New article from John Petersen today:
The shorts are back in scramble mode!
Talk amongst yourselves...
I haven't heard of his "blue sky to book ratio" before. Can someone with an accounting background explain what he's trying to do here (other than obviously trying to bring down the stock price):
"In its letter to stockholders, Tesla reported cash, working capital and stockholders equity that were all clustered in the $5.25 to $6.25 per share range. When I compare the hard financial statement values with yesterday's closing price of $153.50, I can't avoid the conclusion that the current stock price is 4% substance and 96% blue sky."
I don't read John Peterson articles anymore, and very little on seeking alpha is any better. Pretty much ignore them...
Thanks to all the shorts covering this week, I doubled my options play in a few days... Now I have free car payments for 18 months!
Thank you sir, may I have another?
Basically what he is trying to prove is, how much of the stock price is real assets the company actually has (inventory, machines, cash, property etc.) and how much of it is just future expectations on how much this company might be worth at one point.
In blue chip companies ("old" companies that are really save and steady investments, but rarely perform over 8-10% growth) this ratio is normally skewed towards actual assets the company has. In startups it's very often exactly the other way around, as most of their valuation relies on future success that might not come (see Groupon in the last two years). This equals higher risk, but often also higher rewards, as seen here: http://finance.yahoo.com/echarts?s=TSLA+Interactive#symbol=TSLA;range=2y
Tesla in my opinion is somewhere in between a startup and a "known to be reliable for many many years" company.
The problem with his analysis in my opinion is the fact that he fails to include ALL tangible assets, like inventory, properties (NUMMI) and many others. I wouldn't know what the actual ratio would be, as I haven't made an analysis, just the same as he didn't really do an analysis, but it would be way more favorable for Tesla.
Hope that helps.
I liked his line about how he had been quite accurate.
If I had taken his advice 18 months ago, id be broke. As it is, ive received enough in returns to have paid for my loaded 60 twice over.
I read his articles, and anticipate the opposite.
It's difficult to turn gambling into a science, maybe people shouldn't try.