Why Tesla Stock Is Dangerous…

Transcript: Why Tesla Stock is Dangerous

I’m sure everyone has heard about Tesla wanting to be taken private now, at least according to the CEO Elon Musk.

And so, I want to give you a couple words around that situation. So, the title of this video today was that, “Tesla is Dangerous.” Let me contextualize that before we get any crazy hate mails about this.

I actually think Tesla is a decent long-term company. So, for long-term holders in the stock here, and if you’re willing to play the game whether this company gets taken private or not and just kind of stick it out, this may not be important. But what I have seen, a lot of people and a lot of discussions that we’re seeing people having finding this current situation which has tremendous amount of uncertainty be something that they want to speculate on in the near term.

I can tell you there’s so much uncertainty around this whether there’s even any funding at all for this deal. I would expect there is some considering the fact that they tweeted about it, or the CEO did. But there’s so much speculation and so much volatility here that from a swing trading perspective, meaning a few days to maybe a few weeks, I think you are going to have a very difficult time psychologically of holding onto this, unless you literally just want to do a coin flip, but that’s not really trading.

That is just pure gambling. Right?

There’s a lot of uncertainty around a company like this getting funding… period, a company that’s not even profitable. If they were to get funded for this and basically convert equity into debt, all of a sudden then they’re picking to pay like six and a half, seven percent on that as opposed dividend-free stock. So it doesn’t make a lot of sense.

Again, that’s not to say that there’s not a buyer who’s willing to fund this. It’s entirely possible. But I think that’s exactly the point, it’s just extremely volatile. So you can see shares of Tesla here always volatile but the volatility, at least on a day or day basis, has been added quite a bit. And so, a lot of the news flow is either happening in the afternoon sessions or after the close.

So anyway, the point is here, I don’t want to make this too long a thing. I just think the stock from a swing trading perspective … Again, a few days to a few weeks, is really, really difficult at this point, at this juncture. I don’t think it’s worth making a bet in here. Again long term investors, that’s a different situation. But I kind of wanted to just let you know about that.

So, I hope this is helpful folks. Again, I would suggest one stays away from Tesla, even from a swing trading perspective, for the time being. And, see you guys next time.