An e-zine that keeps you informed on the hottest trends on Wall Street, provides you with the key information to make you filthy rich (*your results may vary)
by Joseph Hargett | May 18, 2022
Great Ones, can you smell what Elon Musk is cooking?
Oooh, that smell?
Can’t you smell that smell? The smell that surrounds Tesla (Nasdaq: TSLA)?
Twitter buyouts and Tesla cars, SEC, you’re in the way. There’s too much dope and too much smoke. Look what’s going on with Tesla.
Oooh, that smell!
Tesla shareholders, the angel of darkness might not be upon you … yet. But you can sure see it from here. Elon Musk has a Twitter (NYSE: TWTR) needle in his arm…
OK, now you’ve lost me. Care to clarify, please?
Yeah, I’m not sure where the Lynyrd Skynyrd lyrics came from either. Let me explain…
Y’all know that Elon Musk, CEO of Tesla and several other companies, is buying Twitter for $54.20 per share, or about $44 billion total.
One of the reasons Musk gave for buying Twitter was defeating the spam bots. He even tweeted as much on April 21 right after submitting his bid:
If our twitter bid succeeds, we will defeat the spam bots or die trying!
Furthermore, on April 25 Musk and Twitter issued a joint press release wherein the duo said they would work together in “defeating the spam bots.”
This week, however, Elon Musk declared that his Twitter deal was on hold due to — you guessed it — spam bots.
Oooh, that smell!
Exactly. Musk is using the reason he wanted to buy Twitter in the first place as his reason now for putting the deal on hold. Something smells really fishy here. I think I know what it is, and it’s not Elon’s poop emoji tweet…
As I’ve stated in these pages before, I don’t believe Elon wants to buy Twitter anymore. Or if he does, he doesn’t want to pay $54.20 per share anymore, which is why he’s making a stink over the bots he claimed to want to defeat in the first place.
By the way, if you’re thinking Musk has a case against Twitter, since bots probably make up more than just 5% of the company’s user base … Musk waived his right to due diligence in the buyout. So, basically he agreed to buy Twitter “as is.”
And according to law firm Moses & Singer partner Howard Fischer:
TWTR stock is trading about 31% below Musk’s bid, and now he’s having buyer’s remorse. This is likely compounded by the fact that, after looking more closely at the situation, Musk has realized that his utopian dream of a true free-speech social media platform isn’t possible.
In the U.S., this dream might be possible. Maybe. But in the rest of the world? Definitely not. And that would either make Musk a hypocrite or lose him a crap ton of money when he’s forced to pull out of the EU.
I guarantee you: Musk wants nothing to do with either of those outcomes. His ego won’t allow it.
Furthermore, Musk didn’t really understand Twitter’s economics to begin with. Some of Twitter’s censorship was done at the behest of advertisers … you know, Twitter’s real customers?
Now, we can argue on these points ‘till we’re blue in the face. But ultimately all of these excuses and speculations are beside the point.
And what is that point, Mr. Great Stuff?
We’re getting there. There’s just one more piece of the puzzle to put in place.
To finance this deal, Elon Musk put up his own TSLA stock as collateral. He’s already sold about 9.6 million shares, or $8.5 billion, presumably to help finance his Twitter acquisition.
And if you’re wondering why Musk didn’t go the traditional route of financing his Twitter purchase through major banking institutions … it’s because they didn’t see enough cash flow at Twitter to justify the purchase price.
In other words, Elon Musk is on the hook for everything about this deal … personally.
That means Musk would have to pay a $1 billion break-up fee if he backs out. What’s more, according to the deal Musk signed going into the buyout, he could be on the hook for any fallout at Twitter if the deal doesn’t go through:
That’s a lot of money Musk is potentially on the hook for. And where, Great Ones, does Musk’s money come from?
That’s right: Tesla stock.
Tesla is sitting on a potential Elon Musk time bomb, and TSLA investors know it. TSLA stock is down more than 30% since the Twitter deal was announced.
Yes, I know part of that is due to the current market meltdown. Part … but not all.
If Elon Musk is forced to sell more TSLA stock to either finance the Twitter purchase or to finance a legal battle over the purchase … that means even more selling for TSLA stock.
And that doesn’t even take into account that if TSLA stock falls 40% from the time Musk financed his Twitter bid, payment on the $12.5 billion loan to buy the company comes due immediately.
Did I mention that TSLA is already down more than 30% since the deal was announced?
Ooh, that smell!
Now, they call Elon Musk Prince Charming. But his tweets are full of ‘ludes. He says he’ll be all right come tomorrow. But tomorrow might not be here for you…
As for TSLA shareholders … if you can weather this storm, I think the shares will come back eventually. But, personally? I’m not touching TSLA stock with a ten-foot pole until this Twitter mess is over and done with.
Maybe then I’ll be able to buy TSLA stock at a massive discount.
