Is Nikola a fraud?

Most of you probably did see the report from Hindenburg Research which has detailed evidence about the Nikola company being a complete fraud.

The report was published a few days ago; the stock suffered (but that was already the case before the report being made public). I did cover the Nikola stock on the blog saying it will go to 0.

On the report

We have gathered extensive evidence—including recorded phone calls, text messages, private emails and behind-the-scenes photographs—detailing dozens of false statements by Nikola Founder Trevor Milton. We have never seen this level of deception at a public company, especially of this size.

What do you think? Is that report true or the guys who did publish it are talking their book (meaning they are short the stock and want it to go down)?

I dont know but I am convinced Nikola will go bust; I mean there is no product to show yet however they are valued 12$ billions. Common! When will this crazy joke stop? And btw, it is not only Nikola, but plenty of companies these days including our darling TESLA.

Regarding fraud, I point towards another famous case: Theranos. That company stated that by using a very small amount of blood, it can perform lots of blood tests very rapidly using proprietary technology. The company was valued almost 9$ billions. In the end, everything proved to be a fraud; the technology was not there and the money dissapeared. Theronos CEO was Elisabeth Holmes; she faces charges for fraud and conspiracy to commit fraud. In her defense, this so called business woman is defending by advancing mental disease so that she can escape being convicted.

As Jim Chanos puts it, today we are in the golden age of fraud.

Chanos’s hedge fund manager Kynikos Associates is named after the ancient Greek word for “cynic”. His pitch is that he can identify corporate disasters-in-the-making. The New York-based outfit employs 20 people and has $1.5bn in assets under management. Chanos also teaches a course on the history of financial fraud (“how to detect it, not how to commit it”, he quips) at Yale University, his alma mater. The syllabus stretches back to the 17th century. Today, he says, “we are in the golden age of fraud”.

Thanks to whom? I'll let you tell me...

 

Elon compensation will impact TESLA accounting negatively

You know the big boss is a rich guy, dont you?

He is in top 10 of bilionaires of the planet thanks to you my friend; yes, you did speculate with his company stock and because he did negociate the biggest bonus on WallStreet ever with his board, he is very rich thanks to the stock price levels. For more, check here.

Now that all sounds very cool (for Elon), but whats the story with the TESLA books? Well, the package is quite large; and TESLA must pay for it.

In 2018, Tesla awarded Mr. Musk a pay package which includes stock options for more than 20 million shares that vest in 12 tranches.

 

The first such tranche paid out in May as Tesla reached and sustained $100 billion in market value, according to a securities filing. The company awarded Mr. Musk shares worth nearly $800 million at the time. Tesla stock has doubled since then, and it is highly likely that other tranches will vest this quarter, which would net Mr. Musk billions more.

Now what?

However Tesla decides to treat that in its pro forma results, those option grants need to be expensed according to generally accepted accounting principles. 

For instance, the company recorded an expense of $72 million in the fourth quarter of 2019. Tesla recorded $347 million in stock-based compensation expense in the most recent quarter, which was an increase from past periods but still low enough for the company to churn out a profit according to GAAP.

Any expenses not already booked are recognized as a tranche vests, the filing says. Back then, Tesla's market value was $145 billion. As of Thursday, its market value was around $350 billion, having reached as high as $463 billion in August.

That new expense threatens to put Tesla's streak of four consecutive quarters of GAAP profits in jeopardy. Over those four quarters, Tesla has averaged quarterly net profit of about $70 million.

A third-quarter net loss of just $226 million would put Tesla in the red over the past four quarters. Given the size of the options awards and the recent gains in Tesla's share price, a billion-dollar quarterly compensation expense is within the realm of possibility.

Source: WSJ

OK, so what's about?

Well, basically in the 3rd quarter the package TESLA must pay to Elon is so large it could impact its 3rd quarter profit. How large is the package? Maybe 1$ billion.

Are you happy with that? Not that it matters...

You funny boy, you aint smoking anymore?

Hello you funny speculator!

I hope you did sell your TESLA crap a few days ago and you did not get caught in the drawdown!

The stock lost 30% in a few days; I know that thing is powerful and it will go to 15.000$ a share soon! But in the meantime it suffers a bit.

So the question is what are you doing now? Why not buying you fan boy? You're a true beliver right? That TESLA company is like no other; it will grow in China and even on Mars, right?

Common, you can do better than that! Pump that crap back up!

