Tesla Stock: Bankruptcy Threat is No Laughing Matter

Posted On April 2, 2018 3:14 pm

Tesla (TSLA) is the midst of its worst week, for both its stock price, and reputation, yet founder Elon Musk seems to think it’s a laughing matter, as he sent a series of April Fools’ tweets joking about the company filing for bankruptcy. Needless to say, investors concerned about the health of Tesla stock are unlikely to have been reassured by this.

The tweets culminated with an image of him passed out against a Model 3.

The callousness of Musk’s tweets is likely to exacerbate his company’s problems. I doubt the shareholders that have watched Tesla stock drop over $100 or some 28% in the three weeks are happy. And I also doubt owners who have experienced repeated mechanical problems from bad software to leaking sunroofs are laughing.

Nor are those 123,000 owners of the Model S which were recalled for faulty steering. Maybe Musk also thought it was funny to issue the recall on Friday, when the market was closed for a three-day weekend.

I know the family of the man who died in from an accident while his Tesla was engaged in autopilot isn’t in a joking mood.

Still, through all this, Tesla stock is still up some 500 percent from its 2013 levels, and sports a market cap near $50 billion. That’s larger than two of the Big 3 U.S. automakers, despite Tesla’s paltry production numbers.

 Related: Is a 2018 Recession Coming? Here’s What You Should Know. 


About author

Steve Smith

Steve Smith have been involved in all facets of the investment industry in a variety of roles ranging from speculator, educator, manager and advisor. This has taken him from the trading floors of Chicago to hedge funds on Wall Street to the world online. From 1987 to 1996, he served as a market maker at the Chicago Board of Options Exchange (CBOE) and Chicago Board of Trade (CBOT). From 1997 to 2007, he was a Senior Columnist and Managing Editor for TheStreet.com, handling their Option Alert and Short Report newsletters. The Option Alert was awarded the MIN “best business newsletter” in 2006. From 2009 to 2013, Smith was a Senior Columnist and Managing Editor for Minyanville’s OptionSmith newsletter, as well as a Risk Manager Consultant for New Vernon Capital LLC. Smith acted as an advisor to build models and option strategies to reduce portfolio exposure and enhance returns for the four main funds. Since 2015, he has worked for Adam Mesh Trading Group. There, he has managed Options360 and Earning 360, been co-leader of Option Academy, and contributed to The Option Specialist website.