Remember last year, when Elon Musk launched his red Tesla roadster into space on a SpaceX Falcon Heavy rocket?
Liquidity moves markets!Follow the money. Find the profits!
He’s quite the showman, and it was quite a show.
Musk even went so far as to put a mannequin in a fancy spacesuit in the drivers’ seat, next to a screen that said “DON’T PANIC!” – a cosmic inside joke for all the “Hitchhiker’s Guide to the Galaxy” fans watching.
For a couple hours, us Earthlings and other ground-dwelling types could watch the space Tesla and its spaceman passenger on a live streaming feed, up there hurtling through the heavens.
The Tesla will be up there forever, “they” say, circling the Sun, out beyond the orbit of Mars, though CNBC quoted a couple of Canadian astronomers as saying there’s a 6% chance the Tesla will crash back to Earth sometime in the next 1 million years.
Back here on Earth, Tesla Inc. (NASDAQ: TSLA) has done a pretty good job of defying gravity, too…
… but I don’t need to be an astronomer to predict this space rock is going to come down hard to leave a big, smoking crater in the ground.
Now, I recommended a very special, specific position for my elite Zenith Trading Circle Members – one with stratospheric profit potential.
But the impact from this catastrophic reentry is going to be so big, anyone can make some money…
Yes, Musk Is Quite the Showman… That’s the Problem
By now, it’s crystal clear Elon Musk is his own worst enemy. He’s a genius, without doubt, but somehow he can’t stop getting himself in hot water with the U.S. Securities and Exchange Commission (SEC) for tweeting idiotic, materially misleading non-facts.
I Target the WORST Stocks: These turkeys deserve to fail – but you could potentially see the equivalent of turning $10,000 into $720,000. Click to see how…
But that’s not why we’re jumping on the stock, though his grief in front of regulators could knock the stock if they put more pressure on him than anyone expects.
For us, that would be a good thing, and we can only hope.
The real, proximate reason for making this move: Tesla must pay back $920 million today on a bond they hoped investors would convert into equity.
Those investors are not going to do that, because for that conversion to make sense, the stock must be above $359.
It’s not. At $294 this afternoon, it’s not even in that solar system.
The cash Tesla’s using to pay back bondholders today amounts to a quarter of its cash on hand. The company’s perennially short on cash, and just because it still has some gas in the tank, it doesn’t mean it won’t have to scrape another billion or two out by the third quarter.
Rumor has it that Elon Musk’s been mortgaging his houses and resorting to other “borrowing” schemes. The only reason that’s likely is if he borrowed to buy more Tesla shares and he’s getting margin calls. But they’re just rumors.
Tesla’s been spending money as usual, but finally recognizes it’s not capable of generating the cash flow it was managing when it was taking pre-orders. Prices on cars have been cut twice in the past six months, which won’t help cash flow.
Sales are way down since the tax credits buyers relied on were cut in half to $3,750 in January. They’ll run out completely by mid-summer. That’s not going to help with cash generation.
That’s why Tesla’s had to lay off thousands of workers.
Its roll looks like it’s about to slow down or maybe hit a wall, which makes this stock the perfect short play right now. It’s down more than 8% today, and I think it’s got much further to fall. Go get ‘em.
About Money Morning: Money Morning gives you access to a team of ten market experts with more than 250 years of combined investing experience – for free. Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors.
Disclaimer: © 2019 Money Morning and Money Map Press. All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning. 16 W. Madison St. Baltimore, MD, 21201.
Wall Street Examiner Disclosure:Lee Adler, The Wall Street Examiner reposts third party content with the permission of the publisher. I curate posts here on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. Some of the content includes the original publisher's promotional messages. I may receive promotional consideration on a contingent basis, when paid subscriptions result. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler, unless authored by me, under my byline. No endorsement of third party content is either expressed or implied by posting the content. Do your own due diligence when considering the offerings of information providers.