Piper Jaffray stock analyst, Alexander Potter, in what may be the most idiotic stock research report I’ve ever read, issued a buy recommendation on Tesla (TSLA) stock that is completely devoid of any rational arguments or coherent thought: ‘before investors can follow our advice and buy TSLA shares, they need to employ a ‘creative’ valuation methodology…’ Anyone who suspends disbelief and reads that report is more dumb for having done so.
Creative valuation methodology? I had to read that 3 times before I could believe that he put that in the conclusion of his report. That sounds like something used in conducting human investment analysis tests on stock analysts who have taken LSD. The CIA might be interested in experiments like that.
While issuing his bullish assessment, Potter at the same time reduced his FY 2017 earnings estimate from $0.42/share to a loss of $4.83. I shocked that this analyst was forecasting positive net income at all. But a reduction in an earnings forecast of that magnitude would seem just too embarrassing to report. Maybe Potter was indeed experimenting with LSD when he was thinking about his investment thesis.
As it is, TSLA uses ‘creative’ accounting methodologies in recognizing ‘revenues’ that would make Amazon’s Jeff Bezos blush with embarrassment. The Company burned over $1.5 billion in cash in 2016 in its business operations. This was covered by the most permissive credit and equity markets in U. S. history, which handed over a net $2.7 billion to the Company in 2016.
This post was published at Investment Research Dynamics on April 10, 2017.
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