Barron's: Tesla Is A 'Lemon' Without A Cheaper Battery

Tesla's stock was down 2.5% to below $99.33 in the first minutes of trading today. This is well off its closing high of $110.33.

This comes after Bill Alpert at Barron's wrote that Tesla's Model S "owes its better-than-200-mile range to batteries costing tens of thousands of dollars."

Tesla needs to drastically cut battery costs by 2016 when it plans to launch a car that is more affordable. "If Tesla's next-generation car can't go the distance at half the price, its stock will head much lower," Alpert wrote.

The sub-head of the summed up Alpert's stance. "Tesla's electric car offers a quiet, powerful ride. But unless it comes up with a cheaper, stronger battery, the stock could turn out to be a lemon.

 From Barron's:
"Stubbornly costly batteries may even cause headaches when today's Tesla's luxury cars arrive on the used-car lot. Folks who buy $90,000 cars tend to replace them every few years, and the bid for a four-year-old Model S may prove disappointing if it's going to need an expensive new battery in a few more years. Musk has astutely met that concern with a financing option guaranteeing resale value, but that just shifts the risk to shareholders.

"As a result, Tesla's balance sheet will sprout a contingent liability for the "residual value" of those cars, and analysts worry that the amount will quickly rise to hundreds of millions of dollars -- on the order of half of the company's book value. The deferred impact of all those used batteries will become clearer in coming years, after Tesla also starts running low on the government-legislated zero-emission-vehicle credits that offset $68 million in expenses in the March 2013 quarter."

Alpert also says time will tell us how much "sustained demand" there is for the car. "No one yet knows what portion of Tesla's initial buyers were "early adopters," unrepresentative of ongoing demand," he wrote.

Tesla's CEO Elon Musk terminated the interview with Barron's after a few questions on battery cost reductions.

Please share this article

Infoblox Inc (NYSE: BLOX)

Infoblox Inc. develops, markets, and sells automated network control solutions worldwide. Its appliance-based solution combines real-time IP address management with the automation of network control, and network change and configuration management processes in physical and virtual appliances. The company offers Trinzic Enterprise, an appliance designed to ensure the continuous operation of network control; Trinzic IPAM for Microsoft, which provides a Web-based management interface for the centralized management of DNS, DHCP, and multiple IP address pools running on Microsoft servers; and Trinzic IPAM Insight that allows automated discovery of network device configuration information used in automation and compliance reporting. It also provides Trinzic NetMRI product, which automates network change and configuration management processes; Trinzic Network Automation that automates network configuration functions. The company also provides maintenance and support, consulting, and training services. It serves end customers of various industries, including financial services, government, healthcare, manufacturing, retail, technology, and telecommunications.
To review Infoblox's stock, please take a look at the 1-year chart of BLOX (Infoblox, Inc.) below with my added notations:
BLOX has been working its way slowly higher since bottoming at $14 in November. In September and May the stock hit $24 as resistance (navy), which was also a 52-week high resistance. After the stock finally pushed above that resistance at the end of last month, BLOX has tested the $24 level as support once already, just as one might expect.
The Tale of the Tape: BLOX broke out to a new 52-week high and has now pulled back. A long trade could be made at $24 with a stop placed below that level. A break below $24 would negate the forecast for a continued move higher.
Please share this article

Big Move Coming in Crude Oil?

The tight consolidation continues for Crude Oil prices. In our view, this narrowing range is setting up for a potentially explosive move. The direction, however, is still to be decided. When looking at the chart, a breakout of resistance should lead to higher prices, while the behavior patterns of crude oil historically leave the door open to a vicious rollover. It’s just the way crude oil behaves. It’s out there trying to punish the most amount of traders possible.
Think about it, we’re hearing less and less people these days discussing crude oil prices. Why? Because it’s been a sloppy mess for years. Both the bulls and the bears have lost money in this thing. And no one likes discussing their losers, that’s no fun. Let’s talk about Tesla or S&Ps. Crude Oil? Nah
But this frustration by both sides of the trade sets up for a big move. And I think it should happen pretty soon. We’re watching this resistance from the down trendline in Oil from last Fall’s highs. If that gets taken out, I think we could potentially see 110 within a short period of time. To me that’s probably the higher likelihood based on the amount of times that prices have bumped up against this level. But we still need to keep an open mind and tight stops on any purchases. A reversal in oil takes this back into the 70s.

I think the levels are pretty clear. This narrow range won’t last forever. I’d expect a big move out of this soon.

Please share this article

Gold, Trust, And The Federal Reserve – The Video Documentary

From the inside of the Federal Reserve’s gold vault (where we are told one quarter of the world’s bullion resides) to NYC’s diamond district and the gold-dealers on the streets, this NatGeo documentary is a fascinating walk through the reality of trust, money, and gold. As the narrator notes, “the Fed’s discretion is so trusted that few depositors have ever asked to see if their gold is still here,” except of course Germany now that is, adding (from the exact opposite perspective to the man that runs the building) that, “for thousands of years people used gold as money… it’s the perfect recyclable money….” The must-watch video then progresses to the reality of our financial world where he explains, the trillions in money that is transacted every day “used to be backed gold, but is now supported by the promise of our government… The fact that it all works based on trust alone is simply taken for granted,” leaving the ominous question of “who is in charge” of that ‘trust’? Cue Ben Bernanke – who answers the question of what the world would look like without a Fed… bank runs, stock market crashes, and financial chaos.

Please share this article

Dollar Collapse In 10 Months - Economic Outlook

Please share this article

Food ETFs In Focus On Deal Wave

While many staples companies have been hard hit in the latest round of sector rotation, firms engaged in the production or distribution of food have held up better than most. These haven’t been as bid up as many of their consumer product counterparts, and more importantly, the space has seen a wave of M&A (mergers and acquisitions) activity take place as well.

In particular, Shauanghui of China announced a takeover of America’s leading pork producer Smithfield (SFD - Analyst Report). This $7 billion offer led to SFD shares jumping over 30%, pushing the stock to multi-year highs in the process.

Meanwhile, rumors of a similar takeover helped to boost Pilgrim’s Pride (PPC - Snapshot Report) in recent trading sessions too. In fact, in one day, the stock rose by over 20%, thanks in part to rumors, but also a sharp increase in price targets by an analyst as well. (more)

Please share this article