mountains of cash, again within the next few months.
But don’t just take my word regarding Elon Musk’s credibility. Last week, Apple co-founder Steve Wozniak said “Now, I don't believe anything Elon Musk or Tesla says." Even CNBC’s Jim Cramer said, “In the end, Musk is David Blaine,” referring to the popular magician and illusionist. The SpaceX rocket launch of Falcon Heavy was nothing more than a distraction from Tesla’s quarterly financial results. Musk has made several grand and distracting promises, including the approval of his 45 minute NY-Washington Hyperloop, and an absurd promise to restore power to Puerto Rico, etc., etc..
I am unsure as to why Arc Invest’s Catherine Wood would make such a bizarre prediction implying a valuation light-years away from reality, or why CNBC did not challenge this call more vocally. Even the headline, Tesla stock going to $4,000 – that would be an increase of 1,100%: Money manager Catherine Wood, was written with the guiltless intention of grabbing investors’ attention, like the National Enquirer, regardless of facts or realistic sectorial valuation.
In any event, this chart demonstrates Tesla’s mountain of long-term debt which is skyrocketing. Tesla has produced less than 300,000 cars in its entire lifetime and is not remotely close to making a profit. General Motors produced over 10 million cars in 2017 and made profits. In 2017, Tesla's valuation was higher than GM's. That's bananas! The cause of Tesla’s failing corporate infrastructure can be found in Musk’s business model, built on a foundation of wild promises, impossible to fulfill without an unlimited surplus of American tax dollars and government subsidies. So, for full disclosure I am short Tesla shares and believe the probability of Tesla going to zero before $4,000 is HUGE.