Elon Musk fears Tesla stock could collapse like a “soufflé,” but after years of intense short-selling pressure, TSLA’s more like a diamond.
Published: December 2, 2020 UTC: 8:32 PM.
By: Francois Aure | EmailElon Musk sounds worried, but he doesn’t need to be, at this point. | Source: REUTERS/Hannibal Hanschke/Pool
- Elon Musk has warned Tesla employees about risks to their stock price.
- Likening TSLA to a soufflé, Musk fears a “sledgehammer” should their future profits come into question.
- Tesla stock fell 4% at the open of trade on Wednesday.
A leaked email from Elon Musk to his employees suggested the billionaire fears any damage to the company’s future-profits would crush TSLA stock like a soufflé under a sledgehammer. Heres why Tesla’s more like a diamond than a dessert.
Musk Is No Stranger To Bearish Talk
Elon Musk is a different kind of CEO. With most of his net worth tied up in Tesla, he still said that TSLA stock was too high earlier in the year. Investors ignored him, and subsequently, the companys valuation has continued to soar. Now the worlds most valuable car company, Musk is again warning about the potential for a major crash in share-value and pushing back against complacency.
Colorful imagery aside, all the evidence suggests that a sledgehammer has been falling on TSLA for some time, and theres barely been a crack.
Routinely the most shorted U.S. listed stock, the bears have been trying to squash Tesla relentlessly for months. To be fair to the wounded bears, this isnt terribly surprising. Elon Musk runs his company at full speed, and if you believe that his E.V. company is just that, a car company, then its staggeringly overvalued.
Tesla Enjoys Three Significant Advantages In The Market
Fortunately for the bulls, the market trades TSLA like its not just a jack of all trades, but a dominant force to boot, pioneering the future of self-driving, solar, and battery tech. The destruction of this image is what threatens Musks $128 billion personal fortune the most.
Tesla stock fell 4% the day after Elon Musk’s “soufflé” email broke. | Source: Yahoo Finance
Despite the perception that Tesla is vulnerable, it routinely demonstrates it is not. No matter how deep the dives, the buyers come back with aggression. There are a few reasons for this:
Firstly, as a brand, it enjoys an almost cult-like following. When the cult-leader can say that the company is overvalued on multiple occasions and does nothing to dent enthusiasm, its a good sign your brand is rock solid.
Secondly, Tesla can hire the best people, mainly because of its brand appeal. This ensures that it can maintain a tech advantage. A few brilliant individuals will out-create a large group of average engineers every time.
Finally, there are just not many ways to play E.V.s and solar tech in the stock market. Dip-buying or even front running TSLA rallies is about the only liquid way that a giant like Blackrock can find exposure to this market.
Sledgehammers Aren’t Working
I would, therefore, counter Elon Musks assertion that Tesla is a soufflé. Its more like a diamond that is being worked on every day. European car giants and short-sellers are wielding the hammers, but they havent even scuffed the surface so far.
Where we do agree is that if/when it does break, it will shatter into tiny pieces. Some of those pieces might be profitable, but a $530 billion market cap will be a distant dream.
Aaron Weaver edited this article for CCN – Capital & Celeb News. If you see a breach of our Code of Ethics or find a factual, spelling, or grammar error, please contact us.