The Death of Easy Money
The Credit Strategist Blog
TSLA ended the week at $150.23/share but traded even lower in the aftermarket to $149.06, leaving its market cap below $475 billion. As I suspected, it was disclosed that Elon Musk has been selling stock which hardly helped already toxic sentiment surrounding the name. Debate continues on social and mainstream media regarding the reasons for the collapse as Musk attracts a disproportionate and undeserved amount of attention for his actions at Twitter. Reasons for TSLA’s drip-drip demise include Musk’s lack of focus on the company, increasing competition from other automakers, the slowdown in China, and many other reasons. Less blame is placed on what I continue to believe is the biggest factor which I will repeat again - the fact that the stock for the first time in its history as a public company is trading in a world without QE/ZIRP. Investors can no longer discount future cash flows (to the extent they really exist) into infinity. And Wall Street analysts who concocted ridiculous stock targets can no longer justify those numbers using discount rates with positive denominators that keep rising. Rumor has it that Morgan Stanley’s Adam Jonas is out there somewhere looking for Tesla’s flying taxi fleet on which he once placed a multibillion-dollar value. It’s where it always was - in his imagination.
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