If we’re wrong about Tesla, then what about Daimler?
Monday, 25 June 2018
By Sam Volkering
- Our love/hate relationship
- Profit as the price goes down
- If not Tesla, then perhaps Daimler?
On Friday we were talking to you about the Medici effect — the intersection of two seemingly unrelated ideas to create immense innovation.
We explained that Ryan Dinse thinks he’s found the latest intersection that could be the start of something truly world-changing.
Well, over the weekend Ryan gave us a little more insight into his vision. Most importantly, he let us know that he’s got a special report he’s ready to release to investors tomorrow.
Here’s what he sent us:
‘So I said I’d have a little more for you about this collision of blockchain technology with the biotech industry that I’ve uncovered.
‘Think about this…
‘Forget everything you think you know about cryptocurrencies. At their heart they’re simply a story about data. And how our ability to use it will be revolutionised over the coming years. It’s my opinion — and I lay it out clearly in tomorrow’s research paper — that blockchain technology is about to change the very nature of biotech research.
‘It will be the bridge that brings the power of AI, machine learning and big data to important biotech projects. Especially in relation to the amazing field of genomics. And in turn turbo-charge the speed of — literally — life changing discoveries. That has huge implications on how you value biotech stocks.
‘But not only that, more importantly it has huge implications for the future evolutionary path of humanity!
‘Yep, I know that sounds like a big claim, but read the report and make your own mind up. If I’m right, it could be the chance to stake a small piece of speculative capital into a few early stage stocks and then simply follow perhaps the most interesting and important story of our generation.
We’ll be reading his report. And if we know Ryan as well as we think, it’ll be one of the most fascinating insights into blockchain tech we’ll read this year. We suggest you do the same and check out his report.
Overnight the Dow Jones Industrial Average closed 119.19 points up, or 0.49%.
The S&P 500 rose 5.12 points, or 0.19%.
In Europe the Euro Stoxx 50 index finished up 38.09 points, or 1.12%. Meanwhile, the FTSE 100 gained 1.67%, and Germany’s DAX climbed 67.81 points, or 0.54%.
In Asian markets, Japan’s Nikkei 225 is down 109.02 points, or 0.48%. China’s CSI 300 is down 0.30%.
In Australia, the S&P/ASX 200 is down 17.30 points, or 0.28%.
On the commodities markets, West Texas Intermediate crude oil is US$68.28 per barrel. Brent crude is US$75.53 per barrel.
Gold is trading for US$ 1,268.00 (AU$ 1,709.13) per troy ounce. Silver is US$ 16.45 (AU$ 22.18) per troy ounce.
One bitcoin is worth $6146.61 US.
The Aussie dollar is worth 74.16 US cents.
There are car companies and then there are car companies
Now while we can see opportunity all around us, we’re also experienced investors. And we know that not everything goes up, always and forever. There are peaks, troughs, bubbles, crashes and everything in between.
Sometimes this all happens at once. Sometimes it happens on a smaller scale to individual sectors, industries or even just single stocks.
But we know for certain there are always stocks that fall in price.
We’ve had a five-and-a-half-year love/hate relationship with Tesla Inc [NASDAQ:TSLA]. It’s one of those stocks we’ve expected for a long time to fall in price — and fall hard.
But we’ve been wrong.
However, in the last five and a half years our view on the company has not changed. It’s been the same since the early days when they struggled to make cars.
They fail to meet targets. They fail to generate profits. They continue to amass debt at extraordinary levels. CEO Elon Musk continues to deliver bad news to the market, wrapped in wonderful PR spin.
The reason it’s been a long five-and-a-half years is because we’ve consistently been wrong about Tesla’s share price. Amidst all indications that Tesla is wildly overvalued, its stock kept on heading higher.
For years we’ve said that Tesla continues to be one of the most overpriced stocks on the NASDAQ. Tesla currently has a market cap of around US$56 billion.
Our view is that Tesla’s stock price should be close to Ferrari [NYSE:RACE] at US$26 billion. Instead, Tesla is bigger than Ford [NYSE:F] (US$46 billion).
But year-after-year we’ve been wrong about Tesla. Well, maybe not wrong in our analysis. But definitely wrong about the market’s appetite for the stock, and definitely wrong about the ‘cult-like’ following of Tesla investors and owners.
