MarketWatch reports Tesla stock falls even farther after recall of 123,000 Model S cars.
Tesla Inc. finished off its worst month in seven years with the news late Thursday that the electric-auto maker is recalling 123,000 Model S vehicles due to a potential flaw in a power steering component.
Investors continued to punish Tesla in after-hours trading, with the stock more than 3% in the red, giving back the day’s regular-session gains of 3.2%, when it closed at $257.50. Tesla stock is down 23% in the past month, as the S&P 500 index SPX, +1.38% has fallen 4%. Markets are closed Friday in observance of Good Friday.
The recall of the Model S vehicles is due to a bolt that could corrode, an issue that occurs in cars built before April 2016, and in winter conditions where roads are frequently salted, the company said. Just 0.02% of the cars ever experience the problem, Tesla said.
It’s a small percentage of cars involved in the recall, but it will prove to be costly to a company already struggling to stay afloat.
Bonds Ouch!
Credit Rating
https://twitter.com/BossHoggHazzard/status/979445332491857927
Fraudulent Conveyance Lawsuit
Fraudulent Conveyance is heading to court: Tesla shareholder lawsuit against SolarCity deal set to proceed.
A class action lawsuit by Tesla Inc shareholders against the electric car maker’s chief executive, Elon Musk, and the company’s board over the SolarCity deal was set to proceed after a Delaware judge refused to dismiss it.
The news and sentiment is now so terrible that I wonder if a bounce is coming. I won’t take much to cause a bounce, but I am not playing with this puppy. The floor could fall out at any time.
Crashes do not happen in overbought conditions, they happen in oversold conditions, and Tesla has everything going for it.
For discussion of fraudulent conveyance, please see Tesla Bankruptcy? Fraudulent Conveyance?
Mike “Mish” Shedlock
As far as a possible bankruptcy for Tesla, the 20th century is a littered graveyard of bankrupt established auto companies as well as startups. That being said Henry Ford went bankrupt 2-3 times before he became successful. I admire Musk for his vision but never saw the business case for the EV. As of now the economics don’t add up when you factor in battery replacement costs. I don’t have enough knowledge about the potential fraud issues with the purchase of SolarCity but if the implications are true than this will become an epic bankruptcy and possible fraud. The stock price is way overvalued I believe but that is not Musks fault its idiotic investors drinking the cool aide. Musk may be way over his skis but you gotta admit he has vision and I don’t think he’s being deliberately deceptive. I don’t have an opinion about govt assistance to private companies its not free market capitalism for sure but the internet was initially created by the govt. DARPA if I recall correctly. Or maybe it was Al Gore.
@FlyOver_Country
That is well formed answer where you also look on good side of Tesla too. You rise valid concern that Musk is growing all 4 of his companies at very fast pace. In case there is a recession, it is to be seen if tesla can or can’t successfully restructure. I would not be so sure as Mish on either of outcomes and I would not word articles with “tesla bankrupt?” headlines if I was him.
What is concerning me is that Mish is getting a little too cocky in sense that he is:
1. resorting to calling his readers as “confused” when readers try to start a debate and they bring arguments to table. Instead Mish resorts to calling his blog reader as “confused”. It is like third grader way to argue.
2. coming up with strongly worded articles that could be interpreted by some as investement advice. And, in fact, ill informed investment advice. It does not matter that he says it is not investment opinion if he says the other alternative is “sky is falling” and you better make your bets wisely.
As an exmple, in article – https://www.themaven.net/mishtalk/economics/peak-gold-no-peak-gold-production-perhaps-rjLv-bXfA0C5eDIE3JTZvA/ – Mish suggests to read Robert Blumen’s interview to see what is the real driver for Gold Price.
I read the whole interview and the only sentence I could find in that interview about what is driving gold price was:
“””The gold price is formed by a balancing process, as investors shift different assets in order to hold the amount of gold, cash, and other assets they want”””
Rest of article was what about what is not driving gold price (w.g. jewelery …)
So in comment section I asked Mish, if that really was it? And then in addendum he clarified to me that “The price rises when desirability of gold goes up.”. Right there – that is circular logic. He says that price of gold will go up when people start to think that gold is worth more. Doooh.
He speculates that desirablity of gold will go up when people lose faith in Central Banks. When that will that happen? Why people will resort to gold in such case? Nowadays there are bazillion of other ways to limit money supply, one does not need to have a currency that is necessarily pegged (or backed) by gold to limit money supply. He choses to ignore “what if” other alternatives..
Does he want baby boomers be old and sitting on pile of worhtless gold? I don’t think that anyone is giving better Xanah prescription to baby boomers than Mish with his gold investment advice and fearmongering of equities for so many years in a row.
I am glad that when in 2012 I stumbled across this website and gold was promoted here as a hedge, I also came across Robert Shiller 2013 interview where he rherotically asked – “If gold is in speculative bubble” – https://youtu.be/aG5yAEYQi-o?t=324 At least he is a humble guy who does not resort to calling others “confused” or accusng of “drinking Kool aid” and is not a permabear who will prove to be right only once in a business cycle and then brag “I told everyone this was coming”.
I know Mish does not ask himself “What if I could be wrong?”. So I will receive another “Long VIX you are confused” answer.
I am out of this blog. Last person turns off the light, in case commenters from zerohedge.com don’t migrate to mishtalk.com.
Solution is higher interest rates.
Failed because he never made a profit and burned through billions of gullible investor cash and billions more in taxpayer political subsidies.
******
they may fail because they push too fast too soon
I’m guessing that everyone who has commented here on this thread is over 40-years old, certainly over 35. My son who is 21 and my daughter, 25 love Elon Musk and his endeavors to push technology to a new level. While his Tesla business may very well fail, what he has done to reignite the entrepreneurial spirit in young people to do great things with technology, beyond the next smart phone app, cannot be ignored. As like most forward thinking people, they may fail because they push too fast too soon but in time their work becomes the everyday things we all will come to use.
If they were making some of those so-called self-driving cars, Mish will have to be really unhappy that the attempts to drive working Americans to further despair have hit a roadblock (pun unintended).
I predict Tesla will be paying their 7.7% interest with new 9% loans. And some analyst will claim it’s a great business strategy.
This reminds me of just prior to the lehman banking collapse. Wachovia was borrowing at I think 9.5%. And I wondered what their business model was. Borrow at 9.5% and loan out at 6%.
‘
On other news today: Elon Musk gets FCC broadband approval for satellite Internet system.
Few years later on news: Several Baby boomers refuse to use any of products from Elon Musk companies’ just to prove that they “were right” about him few years back and his companies are bankrupt
And maybe it is something else:
So far Elon Musk companies have received a total of $1,109,000,000 of US Government loans/guarantees from Obama’s Administration.
Elon Musk has donated large amounts of cash to the Democratic party and Obama’s campaign
https://www.southbayriders.com/forums/threads/114051/
A reckoning is coming and I hope its not just Tesla. This everything bubble has been blown up by easy money. It’s got to stop.
I bet Jim Chanos made a ton of money on his Tesla short!! He saw how overvalued Tesla was months ago. Good for Chanos and his funds investors.
You are correct sir. I wish interest rates would go up and sink the overvalued stock market.
That is most likely correct! We cannot say for sure, but we can say for sure the stock price would never have gotten this elevated, nor would this insane amount of funding have come in,
Telsa would have been gone a long time again if we had a functioning financial system.
Those must be really crappy bolts to cause failure from corrosion in only 3 years. Which means the real problem for Tesla is the hit on perception of quality.
Dang I was going to short it on the next pop. Oh well!