Scum and Scummer. Let’s take a look at Goldman Sachs (GS) and Tesla (TSLA) (May 18, 2016)
You’ve head of that movie, Dumb and Dumber? In this video we’re going to be doing Scummy and Scummier and I’ll let you figure out who’s Scummy and who’s Scummier; that would be featuring Tesla ( NASDAQ:TSLA ) and Goldman Sachs ( NYSE:GS ), this is why: Tesla ( NASDAQ:TSLA ) reports, after hours, that they’re doing like a 2 billion dollar secondary offering. Elon Musk is selling a bunch of shares. But of course the company says, “But he’s actually net buyer because the shares he is SELLING are actually being used to raise TAXES that he owes on the money that he’s made on selling OTHER shares.” Of course those other shares were bought with BORROWED money from Morgan Stanley ( NYSE:MS ) and Goldman Sachs ( NYSE:GS ). Wow! What a coincidence. Anyway, so Tesla ( NASDAQ:TSLA ), just a couple weeks ago, I remember reading that Goldman Sachs ( NYSE:GS ) said, “We’re not going to need to do any secondary offering. Our production is so smooth, we’re going to be making all these cars, it’s just going to be huge. It’s going to be fantastic.”
Well that didn’t work out too well. And frankly a lot of people on CNBC, some of the commentators there, were kind of scratching their heads saying, “I don’t know how they can avoid making a secondary offering or selling some bonds or something, because they need cash and they’ve got a lot of debt already.” I don’t even know why I’m going into that. To be honest with you, I’m just kind of mad because I think it’s criminal. So after hours they announced this. Initially the stock went down quite a bit, we’re looking at this after hours, then it’s back. And who the heck knows where it’s going to go tomorrow. When you think about it, forget about what Musk says, because now he’s qualified himself as somebody that you really can’t believe what he’s going to say. But irrespective of all of that, because the market kind of already anticipated that they were going to raise, don’t be surprised to see this stock move higher. Just saying. For me, I’m short the stock and I’ll tell you this, if the stock starts moving higher I’ll cover that short and get out, because I don’t want Tesla ( NASDAQ:TSLA ) to take my money on more than one occasion.
I wanted to point this out because this seems to be the way Wall Street works. They don’t even try to hide it anymore. So this morning Goldman Sachs ( NYSE:GS ) upgrades the stock, though it might have been last night after the close, I don’t remember. But the news hit the tape this morning. Goldman ( NYSE:GS ) upgraded the stock, 250.00 price target, I think. So we look here. Here’s where the stock closed and then it opens up here. So it gets a nice 2 percent ramp, basically on the news that Goldman ( NYSE:GS ) thinks the stock is going higher. And after all they’re Goldman Sachs ( NYSE:GS ) so they have to know everything, right? So then it turns out that Goldman Sachs ( NYSE:GS ), which is the other stock here, they’re a lead underwriter, along with Morgan Stanley ( NYSE:MS ) on this deal.
Happily and proudly I’ve never worked on Wall Street, but I can smell the stench. In this case Goldman ( NYSE:GS ) jacks up their estimates, upgrades the stock. Of course their clients, the big guys, the big clients, they know this is coming. Because they talk to guys on the trading desk and this is what guys on the trading desk do, sell into these lemmings that are buying on our upgrade. So they unload and then at the end of the day it’s reported that the other side of the Chinese wall, the investment banking side, is getting a big chunk here. So this really does smell a lot. With that said, frankly, I’m looking at Goldman Sachs ( NYSE:GS ), the stock, not the fine folks that are actually working there. But this is a stock that is up and down along with the financial sector, a lot of chipping around here. But essentially higher lows and higher highs. If you want to get in on that secondary offering with Goldman Sachs ( NYSE:GS ) and make some money, you can buy the stock here and just keep a stop right underneath $155.00 and that will work for you. As far as Tesla ( NASDAQ:TSLA ), I don’t know what to tell you to do on that. I’m just holding my nose and I’m probably not going to say much about this stock anymore.
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