TESLA stock NOT added to S&P 500 list

Did you bet TESLA will be added to S&P 500? I have news for you: it wont!

Source: FX Empire

What is important is the reason behind not being added. There is speculation around accounting gimmicks

The decision will have an immediate impact on buying power because SP-500 membership would have forced tracking funds to buy more than 120 million shares of Tesla stock. Index components must have a market cap of more than $8.2 billion and report four profitable quarters in a row, according to standard accounting principles. The company has come under persistent criticism from skeptics who insist that profits rely on accounting tricks and these alleged practices may have been factored into the exclusion.

It aint pretty, right?

What does it mean for speculators? Well, these folks look only their screen and check price candles. So probably not much (until they panic and poo in their pants).

What do you think about it? 

The tech bubble will burst. By definition.

To support the previous article on TESLA as the most dangerous stock on Wall Street, here is a hedge fund guy, way more intelling and experienced than me and you, saying basically the same thing: we have a bubble, and by definition, it will implode.

But you my friend, as a speculator, dont care about this right? What you want to know if when and the path we take to go there. Will it burst tomorrow? Will we go up another 1000% then burst? Well, unfortunately I dont have an answer to that.

We are clearly seeing a correction, Arnott said last week, pointing to the FANG+ stocks [Facebook, Amazon, Netflix, Google parent Alphabet and Microsoft among others] taking a beating recently.

It’s a bubble. Bubbles burst. The FANMAG bubble will be no exception.

To put things in perspective, here is how crazy the bubble on Apple stock is going these days.

At its recent highs, Apple was worth more than the entire FTSE index. In other words, the one stock was worth more than the entire publicly traded British economy.

It’s a fantastic company with great products and superb management. But, it will not produce more profits for its shareholders in the decades ahead than the entire London stock exchange

Maybe these things dont matter; until they will!

 

TESLA - the most dangerous stock on WallStreet

Its not because the TESLA cars are ugly or dangerous or whatever (to be honest, some models are not that pretty...)

No; its because of stupid valuations and the disconnect between the fundamentals and the share price. That TESLA is way more valued than Toyota, the most efficient car maker on the planet selling 30x more cars than TESLA is no secret for you. We did talk about it here several times.

See here and here.

The current stock price implies a market share between 40% and (hold your breath!) 110%. That means TESLA will sell not only to humans but also to people from Mars planet (which to be honest they already did start doing).

Allright, so at what level, based on current fundamentels, should the stock be? Probably 10x lower than current if we believe this analyst. Remember, that's a good valuation for TESLA; in huge bubbles like the one we currently have (which can baloon even further to be clear!), when prices correct they tend to go under fair value. So it is not impossible to find TESLA stock to much lower prices below 50$ per share.

Whatever best-case scenario you want to paint for what Tesla’s going to do –  whether they’re going to produce 30 million cars within the next 10 years, and get in the insurance business and have the same high margins as Toyota, the most efficient car company with scale of all-time – even if you do believe all that is true, the stock price is still implying that profits are going to be even bigger than that

We think this is a big, big – one of the biggest of all time – houses of cards that’s getting ready to fold.

I think around a 10th of what it is is probably appropriate if you look at, you know, kind of a reasonable level of profits. Tesla doesn’t rank in the top 10 in market share or car sales in Europe for EVs and that’s because the laws changed in Europe that have strongly incentivized the incumbent manufacturers to crank up hybrids and electric vehicles. The same is coming in the United States. I think realistically we’re talking about something closer to $50, not $500, as a real value.

There you have it; whether you believe or not, I dont care.

TESLA stock is a monstrous bubble that will implode. I dont know when (1 month, 3 years or 3 decades from now, make your guess).

There is a kind word for Elon in the article however 😁 

Trainer does credit Tesla CEO Elon Musk and the company for accelerating the trend and making electric vehicles more mainstream.

Good luck you speculators!

 

 

 

The whale pumping tech stocks in August revealed

Maybe its no secret for you that last weeks were quite impressing in how much stocks (and in particular tech stocks - including TESLA) did go up. And they did it without pause, defying fundamentals - but that its no surprise to you - but also speculators.

Well, the large whale behind this pump scheme has been unmasked by FinancialTimes. It is a japanese bank called SOFTBANK.