But the Musk man’s madness isn’t the only thing going on in the Tesla-sphere: A former Tesla employee released a brand-new innovation promising to make every EV out there instantly obsolete. Some call this man “Employee No. 7.” Even the “Godfather of the EV Revolution.”
He created the first working Tesla battery. Now he’s about to change everything again.
As you’ve probably already guessed by Target’s (NYSE: TGT) plummeting share price, the retailer’s earnings report was way off the mark this quarter as inflation continued to eat into the company’s profits.
Analysts aimed for earnings of $3.07 per share on revenue of $24.49 billion, but the big red bull’s-eye failed to meet its target. While it brought in more money than expected this quarter — $25.17 billion, to be exact — Target’s profit margins fell from year-ago figures.
Similar to Walmart (NYSE: WMT), Target cited cost pressure, higher inventory and shipping delays that railroaded returns. But let’s not forget that when inflation concerns first started to circulate, Target also promised to eat the cost of higher inventory prices instead of passing them on to customers.
With TGT stock falling 24% today, one has to wonder whether Target regrets sticking to its “nice guy” stance … and for how long that cost absorption might continue.
Netflix’s (Nasdaq: NFLX) noose looks like it’s beginning to tighten, as news just broke that the company’s laying off another 150 employees in its bid to recover … erm, restructure … from falling subscriptions and revenue growth.
What’s worse, Netflix is apparently forcing the employees it has left to work on projects they may have personal reservations about because it believes in “[letting] viewers decide what’s appropriate for them, versus having Netflix censor specific artists or voices.”
That’s … umm … not how you keep your remaining employees around, Netflix. And all this because of a little password sharing… Geesh.
Just when I thought I’d heard every corporate excuse in the book regarding falling revenue, Lowe’s (NYSE: LOW) starts lamenting an unseasonably cool springtime as the reason for its declining sales … among, well, other things.
Personally, I like spending time outdoors — not to mention doing grueling DIY projects — when the weather’s a bit nippy. But according to Lowe’s, people have put off buying grills, patio furniture and gardening supplies they would’ve usually purchased this quarter because … well, it’s been cold.
Right. This has absolutely nothing to do with necessary frugality now that the price of literally everything is increasing. No, it’s absolutely, unequivocally the weather — which I’m sure also caused LOW’s 6% decline today.
Blustery Power Bills Got You Pinching Pennies?
That arctic inflationary wind isn’t just ripping Lowe’s apart — it’s also causing pain among everyday Americans struggling to pay rising energy bills.
But here’s the good news: A historic breakthrough Paul calls “iPower” is cutting power bills down 50%, 80%, even down to nothing …and you can access it all from any app on your phone.
The best part? This disruption is presenting investors with a bigger market opportunity than Uber, Airbnb and Amazon — combined. And you can start investing in the leader of this market today for as little as $10.
There she goes again, Great Ones… Tech company Tencent (OTC: TCEHY) is racing toward rock bottom as its video game business struggles to shirk a year-long Chinese regulatory crackdown amidst “privacy concerns” in the Middle Kingdom.
Tencent posted its worst quarter in nearly two decades, with net earnings falling 51% from a year earlier to 23.41 billion yuan. But honestly, what do you expect with gaming time for youths — Tencent’s core audience — getting whittled down to just a few hours a week?
That, plus steep advertising cuts — another key business segment — killed Tencent’s bottom line this quarter and sent its stock careening 5% lower.
Ah, it must be Wednesday, my Great Ones. Time for a new poll that’s totally not going to be Twitter-related, right?
Uh oh. Something’s wrong here, I can feel it.
Surprise: We’re talking Tesla. Still.
While the market is worrying about the social media buyout that shall not be named affecting the billionaire who shall not be named … I, for one, worry about you Great Ones. Specifically, all y’all Tesla investors.
So the question is … are you still holding Tesla stock while Twitter’s a-flutter? Or is the Twitter uncertainty causing you to reconsider Tesla?
Click below and let me know:
Looking for last week’s poll? You’re looking in the right place.
This time last Wednesday, crypto was top of mind — whether you’re a coin hoarder, a stablecoin hodler or simply stick with the exchanges. So we asked: What’s your favorite flavor of crypto?
By and large, more than half of you’re deep into the ethereal Ethereum waters, with 53% of the votes. Y’all can probably guess what’s in second place with 30% … Bitcoin.
Oh yeah … and there’s one sole Great One out there holding down the stablecoin fort. James S., is that you? Man, I hope not. Good luck, whomever you are, and I hope it wasn’t Terra…
Closer to Great Stuff Picks investors’ hearts are crypto exchanges like Coinbase (Nasdaq: COIN), coming in at 15%. Besides, everyone’s gotta buy their bitcoin and Ethereum somewhere, right?
As always, if you’d like to sound off on the week’s hot topics, write to us for Friday Feedback! GreatStuffToday@BanyanHill.com is where you can reach us best. You can also keep up with the action Greatness:
Until next time, stay Great!
Editor, Great Stuff