Do Tesla Investors Have Stockholm Syndrome?

16.03.2017 • Investing

By Kris Sayce – Port Phillip Insider (Australia) –

Some days, we just don’t get the markets.

Take this, from the Financial Times:

‘Tesla turned to Wall Street for another $1bn cash injection on Wednesday as it sought a bigger financial cushion for the planned launch of its mass-market Model 3 this summer.

‘Elon Musk, chief executive of the US electric carmaker, signalled last month that the company’s ambitious plans would push its finances “close to the edge”, and indicated he was thinking of raising more money.’

We don’t know about you, but, if a company we’re invested in says that its finances are ‘close to the edge’, we’d get the heck out of there.

Yet Tesla Inc. [NASDAQ:TSLA] appears to be lapping it up. In after-hours trading, the stock was up more than 2%.

It seems to us that we may have the financial-market equivalent of the ‘Stockholm Syndrome’. Perhaps investors in Tesla have become hostages, and now feel sympathy with the company — in the face of what seem to be severe financial problems.

Or maybe it’s an extension of the saying: ‘When you can’t pay a $1 million debt, you have a problem. When you can’t pay a $100 million debt, the bank has a problem.’

Maybe investors are willing to tip in more cash, not because they’re bullish on the stock, but because they fear the whole enterprise could go ‘bottom over elbow’ if they don’t.

But, whatever the reason, and despite the rising share price, it still strikes us that, with over 6,000 stocks on the US market, there must be (there has to be) better investment propositions for your hard-earned money than Tesla.

As we’ve noted before, Tesla is a one-man PR machine, and little else. We think we’ll start calling it ‘DeLorean Mk II’.

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