The ‘following’ is far stronger than the fundamentals.
We’ve said repeatedly; Tesla is perhaps the best stock to ‘short’ in the world.
And we’ve been wrong.
But maybe we’re starting to be right.
However, it’s one thing to talk about shorting a stock. It’s something else to actually do it.
And for most investors, even seasoned pros, shorting is still a foreign language to them.
But it can be immensely profitable if you know how to do it properly.
So, let us ask you a simple question. Do you know how to short a stock?
If the answer is no, then there’s good news ahead.
Someone profits from a 54% fall
Back to Tesla’s problems.
The world is expecting that the company will roll out hundreds of thousands of Model 3’s this year. Well, that’s not going to happen. It was supposed to happen months ago. But as usual, the company missed their production targets.
But we expected them to miss their production targets. They missed them with the Model S. Then they missed them again with the flop (yes, it’s a flop) Model X. Now they’re missing them with the Model 3.
They will miss them with the Tesla Truck. They will miss them with the proposed Model Y. And they will miss them with the revamped Roadster. This is a company that continues to fail to deliver.
And yet the stock heads higher. In our view, this is the most polished turd on the NASDAQ. But perhaps the shine is wearing off. You see, for the last year Tesla’s stock has moved up and down like a rollercoaster.
And based on the rolling year, it’s actually worth less than it was this time last year! Finally, people are coming around to the reality of Tesla. And even in the last week the stock has gone from a high of over US$370 to close at just over US$333 on Friday.
This makes it look tasty for ‘shorters’. And if we’re right and it settles on a valuation nearer to Ferrari, that could see Tesla’s stock trade at around US$153 — 54% lower than its Friday close.
Now imagine what you could if you were able to profit from a stock free fall like that?
Being able to ‘short’ a stock is one of the most powerful things you can do as an investor. But again, most people I talk to simply don’t know how.
And that’s exactly why publisher Kris Sayce is putting on a FREE investor education series starting today. It’s called the, ‘How to Make Money from Shares That Go Down Masterclass’.
Kris is going to show people how to make money from falling stock prices. It’s that simple. But it’s also important that we made the masterclass free.
We always educate investors on how to make money from rising stocks. But how much attention is given to falling stocks? Not enough. Again, we can’t emphasise the importance of this masterclass enough.
It will make you a far better all-round investor. Learning how to profit in falling markets is a skill every investor should have, and we think every single Port Phillip Publishing subscriber should tune in.
Picture the headlines:
‘Tesla falls for the fourth consecutive week.’
‘Musk ousted as Tesla stock free falls into the abyss.’
Then picture your portfolio as you make money on the ride down.
Even real car companies can fall
Of course, we could still be wrong about Tesla. The cult may continue to push the stock higher and higher.
But the best thing about learning how to profit from falling stocks is you can apply it to any stock.
Take for instance Daimler AG [DE:DAI]. Another global car company, Daimler sold 3.3 million units (cars, trucks, buses, vans, etc.). And Daimler makes a profit — 10.3 billion euros.
But last week Daimler sent out a profit warning. They say it’s because of ‘US-China trade tensions’. Whatever the real reason, the fact is they expect to sell less cars this year. Mercedes-Benz cars in China, in particular.
Their profit warning is clear — they simply won’t make as much this year. This kind of thing spooks investors. And it sends stock prices plummeting.
They released the news on 20 June (a Wednesday) before the release the stock was trading at 60.64 Euro. By Friday the stock had fallen to a 52-week low of 56.96.
To make things worse, in January Daimler was trading at over 76 euros. From January to close on Friday, Daimler has seen around 25% of its stock price wiped away.
Again, if you knew how to properly short Daimler, you could have been sitting on a tidy five-month profit as the stock decreased in priced.
But did you? Someone did. Someone is.
Investors who know how to short stocks are profiting from the likes of Daimler as they fall in value.
Why isn’t it you?
We think that there are immense opportunities in markets all over the world. But we also know there are plenty of stocks that fall in value. We think there are plenty more that are overvalued and should be worth far less (see: Tesla).
And we think that every smart investor should learn how to short stocks. You know how to make money when stocks rise. So how powerful will it be if you can do it when they fall too?
To learn how, just register for Kris’ masterclass, ‘How to Make Money from Shares That Go Down Masterclass’ which kicks off today.