Is Tesla Stock an Opportunity Right Now?

TSLA - Is Tesla Stock an Opportunity Right Now?

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Maureen Callahan, a writer for the New York Post, believes Elon Musk is a total fraud. That’s what she called the Tesla (NASDAQ:TSLA) CEO in her July 21 article that also suggested he has yet to succeed at anything.

Elon Musk is a lot of things including a flawed human being like us all but a failure he is not. How many cars have you built from the ground up, Ms. Callahan? You might be a capable writer but an assessor of talent you are not.

To hang your assessment of Musk on a $2 billion fall in the price of TSLA stock is a ridiculous assumption. That’s a blip for a stock that is heavily shorted — the 31st most shorted Nasaq stock in terms of shares short — although as a percentage of the company’s float it doesn’t even make the Nasdaq top 50.

There Is No Excuse

There is no excuse for what Musk tweeted about one of the divers responsible for the rescue of the Thai soccer team — and he has apologized for the unnecessary comments after Loup Ventures’ Gene Munster (a Tesla investor) sent Musk a letter calling on him to apologize and focus on the task at hand. 

If Callahan had seconded Munster’s thoughts about the Tesla CEO’s focus, I’d have been far more receptive to her column.

As it stands, she might want to focus more of her own energy on President Donald Trump, because there’s a human being who has no problem playing fast and loose with the truth.

But I digress.

TSLA Stock Is a Short

Callahan quotes infamous short-seller Jim Chanos in her column, suggesting the mere fact he’s against Tesla is proof positive Musk is a fraud selling shareholders la bill of goods.

“Star investor Jim Chanos called Tesla a ‘walking insolvency’ back in 2016,” wrote Callahan. “He doubled down in December, saying Tesla is ‘headed for a brick wall.’”

The thing about short sellers, Ms. Callahan, is they’re often wrong — just like the longs. To hold Chanos out as the sole arbiter of Musk’s success or failure is too small a sample to be considered persuasive in any manner.

A Buying Opportunity

Like I said in the beginning, TSLA stock has lost all of its gains from 2018; it started the year at $311, reaching a high of $373.73 as recently as June 18, but now has dipped below $300 as I write this.

In May, I asked InvestorPlace readers whether TSLA stock was headed to $400 or $200. At the time it was trading around $300.

I argued that it was headed to $400 by the end of the year given the progress it has made on its Model 3 weekly production — it’s now up to 5,000 per week from 2,000 per week — but that was a day or two before the infamous conference call where Musk called analyst questions “boneheaded” and then invited YouTube sensation Galileo Russell to ask some questions.

Suffice to say, TSLA stock is a volatile one. Calling analysts derogatory names hurt it in the short term, but before long it was climbing to $370.

Unfortunately, when you’re as widely followed by investors as Musk is, every negative story has an effect on its share price. It’s possible Callahan’s will too.

Long-term, Tesla consistently producing 5,000 Model 3’s a week will answer Elon Musk’s critics, even naive ones like Maureen O’Callahan. 

Under $300, TSLA stock is a buy.

As of this writing Will Ashworth did not hold a position in any of the aforementioned securities.


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Article printed from InvestorPlace Media, https://investorplace.com/2018/07/is-tesla-stock-an-opportunity-right-now/.

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