Why the Tesla Bull Run is Fake News

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Tesla joins the S&P index and Elon Musk is worth 167 $Billion, but not all is right with the world.

Tesla’s 800% plus gains in 2020 (counting since the March lows) have been totally unrealistic. It has a history of being a volatile stock and as it joins the S&P, its downfall in 2021 will mean a decline of the entire stock market.

So why is that?

It’s because the the NASDAQ + Tesla is overweight. Or namely the BigTech rally of 2020 has been concentrated in too few companies. Tesla’s volatility could up end a lot of the astounding growth we’ve seen.

However with low interest rates and central banks printing money, a negative economic outlook is nearly correlating with a stock market bubble boom. With over 10 million Americans facing evictions and food shortages, American Capitalism protects the money, sorry but not the people.

Elemental Catalysts on the Horizon for Stockmarket Crash in 2021

With the U.S. dollar widely expected to retreat 15% in the next three months and Covid-19 cases to spike during the same period, Tesla’s stock has a 70% risk of tanking in the next 6 months.

Keep in mind what we are talking about:

Tesla has gone from $85 to $695 since the March 2020 lows. Remember this is even more dramatic when you consider Tesla’s stock split of August 31, 2020. Tesla performed a 5-for-1 (5:1) forward split, which means that for every 1 share of Tesla you owned, you received 4 additional shares.

• Tesla is barely even profitable with significant product issues (quality) and production issues (supply-chain).
• Competition in the EV sector will accelerate in the 2020s with various EV startups and automobile companies pivoting to EVs that will give Tesla far from unlimited time to be the first mover in the space.
• Tesla is a historically volatile stock so a reckoning will come for it, sooner or later.
• This is because Tesla’s stock isn’t based on fundamentals. It’s based on sentiment and speculation. It is a story stock, namely, THE story stock of the 2020 stock market bubble.

While a second stimulus and Covid-19 vaccine news might seem like incredible headlines, Tesla joining the S&P is actually dangerous for the stock market.

Tesla at $700 isn’t rational, it’s preposterous. The electric car company’s impending inclusion in the S&P 500 is doing wonders for its share price and its founder’s compensation package, but it could be the main catalyst for the stock market being vulnerable to a correction sometime in the February, March and April period of 2021.

Elon Musk better buy Bitcoin and sell stocks.

The NASDAQ is Top Heavy

Tesla has joined the S&P 500 as of the market’s close on Friday, Dec. 18. The electric car maker will be the most valuable company to ever be added to the widely followed index, and it will likely land as the sixth-largest company. Six BigTech companies now make up 50% of the NASDAQ, so if any one of them has a tumble, it will impact the entire stock market. These companies that are overweight are:

• Tesla
• Apple
• Microsoft
• Amazon
• Alphabet
• Facebook

Given the multiple lawsuits against Alphabet, the EV competition ramping up against Tesla and a second great lockdown for an extended period at the start of 2021, there could be some serious risks for investors. Tesla losing ground is the most likely scenario.

The gains BigTech made in 2020 just aren’t sustainable and are seriously skewing all the cap-weighted indexes. It’s a pretty serious problem for a stock market propped up by printing money and Fed stimulus-led low interest rates.

Tesla’s market cap is now $658 Billion, which isn’t sustainable. The bull run of Tesla in 2020 is the biggest lie of the U.S. economy perhaps in the history of investing. This is because it’s not tethered to reality or basic fundamentals of how companies work in the long term.

Tesla's the mystic baby stock of the bubble not seen since Cisco or Yahoo in the dot.com bubble. Sadly Elon is not actually a magician.

Tesla is building new factories in Germany and Texas as part of its global expansion. It’s basically over-expanding for the level of competition it’s going to face in the coming years from the likes of Nissan, Volkswagen, BMW, GM, Xpeng, Rivian, Nio and dozens of other companies.

While it’s cool to be bullish on Tesla in 2020, not all hype is good hype for a growing industry. Time and time again we have learned that in new industries the front runner (“first mover”) does not have a good fate. Unfortunately for Elon Musk, Tesla has a lot of supply chain and quality problems.

The Chart is King

Tesla is only out of negative operating income in 2019, it’s not a mature company in just an emerging field. It is not a sure bet to have a sizeable market share position in years to come. For its stock to go up 700% in any normal year without the Fed bailing out the stock market simply would not have happened.

The conclusion of the Last Futurist is therefore that Tesla’s stock will depreciate significantly and this could impact the entire stock market in either 2021 or 2022. It could coincide with other major catalysts of which there are plenty on the immediate horizon.

Of the Big-6 companies that are overweight on the stock market in 2021, only Microsoft and Amazon are considered safe. Tesla and Apple are both potentially volatile in the coming years, while Alphabet and Facebook can be considered neutral. While there are some great technology companies that went up in a valid way in 2020, Tesla is not one of them.

Tesla will have in 2021 and 2022:

• A fading edge in battery technology and manufacturing.
• Steepening competition in China and America.
• Continued inability to match incumbents’ scale and quality.
• Disrupted production due to Covid-19’s second great lockdown.
• Elon Musk’s somewhat unpredictable show boating and ill-fated promising behavior.
• An overly bullish market run in 2020 that gives an unrealistic picture of the company’s future prospects.

This together isn’t rocket science, it’s just common sense. Tesla will be the catalyst of the stock market’s ill fortune and it could happen sooner than you think.

To have a wild ride like Tesla has seen in 2020 is not always good for the fundamentals of a company. In fact, it’s very very bad. Tesla is the stock of the year in 2020, but that won’t be a crowning achievement of this company, given what’s ahead.

What could possibly go wrong with an automobile stock pretending to be a Tech stock that had an 817% rally during a pandemic?

It's not hard to make a prediction when the bubble is the best innovation America could come up with during the pandemic.

Postscript

It's a bit amusing that the Fed has made Elon Musk filthy rich by an unlimited stimulus approach and a central bank printing money + buying bonds approach to stimulus.

Tesla? It's not as good as it seems, not by a long shot.

The market is always right in the end, but like a propaganda of American Capitalism, Tesla being worth $600 billion is a kind of greedy insanity that can only be called "fake news" in an era of stock manipulation like this bull market.

If Tesla (and Apple) were one of the main beneficiaries of an inflated bubble, their slide will spell the trigger of the next "correction". It's as inevitable as the bad volatile chart that Tesla's history demonstrates.

On the stockmarket, the chart is always king. Tesla masquerading as a tech company is fake news. Tesla joins the S&P on December 21st, 2020, tomorrow. Good luck to all investors, real and fake.