Monday, August 20, 2018

Tesla Tumbles After JPM Releases Scathing Report On Chatotic Management

Beleagured Tesla CEO Elon Musk may be about to suffer another public meltdown on Twitter after
bankers JP Morgan issued a note that acknowledged what it seems that everybody already knew: Contrary to Musk's statement at the beginning of last week that he had secured funding to take Tesla private, the money has not, in fact, been secured. To add insult to injury, J.P. Morgan lowered its price target on Tesla stock by about 30% to $195.

After Friday's plunge in Tesla shares following the publication of a bizarre interview in the NYT with CEO Elon Musk which revealed the state of his emotional breakdown, Tesla shares are down another 6% this morning, trading in the $280's in the market. An extract from the statement reads:
We are reverting to valuing Tesla shares on the basis of fundamentals alone, which entails a $113 reduction in our price target back to the $195 level where it stood prior to our August 8 note in which we newly weighted 50% in our valuation analysis a go-private scenario for which funding was at that time said to have been secured to take the company private at $420 per share.
JPM had commented in a somewhat mealy mouthed style that "As surprising to us as these developments are, and as lacking as the statements are in any details regarding whom is expected to provide the required amount of financing and on what terms, they are nevertheless declarative statements from the CEO of a public company which we feel should be considered seriously. Either funding is secured or it is not secured, and Tesla’s CEO says funding is secured.” The bank added that “Our price target could move up or down based upon further developments affecting the likelihood the transaction will or will not go through.”
Fast forward to today, when for at least one bank, the going private deal is now dead.

Subsequent events have obviously led JPM to believe that funding was not secured for a going private transaction, nor was there any formal proposal, it was just Musk failing to put his brain in gear before being let loose on Twitter.

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