Bill Poulos, Founder of Profits Run, Reveals His Stance on Tesla's Future

WIXOM, Mich., Oct. 25, 2018 /PRNewswire-PRWeb/ -- Bill Poulos, Co-Founder and President of Profits Run Inc., announced his outlook for Tesla after Elon Musk steps down as chairman of the board. There are not many companies that have CEOs whose names are so closely tied to the companies they are running. Recently, Musk has received controversial press for interviews and tweets, causing much concern for Tesla's investors. One tweet in particular led to charges brought by the SEC, leading to Musk's removal as chairman of the board. Bill Poulos shared, "First, Musk received much criticism from investors about his interview on Joe Rogan's show where Musk was smoking marijuana. While legal in the state of California, it led to questions about his wisdom in doing so as the CEO of a major corporation. When this happened on September 6th, 2018, the company's stock closed at $280.95, the next morning the price opened at $260.26, a drop of more than $20. Something that seemed like a small thing at the time caused investors to question what might happen in the future."

The Profits Run President continued, "Second, on September 29, 2018, the SEC (Securities and Exchange Commission) settled the fraud charges they brought against him the week prior. The SEC brought a complaint against him when he tweeted back on August 7, 2018 that he would be able to take Tesla private at $420 per share, which was significantly higher than the opening price of $343.84 on the morning of the tweet. The SEC felt that Elon Musk knew about the uncertainty of the potential transaction and that it had not been properly disclosed prior to the tweet. Because of what he said, it caused the price of Tesla to jump more than 6% and led to a disruption in the markets."

Poulos went on to explain, "In the settlement, Musk agreed to step down as the chairman of the board as well as pay $20 million dollars in penalties. In addition, Tesla will appoint two new independent directors to the board, establish a committee of independent directors to oversee Musk's communications, plus Tesla will pay an additional $20 million dollars in penalties. So, with all this 'excitement' surrounding Tesla and Musk recently, what does it mean for the company? Will Tesla be able to recover, or will we see prices drop even more as a result? This could be an opportunity to purchase Tesla at a lower price, or it could be time to short Tesla as it continues to move down. Time will tell, but for now we need to look at what the price is telling us."

Poulos revealed, "Tesla hit a high of $389.61 back on September 18, 2017 and once again moved close to that ($387.46) the day Elon Musk released his Tweet. Since then, price has been unstable and gapping up and down as news of what was going to happen with the SEC was released. On October 8th, 2018 (2 months after the Tweet) the price of Tesla closed at $249.00. This means price dropped about 35% in those 2 months. So, does this mean it's time to buy Tesla? Well, there are analyst who are looking at the current price range as buying opportunities, but, if you are looking to buy, make sure you are watching what the price is actually doing. Buying as price is dropping is usually not the best idea. While Tesla looks tempting at this price level, you will want to see some price confirmation before getting too aggressive in buying."

Poulos shared, "The third thing we need to mention is the issue they are currently going through with the amount of debt they are trying to repay. During the next 6 months, Tesla is going to be paying about $1 billion back to their creditors. While this is not a problem for a company that has the cash, for Tesla, this is an issue because they don't have it. They will need to find a way to raise this money in order to stay current with their payments. In addition to this short-term debt issue, Tesla still has $11 billion in longer term debt that they will need to pay back. We know companies have debt, the problem is we have yet to see Tesla turn a profit. With no profit and big debt there could be some issues coming up down the road."

Bill Poulos continued, "Currently we see that Tesla looks to be sitting near an area of support, and as of October 16, 2018 is beginning to show a bounce higher and currently trading at $271.20. Just keep an eye on these recent lows in case we get more news which could push prices back down below these areas of support. A break of the current price level could push prices down into the low $200's or even lower. On the other hand, if positive news emerges, this area would be a reasonable place to see prices bounce up off of and move higher."

In conclusion, Poulos added, "Elon Musk is the heart of Tesla and his commitment and desire to see it succeed is very strong. In addition to the technical aspect of Tesla, we will want to see what happens in the future with earnings and profitability. Up to this point, there has just been talk about when Tesla will be profitable, which we haven't seen quite yet. When they do turn a profit, that is when we could really see another strong rally up. Until then, use caution and make sure you use the appropriate amount of risk, looking to enter as price confirms the move higher."

Bill Poulos is the president and co-founder of Profits Run. He is a retired automotive executive, philanthropist, and author. Poulos is a regular contributor on Investing. He is passionate about helping kids and hopes to inspire them to lead successful lives. Bill Poulos and Profits Run created the Profits Run Starfish Award to recognize people who work hard to make a difference in their community. Poulos has a bachelor's in engineering and a Master of Business Administration, with a major in finance. Poulos lives with his wife in Michigan. They have been married for 48 years and have three grown sons.

About Profits Run, Inc.

Bill Poulos founded Profits Run, Inc. with his son Greg Poulos. Traders often say, "Cut your losses and let your profits run." This popular saying is where Profits Run's name derives from. The company's mission is to educate people on simpler ways to invest while properly managing risk.

SOURCE Profits Run, Inc.