Is TESLA paying any dividends?

For those of you who know the stock, the answer might be obvious but I might to give a bit of context in the huge bubble the stocks navigate these days...

I did watch a remote conference yesterday by University of California, Irvine discussing the state of the economy, stock market, CORONA virus crisis and possible issues later next year and in 2021. The conference was held by professor Christopher Schwarz, very interesting.

A topic came up regarding why the stock market is so expensive; the argument offered was that the main alternative (US government bonds) offer very low yield (something like 0.59% at the moment for the 10 year note: source here) and by consequence people buy stocks (especially large caps or ETFs) because they make more on the devidends these stocks pay.

Back to TESLA stock; that theory does not apply to TESLA, of course, because our darling stock pays nothing in form of dividends. From TESLA's FAQ:

Tesla has never declared dividends on our common stock. We intend on retaining all future earnings to finance future growth and therefore, do not anticipate paying any cash dividends in the foreseeable future. 

Not only they pay nothing, but you will see no money from them in the foreseeable future.

So why are speculators rushing in? If is not dividends, is then something else? Something like... sweet?

Good luck

 

NKLA stock accelerates towards ZERO

And in the meantime, TESLA's younger sister Nikola sees his stock accelerating... not using batteries, but gravity. Towards the ground; ZIP; ZIRP; Empty; Zero!

TESLA stock next? Where are the Robins?

You ain't smoking anymore?

I hope you're doing ok folks

You're taking it easy today?

Elon wants TESLA not go bankrupt (or slightly profitable). Whatever...

Not very profitable! No, just a bit profitable.

After reporting yesterday earnings the big boss did comment the smashing earnings (or something equivalent) saying he does not want TESLA very profitable.

We need to, you know, not go bankrupt, obviously, that’s important....But we’re not trying to be super profitable, either, Musk said toward the end of Wednesday’s conference call.

I think just we want to be like slightly profitable and maximize growth and make the cars as affordable as possible, he concluded.

Read that again: WE NEED NOT GO BANKRUPT

It looks like this time, Elon didn't say much... That's a bit strange as he is a big mouth...

 We luv u Elon! And you know that!

TESLA earnings report

As I informed here, TESLA did report earnings today after the marker close.

The sales are down 5%, but TESLA managed to make a profit of 50 cents / share.

People are super enthusiats about this, stock is trading 6% in the after hours. Some are even sure the stock will join the S&P 500 (with more speculation coming down the road).

Elon Musk has done it again, beating Wall Street’s expectations for Tesla’s earnings significantly for the fourth quarter in a row.

Note that TESLA did not beat estimates; it literally smashed them!

I'll have more in the coming days about earnings...

In the meantime, here is the point of view of BofA analyst (certainly a dumb guy who's clueless about stocks compared to robinhood traders). 

In our view, the $1,500+ stock price is not supported by fundamentals, with valuation driven largely by momentum and low rates." Among 10 reasons to remain cautious on Tesla, the analysts said that while volume growth is real, it is constrained by capacity expansion and capital availability; the EV market is likely smaller than appreciated; and Tesla's profitability and cash flow "are not great or consistent, and are major risks.

The EV market is smaller than appreciated! Well, that's quite a surprise!

And on the view lots of people have on TESLA stock as a tech company, compared to FANG stocks. 

 

while Tesla is often compared to technology companies and industry disruptors like the FAANG stocks, Tesla's business model is capital intensive, which "makes its business much less scalable than that of a technology company.

In the meantime, the litlle brother Nikola stock keeps going lower.

How much the TESLA stock price by end of the week?

Place your bets. 2000$, 3000$?

 

Bubbles by definition pop

By definition, every bubble will burst.

TESLA stock will be no exception to that rule. Predicting when that will happen is impossible; we will know only after it does. 

Here is a serious analysis by Hoisington Management on the current state of affairs: economic recessions, corporate and sovereign debt and their implications, etc.

This excelent blog resumes it well, pointing out the stock market unprecedent speculation - and TESLA stock is leading the charge together with other tech stocks which are highly overvalued.

Nearly all economists expect a huge jump in inflation associated with the Fed's massive balance sheet expansion and government fiscal stimulus.

Actually, inflation is easy to find. Look no further than the stock and bond markets.

The Fed's balance sheet expansion coupled with trillions of dollars of fiscal stimulus (both unprecedented) has resulted in stock market speculation also at unprecedented levels exceeding the housing bubble boom in 2008. 

Enjoy reading

Long term bull case for TESLA?

I did write about the 7 short term risk as seen by this analyst.

On the longer term, this guy is bullish on TESLA stock. The arguments are quite lite, to say the least.

1. He likes found-run companies. Jeff Bezos, Mark Zuckerberg are driven by a lot more than money. No shit! I suppose Elon is the same...
2. Tesla is like Amazon in its early days. When I told you this is not a car manufacturer but a technology behemoth you didn't believe me! Here you have it, a guy smarter than me is telling you so. TESLA is the next Amazon, a trillion dollar company (add by me: making no money).
3. Tesla is producing cars at scale. 350.000 per year to be more precise versus 10 millions for Toyota. The analyst believes one day (he does not say what year but it could be by the next century) TESLA will produce as many cars as GM and Ford; in the meantime, waiting TESLA to produce those cars, his market valuation is 10x that of GM (you read that right: 10 TIMES!)
4. Tesla is leading the way to a humanity with less carbon energy. I wont stop much here as this thesis imo is so weak; scratching the surface a bit shows that battery producing, recharging and recycling is not that carbon-free. 
5. TESLA stock catalysts: electric truck (good luck with that one), an electric roadster (roadster car markets is not growing that much overall - I know a thing or two about roadsters) - I think you can forget about this one btw, a model Y SUV - the competition will be tough on this segment as there are so may electric SUVs coming out, I did post a few on this blog as well. So this argument is very weak for the long term bull case.
6. Wall Street is skeptical about TESLA. The idea is that more speculation is in the cards. I dont know how to read this one; judging by stock price action I tend to say people gambling with the stock are dumb investors; but it does not mean professional analysts will jump in with both feet; there are gamblers on WallStreet for sure, but serious investors are managing risk. I dont think TESLA stock is a good risk/reward investement. I might be wrong however.

So this is the analyst's long term case for TESLA stock.

I find this analysis a complete crap.

And you?