SoftBank is the “Nasdaq whale” that has bought billions of dollars’ worth of US equity derivatives in a series of trades that stoked the fevered rally in big tech stocks before a sharp pullback on Thursday and Friday, according to people familiar with the matter. The Japanese conglomerate had been snapping up options in tech stocks during the past month in huge amounts, fuelling the largest ever trading volumes in contracts linked to individual companies, these people said. One banker described it as a “dangerous” bet. The aggressive move into the options market marks a new chapter for the investment powerhouse, which in recent years has made huge bets on privately held technology start-ups through its $100bn Vision Fund. After the coronavirus market tumult hit those bets, the company established an asset management unit for public investments using capital contributed by its founder, Masayoshi Son.

Ok, now what? Will they dump now they have been unmasked? The last 2 trading days have been quite volatile; TESLA stock did lost about 30% from its peak at a moment. That's ok as 60% is still left to go back to earth from hyperloop (or whatever that crap technology is).

We dont know of course what Softbank will do but by any measures, they did try manipulating stocks they own via derivaties (call options). What's sad about these stories is the day when these schemes are revealed, the federals intervene to help these idiot risk takers and save them. Either with your children money of by debasing. That's how the markets function these days (unfortunately).

The surge in purchases of call options — derivatives that give the user the right to buy a stock at a pre-agreed price — has been the talk of Wall Street, as the sheer size of the trades appears to have exacerbated a “melt-up” in many big technology stocks over the past few months. In August alone, Tesla’s share price shot up 74 per cent, while Apple gained 21 per cent, Google’s parent Alphabet rose 10 per cent and Amazon 9 per cent.

And of course TESLA stock was on SOFTBANK's buying list.

Nothing new under the sun; business as usual...

 

 

Elon will sell you more shares to you!

After the split, here comes more shares selling by Elon.

The guy is a genius (or better said he found a very big fool of idiots ready to commit suicide if the genius will ask them to).

So our brave Elon, seeing the hyperbolic rise of its stock, what did he think? Why not sell more crap to these idiots? If they are ready to buy no matter what! To be honest, I would do the same; I like the guy 😂😂

So here it comes, 5$ billions of more shares coming down to your throat

The company has raised about $14 billion over the past decade through secondary stock offerings, most recently in February. 

Should Tesla press ahead with the full amount it will represent the largest equity raise ever for the company.

As of last September, $5 billion would have represented a significant portion of Tesla’s market capitalisation, which dipped just below $40 billion at the time. Today it is about 1oc of the $460 billion market value, which exceeds that of Toyota and Ford.

Tesla carried out a five to one share split last month, meaning shareholders would get five shares for each one they held, thus diluting each one’s value. Despite the split, investor appetite has continued with the price now standing at $481 (£358), up 17pc in a week.

And btw, if you did not notice, Elon surpassed Zuckerberg in our sociopath top of bilionaires of the world and he did make it to the 3rd place. All that in 1 single month.

Go TESLA stock! Like a rocket!

 

TESLA - a new paradigm

Bullish analyst Dan Ives has a story around TESLA. A new paradigm shift.

Here is the video where he's selling his bullshit: Yahoo Finance

What is the new paradigm?

I think there is a misperception on retail investors and institutions [on Tesla]. I have talked to more institutional investors the last six months on Tesla than the last six years because the story has changed fundamentally, and profitability wise.

You need to start focusing on the market [electric vehicle] and on the indexing of the S&P 500. It has changed the game a bit. Of course there is retail [investor] momentum, no doubt. I think there is a bit of a misperception that it’s all retail. I believe there is a strong institutional support there because there has been a change in the fundamental story of Tesla.

 
Meanwhile, Tesla’s top five institutional shareholders is a who’s who of credibility (according to Bloomberg data): Ballie Gifford, Capital Group, Vanguard, BlackRock and FMR. Smaller institutions such as ARK Invest Management, Legal & General Group and Northern Trust have all added to their Tesla holdings since June 30, according to regulatory filings.

OK so what's the paradigm? Well, none! Except there are institutional and retailers invested in the stock. Ok, thanks for the info, we already know that.

You see one heck of of an institutional bull cited: Ark Investment. I did already post a video on the blog where these analysts have a crazy price target for the stock: 15.000$ a share.

PS: As anticipated, the TESLA stock split did nothing to the stock; it did what it does every day: go up 10%. What about tomorrow? I can tell you what will happen: the stock will go up 10%. And after tomorrow? Again, 10%.

