Tesla Inc. (Nasdaq: TSLA) is in trouble and could really use its own Lt. Daniel Kaffee right now.
Investment firm Wedbush analyst Dan Ives just issued a “code red” on the electric vehicle (EV) maker, citing a host of concerns. We were going to ask Wedbush for an interview, but we have deadlines to keep. If we had gotten one, though, it might have gone like this:
Great Stuff: “Did you issue the ‘code red’?”
Wedbush: “You want answers?”
Great Stuff: “We want the truth!”
Wedbush: “You can’t handle the truth! Son, we live in a world that has roads, and those roads need to be driven on by men with cars. Who’s gonna build them? You? You, Great Stuff? I have a greater responsibility than you can possibly fathom.
You weep for Tesla’s stock price and you curse our analysis. You have that luxury. You have the luxury of not knowing what I know: that Tesla’s falling stock, while tragic, probably saved investment dollars.
We use words like ‘demand,’ ‘growth prospects,’ ‘cost-cutting measures.’ We use these words as the backbone of a life spent making investors money. You use them as a punchline.”
Great Stuff: “Well, that’s … umm … kind of our job…”
Wedbush cut its price target to $230 per share, citing growth prospects and a companywide push to cut costs — not something you would expect to see from a company pushing heavily for growth.
Additionally, Tesla is pushing into nonrelated industries and products like insurance and “other sci-fi projects.” Cash flow is a real concern now for Tesla investors.
Still, the company has excellent long-term prospects given the EV market. While I don’t advise trying to catch the proverbial falling knife here, long-term investors might want to average down their TSLA holdings once the price stabilizes and hits bottom.
The Good, the Bad and the Ugly
The Good: A Sprint to T Finish Line
We’re in the last mile of the $26.5 billion T-Mobile US Inc. (Nasdaq: TMUS) and Sprint Corp. (NYSE: S) merger. The finish line is in sight! In the last mile, U.S. Federal Communications Commission (FCC) Chairman Ajit Pai was seen handing out water bottles and encouraging the duo to keep going. Pai announced this morning that he would recommend approval of the merger, but only if certain assets were sold and rural services guaranteed.
So, the deal is a go … at least as far as the FCC is concerned. The Department of Justice has yet to officially weigh in. The combined company is sure to have considerable leverage in the wireless market. If you’re looking for a ground-floor entry on T-Mobile/Sprint, start preparing your moves now.
The Bad: A Game of Thirst
Speaking of water bottles … HBO’s Game of Thrones had another faux pas this weekend. During a key scene, water bottles can be seen by the actors’ feet. Hydration is important, but this is the second such incident.
Remember the coffee cup?
Many viewers are now extremely fed up. One viewer even went nuclear in an online message board: “That’s it! I’m never watching this show again!”
While viewers are incensed, investors clearly favor actor hydration. Shares in HBO parent AT&T Inc. (NYSE: T) rose more than 2% today (likely due to the Sprint/T-Mobile news).
The Ugly: The Tech Cold War
It’s Trump’s way, not the Huawei. A slew of U.S. tech companies have begun to cut ties with Chinese technology giant Huawei Technologies, including Google, Xilinx, Intel, Qualcomm and Broadcom. All have decided to cut ties with Huawei following President Donald Trump’s decree that the company be added to the “Entity List.”
For investors, the impact is clear: Stay away from semiconductor stocks for now. (What? There’s not always a funny takeaway. This one is serious.)
Great Stuff’s Monday Chart of the Day
The Boss called it. Way back in 1992, Bruce Springsteen crooned: “There were 57 channels and nothin’ on.” Apparently, though, it took another 20 years or so for consumers to be fed up enough to act.
In the first quarter of 2019, paid TV subscribers fell by more than one million. The biggest loser was AT&T, shedding 544,000 subscribers in U-verse and DirecTV — just wait till it hears about the water bottle.
In 2018, some 3.2 million people cut the cord. As you can see from the chart, it’s getting worse for the industry. What’s most concerning, however, is the rise in “cord nevers.” It’s clear that traditional paid TV is dying and that online streaming is the future, especially for investors.
Craft Cannabis Is Happening … at the Indy 500, No Less
CBD is coming to Indy. A leading producer of CBD products just struck a landmark deal with the Indy 500 to sponsor a race team — the first of its kindin a major professional sport.
Craft 1861, a New Mexico-based CBD products maker, signed on as a sponsor for the Carlin race team. Carlin’s cars will sport the Craft 1861 logo during one of the biggest and most prestigious races in the U.S.
No, we aren’t talking about stoned IndyCar drivers … though that would be rather amusing, albeit dangerous. We’re talking about cannabidiol, a hemp extract that reportedly has a myriad of health benefits, including dealing with pain, anxiety, cognition and more.
Let’s make this clear: CBD is not pot. You’re not going to get high off CBD. It’s nonpsychoactive, meaning that it does not alter its user’s state of consciousness.
So, make all the pot jokes you want … like IndyCar drivers creeping along at 20 miles an hour, only to surge to 200 miles an hour when they finally stop laughing about their funny helmets and the shifters being on the wheel.
The bottom line is that there’s money to be made here. CBD is a $1.65 billion industry, after all.
If you want to ease the pain the market has put on your portfolio recently, Banyan Hill guru Anthony Planas has a plan for you. Check out his video below:
Until next time, good trading!