Musk Might Be “Entering Endgame” Due To Excessive Leverage, CNBC’s Dan Nathan Says
If there’s one prediction that set social media ablaze late last week, it was ARK Invest’s newest $2,000 per share price target for Tesla, which manager Cathie Wood and her team released late in the week.
Responding to the target along with numerous skeptics on Twitter, CNBC’s Dan Nathan, who was permanently banned from Twitter for playing an April Fool’s joke on Elon Musk earlier this month, had some choice words for Tesla late last week on his show, Fast Money.
On Thursday, Nathan offered up a scathing analysis of Elon Musk’s empire after the company posted earnings that disappointed Wall Street earlier in the week. Musk referred to Nathan as a “doofus” back in January 2023.
Nathan’s main concerns – highlighted by Mediaite – were about Musk taking on too much debt and what the consequences could be if Tesla’s stock price continued to slide lower. The stock finished the week down more than 10%, but still about 60% higher than lows it plumbed in late 2022.
“I actually think it’s going probably break 100, which is where I was in January, and my price target is 69 to the downside. That might seem a little aggressive on 4/20 on a day that it was just Elon day here,” Nathan said. He then called into question the economics of Musk spreading himself thin between his three companies:
We know that he had been selling Tesla shares all year last year to fund his purchase of Twitter. We know that SpaceX has been for sale. He’s been looking to raise capital that way. You know, if this stock were to continue to go lower, if they are pushing out a manned trip to the moon, and that’s what the whole idea of this rocket launch was today on Twitter, they just marked down from $44 billion to $20 billion, got $13 billion.
This is not a generally very liquid person. He used to be able to get whatever lines that he wanted to, but now he’s got all these banks on the hook for this debt that he can’t service based on Twitter’s businesses. So to me, he might be entering the endgame here a little bit for being the CEO of all of these companies and being that levered.
And now when you look at this stock right here, it’s broken. The fundamentals have shifted. Not a single analyst on the street downgraded the stock. Okay. There’s plenty of price target downgrades.
They will be downgrading the stock lower. I’m just telling you that people over the next 3 to 6 months or so and that’s when you have a situation where, you know, who knows if he’s going to be in control of this company in the not so distant future, because it doesn’t seem like the “Elon aura” is playing out right now, the three biggest companies.
“I think there’s a demand issue and I think there’s a competition issue in China. And I think that if you’re looking at the prices of an average price point of $45,000 for your car and you’ve just seen margins go from 25% last year down to 19% and likely going lower,” he told his co-hosts.
“They have a big fundamental problem that I didn’t hear a single analyst talk about this, there’s this guy, Gary Black, and he was on Max’s, he was on Last Call last night. He’s like the biggest bull ever on Twitter. He’s always talking about Tesla. He’s seen to have turned on this story. He’s lowering his estimates. So earnings estimates are coming down. Margin estimates are coming down, Delivery estimates are coming down, backlogs coming down and inventory inventories going up. Does that sound like a good fundamental situation for you?”
“I don’t have something against Elon, I just don’t trust him,” Nathan had said in a January 2023 discussion about Tesla and Musk.
You can watch the full 5 minute clip of Nathan’s rant on Mediaite here.
Mon, 04/24/2023 – 02:45