See you next time

TESLA stock split - an update

Tomorrow TESLA stock will be split in 5-for-1 move (you will get 5 shares for 1 share you hold).

Companies often do these splits to attract more investors in (greed?)

What does this mean for TESLA stock? This article speculates around the topic:

Stock splits come with some serious caveats. This is particularly true of excessive splits, such as Apple's 4-for-1 decision, or Tesla's pending 5-for-1 split. Tesla's split also takes effect on Monday.

Stock splits typically come in the 2-for-1 or 3-for-2 variety. William O'Neil, founder of Investor's Business Daily and author of "How to Make Money in Stocks," considers anything beyond those typical categories excessive. "Oversize splits create substantially larger supply," he explains in his bestseller. The result, he warns, "may put a company in the more lethargic, big-cap status sooner."

 In prior decades, Companies have often enacted multiple stock splits over a period of two to three years. This also amounts to excessive splitting. One of the most famous examples is Qualcomm (QCOM), which executed three stock splits from late 1998 to the end of 1999. During that period the stock ran up more than 2,500%.

The third stock split, a 4-for-1 division, took place in December, 1999. The following month, Qualcomm rolled over into a 20-month decline that would reduce the stock's value by 88%.

The example on Qualcomm the article talks about came at the end of the 2000s bubble. The 88% decline in Qualcomm is dues to the bubble popping rather than a stock split effect. Probably TESLA stock bubble will go the same path; I have no idea whether it is tomorrow or in 5 years. A 90% decline in TESLA stock (and maybe company bankrupcy) is guaranteed when the bubble pops. And it will!

In the meantime, the split itself will have no impact whatsover in the TESLA stock bubble.

BTW, Elon boy wealth tipped 100$ billions on Friday!

Common sense indicator discarded

 A common sense indicator is a basket of high quality earning vs low quality earning stocks.

For decades, high quality earning stocks have won over low quality earning stocks. That's ABC logic you will tell... Agree, but for the last months lows quality beats high quality; and not for a low margin, but there is quite an important gap between the low quality stocks leading the way.

Why's that? Well, as this article explains there are 2 culprits (I think there is more to the story):

One explanation is that this price action is being driven by the sudden influx of retail money into the market. Empowered by zero-fee brokerage accounts and starved for entertainment as they shelter in place, retail traders are buying like it’s 1999.

Ok, we know that idiots are buying TESLA stocks these days; money from idiots is still money, right?

Here is another reason:

In response to the COVID-19 crisis, governments and central banks have opened the floodgates of liquidity. Asset purchases of every stripe by the Federal Reserve continue to set record highs. In such an environment, actual corporate earnings hardly matter, let alone the quality of those earnings.

There you go: central bankers putting gas on the fire. 

Does that mean something? What do you think?

TESLA stock will split Friday 28/08

 The TESLA stock will be split 5 to 1 (that is for 1 stock you will receive 5 after Friday session close).

What does it mean for the stock? I have no idea, we will see on Monday; it will probably go higher as I did write on the blog: the TESLA stock will never go down!

You lucky boy!

😄

Lucid Air - TESLA competitor - will offer the fastest recharching technology

 As I wrote here a couple of times, competition on the EV market is coming; this is not a surprise as this market is growing and more and more companies want a piece of the pie. So TESLA is not alone on the EV planet (contrary to what the stock suggests).

And not only competition is coming, but it might come with technological challenges for TESLA. I have no idea whether Lucid Air will deliver on its promises, but it says that it will have the fastest recharge technology for EVs.

• Lucid Motors announced that its new luxury sedan, the Air, will be the "fastest charging electric vehicle," with the ability to charge 20 miles of range per minute.
• The claim smashes the standard set by Tesla, whose V3 Supercharger can add about 15 miles per minute. 
• The announcement follows Lucid's claim that the Air will have a range of 517 miles, another bid for best-in-industry specs. 

Lucid Air CEO did work on TESLA model S; the guy did work for Elon. He wants to beat TESLA in terms of luxury and EV technology. 

We're creating a car which is going to be the best car in the world. People are going to want it.

 

Believe what you can (I pesonally dont believe this thing will be the best in the world; nor the most luxurios. For that, have a look at a Bentley for instance).

Source: Business Insider

 

 

Analyst has a target of 87$ per share for TESLA

Gordon Johnson has a low target for TESLA stock compared to where the stock is trading currently. He values the stock at 87$ per share.

