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Dow Jones futures rose early Monday, along with S&P 500 futures and Nasdaq futures, after initially plunging Sunday. TSLA stock has also started growing in the premarket.
As the infamous COVID-11 progresses, investors are worrying more and more every day. Everybody’s talking about how nobody expected that a virus will become a so-called ‘Black Swan’. Just for reminder, we call Black Swan any unpredictable event that is beyond what is normally expected of a situation and has potentially severe consequences. Black swan events are characterized by their extreme rarity, their severe impact, and the practice of explaining widespread failure to predict them as a simple folly in hindsight. And even such stock market giants as TSLA (and not only it) couldn’t but react and started falling last week.
Usually, if we look in the past, we had scandals, we had impeachments, we had Enron, we had Madoff, hell we have Meghxit if you ask Brits. However, even the most prominent economic analysts could have thought that something like a virus could impact the global economy in a way we couldn’t even imagine. But it did. Equities on major United States stock markets closed the trading session last week mostly lower, ending the worst week since the 2008 financial crisis.
Haters Are Gonna Hate
It is expected that all stocks on Wall Street follow. From Microsoft Corporation (NASDAQ: MSFT) to Apple Inc (NASDAQ: AAPL) and Tesla Inc (NASDAQ: TSLA).The latter is pretty interesting since it has so many haters. You rarely hear people celebrating Microsoft or Apple falling down. However, when it comes to Tesla – the sentiment changes, like, immediately.
Mark Spiegel of Stanphyl Capital therefore says:
“In a refreshing change, our Tesla short position (despite an early-month spike higher) worked well for us this month.”
As we can conclude, the only one who calls Spiegel analyst is probably him and his mother…but not to be judgmental, let’s go on.
According to S3 Analytics, the first month of 2020 was an absolutely brutal one for Spiegel and the Tesla shorts. We’ll just add that until February 19, Tesla (TSLA) stock was well over $900. Spiegel admitted he cut off his short position during this rally that may explain his frustrations.
And even though Tesla (TSLA) stock is falling right now (like all other stocks), it is still much above so-long-awaited $420. In fact, in after-hours trading on Friday, Tesla started to recoup a bit growing 1.05% to $674.98.
But, since haters are going to hate – so will Spiegel.
“Tesla is the biggest single stock bubble in this whole bubble market for several reasons: No moat, a balance sheet that will return to losing money this year and flattening revenue growth, to name a few.”
He also predicts that most of all, a “huge onslaught of competition” will take Tesla’s market capitalization.
“This cash-burning Musk vanity project is worth vastly less than its over $130 billion enterprise value and — thanks to nearly $30 billion in debt, purchase and lease obligations — may eventually be worth zero,” adds he.
TSLA Falling and Growing, Musk and Ellison Re-Purchasing Shares
Be it as it may, it is true that Tesla is not doing particularly well. It’s also the truth that both the CEO and the director Elon Musk and Larry Ellison bought stocks in mid-February, raising about $2 billion. Usually, this kind of purchasing shares is seen as a positive thing among other investors when companies raise cash by selling shares. People like it when management puts its money where its mouth is.
And yes, it is true that they are lost now a bit since they bought stock priced $767 at the time. However, somehow we think they are not in mourning. We strongly believe that Tesla will recover. China started slowly recovering from the coronavirus. Unfortunately, trouble spots are now transferred to Europe.
Italy reported a 50% increase in coronavirus cases on Sunday. Italy’s Civil Protection Authority reported the country now has 1,694 confirmed coronavirus cases, up from 1,128 confirmed cases on Saturday. Thirty-four people have died. Italy has the most coronavirus cases of any country outside of Asia. And when talking about the auto industry we still have to how it will affect the city of Maranello and Monza though.