It seems that everyone wants to be famous these days, but fame isn’t everything. This point can easily be made when we consider the famous CEOs and chairmen who are regularly featured in the news. These people love the idea of being famous, and popularity appears to make them prosperous. That’s because popularity is a reward for becoming an inventor and taking risks in the business world. Some examples are the late Steve Jobs of Apple, Jack Ma of Alibaba and Richard Branson of Virgin.
The truth is that even the men listed above have had detractors, and a fair amount of criticism and negativity have been thrown in their direction. Apple’s investors and board of directors were so displeased by Steve Jobs’ vision that they removed him from the company, and he was the founder!
These famous people who are running companies worth millions of dollars can expect to be vigorously watched and have someone shine a light on all of their mistakes. If the company is publicly traded, these famous individuals have to address the criticism very carefully because their actions can cause their companies’ stocks to plummet.
A perfect contemporary example is CEO Elon Musk of Tesla.
In the past several months the financial press has paid a lot of attention to the things that Elon Musk has said and done. Every time he made a misstep and every time he said something strange, it was illuminated in print and on TV. Tesla’s stockholders were extremely unhappy about this.
The stockholders are beginning to believe that being famous has gone to Mr. Musk’s head. They don’t know whether or not he can be trusted to lead the company in a profitable direction. They may even be thinking of selling their stocks.
Paul Mampilly is the author of the newsletter “Profits Unlimited.” In this newsletter, he teaches people how to trade whether they are beginners or more advanced. He advises his readers to purchase stocks in the Internet of Things, the millennial generation and precision medicine. His newsletter had a readership of more than 130,000 subscribers in 2016.
Paul Mampilly landed on Wall Street in 1991, and by 2006, he was being recruited by Kinetics Asset Management to manage the company’s hedge fund. The $6 billion firm became a $25 billion firm under Paul’s watch, and Barron’s named the fund as one of the “World’s Best” hedge funds for averaging 26 percent annual returns.
Paul also distinguished himself as a financial expert when he was invited to take part in the Templeton Foundation’s investment competition. He started this contest with $50 million, and in only one year, he had turned $50 million into $88 million. The most impressive thing about this is the fact that Paul did this in 2008 and 2009 when the country was experiencing a financial crisis.
Paul Mampilly has been featured on several television stations, including Fox News, Reuters, Hedge Fund Intelligence, Kiplingers, Bloomberg TV, Fox Business News and CNBC. He obtained his Master of Business Administration from Fordham University in 1996. After spending several years on Wall Street, Paul decided to branch out on his own.
Paul now believes that backing Elon Musk after his meltdown began was a mistake, but it is a different story now.
In May, Tesla’s stock started to lose value. People were beginning to ask Elon Musk about the company’s profitability. They were also asking about Model 3 deliveries. Rather than answer the questions, he exploded on an earnings conference call with analysts. Although he was making a good point against these sell-side analysts, he didn’t do it as well as he could have. That was just the first time that Elon Musk has handled a situation badly. He also did the following:
- Musk made defamatory comments about the British rescue diver who saved 12 boys and their coach from a Thailand cave. He is the subject of a libel lawsuit as a result.
- He decided to smoke pot on a podcast while he talked about Tesla and other business ventures.
- He announced that he would take control of the water situation in Flint, Michigan, but he hasn’t done anything to fix it so far.
- He sent out a tweet in which he stated that he had the funding to take Tesla private, but Tesla is currently under investigation by the Securities and Exchange Commission.
All four of these gaffes have two things in common. One is the fact that Elon Musk didn’t have to do them. The other is the fact that they didn’t have anything to do with Tesla.
Elon Musk isn’t dealing well with fame, and he isn’t handling criticism in the best manner either. At the same time, Tesla is at the top of several leading markets. The company is finding new ways to store affordable energy and solar power, and investors seem to be forgetting about that. The company is also the leader of electric automobiles.
According to Baird, “Gigafactory 1 creates a significant barrier for competition, and manufacturing capability should be a competitive advantage for TSLA over the long term. We believe that TSLA’s Gigafactory enables the company to drive down costs through an industrialization of battery pack assembly and economies of scale.”
Bernstein also stated, “We think the setup in sentiment looks relatively favorable for the next few weeks. We now see the near-term risk-reward for Tesla as relatively skewed to the upside, given the potential for the stock to revert toward the middle of its $270 to $370 range.”
In addition to that, third-quarter production figures are about to be released, and this will be a key moment for Tesla’s investors.
Elon Musk has stated that Tesla’s third quarter is going to prove to be very profitable, but Paul Mampilly says that you shouldn’t pay any attention to Elon Musk. Instead, pay attention to the figures that will be released.
During the third quarter, Tesla planned to build 50,000 to 55,000 Model 3 units, but they have scheduled deliveries for more than that. In addition to that, Tesla expects deliveries for the Model S and Model X to be between 73,000 and 83,000 units in the second half of the year.
If Tesla does manage to reach the above mentioned limits, it will demonstrate that Elon Musk’s unbelievable promises and controversial image are not causing the company to suffer any negative consequences.
Paul Mampilly believes that there isn’t any reason for investors to run from Tesla stock because it will, most likely, produce acceptable production figures.
It must be noted that TSLA stock was high when Elon Musk was not in the news. This means that the reason that the stock went down recently is because of investor sentiment. It didn’t really have anything to do with the company. When we think of it this way, TSLA stock appears to be offering investors an excellent opportunity to buy.
Today, TSLA stock is making a move up, and the 14-day Relative Strength Index is demonstrating the fact that people are starting to buy. Even so, Paul Mampilly still warns his readers about the risk of purchasing TSLA stock. If Elon Musk continues on as he has been, the stock is likely to take a beating. Also, if the production figures that will be announced later this month are light, this could also affect the stock negatively.
If you are willing to take the chance, TSLA would be a good product for you because it has growth potential. If the level of risk is too much for you, it would be better to wait until after the production figures have been released and the stock reclaims price support at $300 before you buy.
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