He does not believe in

• TESLA car production and sales (core business losing money)
• Technology (they dont own battery production technology, no self-driving technology, etc)

He's basing his projection for price for 2021 on sales and production figures:

• 11.400 cars sold in China (versus 12.000 or so produced)
• 370.000 cars sold this year (and 500.000 projected to produce this year)
• He takes out the credit selling (because of green business) to other car companies (that is not sustainable because the other car manufacturers are starting to produce and sell EV cars); we did cover that here on the blog.

So here you have it on Yahoo Finance.

Everyone wants to leave the party seconds before midnight

Is Warrent Buffet warning in 2000 true today?

They know that overstaying the festivities — that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future — will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There’s a problem, though: They are dancing in a room in which the clocks have no hands.

This is what the wise man from Omaha told Berkshire investors in its letter 2 decades ago.

The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money.

MarketWatch explains it very well in this article 

Today’s investor knows a thing or two about effortless money, as the disconnect between the market highs and the reality of the devastated economy has never been more pronounced, thanks in large part to the Federal Reserve’s commitment to pumping cash into the system.

Enjoy speculation (while it lasts)

 

 

I told you so!

 OK that's not very serious right?

In the mirror everyone is a hero 😁. TESLA stock wont go down, it will look like a bargain in a couple of years (what am I saying, in few months).

When a single share will be worth 15.000$ in 4 years, 2000$ per share will look like real bargain. And even more so when my price targer of 100.000$ per share will be touched.

Analyst is suprised by the 2000$ number, but he thinks it will go up even more.

It’s shocking [to see Tesla’s stock at $2,000], and it can probably continue to go up. I mean I am surprised by the number. It makes it tough to be a new investor in that stock to think whether or not you will get the returns from a price perspective. But it’s a great company, an amazing company.

Buy more, never stop!

 

            

TESLA stock valuation

Here is a podcast from BARRON'S where an investor tries to value TESLA.

He kind of recognizes he doesnt really understand it, Elon is making it more difficult because of wild cards he throws in the mix; but he has a value of 6XX$ per share (a bit less than 700$).

It is quite far from what we have today in price. Btw, today looks kind of boring with a 4% jump; I'm sorry, but where is the fun? Where are the days when we enjoyed 15% and 20% per day?

Speculate on!

TESLA stock clears 2000$. Where from here?

TESLA stock touched 2000$. No resistance, no news, the same idiots chasing prices higher. That's ok in fact!

Now the question is where from here? As I said I see no reason for the stock to stop before 3000$, than 5000$ than 100.000$. I mean my analysis is not better or worse than professionals.

Here is one from BARRON'S. Gary Black, a TESLA bull analyst, raised his price target to 2700$ per share. That's peanuts; I just raised mine to 5$ millions per share.

The article from Barron's concludes that history indicates more upside coming; after a brief pause.

I say no pause, 3000$ will be touched in less than a month.

Good luck!

Warren Buffet stock market valuation indicator - all time high

The fact that the stock markets are in a huge bubble is a secret for nobody.

But where do we stand exactly in terms of valuations? 

One indicator I aften see cited is the Warren Buffet indicator. What is this indicator? It is the total market capitalisation relative to GDP.

Here is how it goes:

All right, so the question is where do we stand today?

Here is the curve showing where this ratio is today (August 2020):

As you can see, the indicator stands at 178%. Does that mean stock will go down? Absolutely no; as I said here and here, they can only go up.

Buy more, they are cheap!

Cathie Wood - Ark Investments CEO - predicts TESLA stock going to 15.000$ a share

And yes, this is a "I told you so" message.

Look, I'm not smarter than the average of you. I'm having quite a poor track record in trading (but working on it 😁 to improve).

But here is a much smarter analyst from Wall Street. Cathie Wood; do you know her? Because I dont.

She anaylized all kind of scenarios for TESLA - including bankrupcy - and she is very confident the stock will reach 15.000$ over 4 years. That prediction was made back in February 2020. At that time, the stock was around 900$ I think before suffering a steep correction due to COVID shock.

An increase fom 900$ to 15.000$ means around 2000% over 4 years (or 500% a year on average). 

At 15.000$ per share, the market cap will be 7x today's, at around 2.5$ trilion dollars. I'll tell you a secret: I think that is peanuts; TESLA will reach 100$ trillion market cap 😎. What do you think about me?

Here she is explaining her crap to you

Buy more as you will make 2000% on your money!