For those wondering what the term “future-hype” represents, here’s a description I’ve used in prior articles. To wit:
“What this term means is what I describe as the now near comical press releases, CEO jawboning, or anything similar that takes place right before earnings (usually a week or so, give or take) either from “The Valley” or tech space in general.
Usually what you’ll read, see, or hear (and echoed jubilantly by some next-in-rotation fund manager) is some grandiose announcement of some super-duper, sounds really awesome, coming attraction that has the potential to not only change everything, but also, to fill investor coffers with riches beyond the imagination.
All one needs to do, as to engage and embrace in this vision, is to use their own imagination, then buy into the “dream” with real legal tender, literally. Because, without those investor dollars continuing to pour in? The “dream” as they say – will be lost. Along with any earlier proceeds. Rinse, repeat.”
Did we see any of the above before, during, or after this latest earnings reporting? Hint: Is water wet?
As has been the usual case, Tesla™ CEO, Elon Musk appears to set both the bar, as well as the precision timing of future aspirations than almost anyone else in recent memory.
To be clear, I’m a big fan of Mr. Musk in both his audacity for setting goals, as well as his tenacity in trying to make reach them. What I’m speaking directly to here is the actual reality for day-to-day operations in acquiring those visions in the real world, where real money (as in investors) is at stake.
Production schedules, quality concerns, and more need to be articulated clearly and truthfully. That’s a CEO’s primary responsibility in a public company where true market forces are at play. But by my eye, Mr. Musk seems to be still playing the game of QE charged grandeur.
Problem now is – future grander is falling on the deaf ears of reality. All the “market” seems to want to hear now is, “Where’s my money?”
This seemed to cause the aforementioned “future-hype” to be rolled out in spades the moment Mr. Musk seemed to grasp that maybe, just maybe, the stock price of Tesla wasn’t as bulletproof as he taken for granted in the past .
What was rolled out in near tandem with his sudden realization one may ask? Better production schedules? Better manufacturing techniques? You know – car related provisions, the part that Tesla is currently having many an issue with in fulfilling prior goals or commitments. Not to mention a now joint investigation via the NHTSA and NTSB into recent crashes causing fatalities announced just days prior. So what did?
Here’s what I deem as another clear example of future-hype in real-time. To wit:
“First Boring Company tunnel under LA almost done! Pending final regulatory approvals, we will be offering free rides to the public in a few months.
Super huge thanks to everyone that helped with this project. Strong support from public, elected officials & regulators is critical to success.
As mentioned in prior posts, once fully operational (demo system rides will be free), the system will always give priority to pods for pedestrians & cyclists for less than the cost of a bus ticket”
As always, the devil’s in the details, if you look for them. Can you see what I’m alluding to? Hint: “almost” and “pending.”
Where have you heard that before? Oh right, anything Tesla, the car company, related.
The true issue here is not Elon’s posting of what could very well be a great achievement for the future. But what’s surprisingly tone-deaf is that this type of “future-hype” is for a game past its sell-by-date. And Elon seems to be the one having a hard time interpreting it.
This worked when there was ever the abundance of “free-money” provided via the Fed’s QE (quantitative easing.) However, in an environment where money is now being destroyed (as in the Fed’s now reversal known as QT, quantitative tightening) the image draws many an investors mind directly to the realization that maybe Mr. Musk has spread himself way too thin between projects. And, what can only be worse, is the immediate realization that their investment dollars are now drilling the proverbial “rat-hole” to shovel more and more of it into oblivion, possibly (maybe probably) never to be seen again.
Again, this worked like clockwork during QE. But now since we’ve entered QT? The reactive vault of pushing the stock price back into “black-sky” territory seems more arduous than launching another Space X™ rocket.
Tesla’s stock price has increasingly drifted back towards Earth falling some 25% respectively. And the reappearance of “future-hype” styled releases has done basically nothing more than get a few weak handed shorts to cover.
Tesla stock price is hovering back just above its 2015/16 highs after dipping below it, before this earnings report. Dipping back below those highs (for what ever the reason) is not where a company, supposedly, that should be hitting its stride should be.
Combined with the above one can clearly see how the “future-hype” game has changed much to the chagrin of many who still think it matters in a period of QT, as opposed to QE. Hint: It now has the little, to no effect, except for some knee-jerk reactions by headline reading HFT bots.
Tesla is not the only one, for there are others. Yet, none has been more obvious, in my opinion, than what currently took place in tandem within the crypto-currency space.
Over the last few weeks it’s been hard to peruse the web and not see some headline that Bitcoin™ is going to be worth gazzilions. However, the difference this time, is that this seems to now only be coming from a few of the most prominent players. e.g, John McAfee, Tim Draper, or Tom Lee.
What hasn’t re-materialized (at least as of yet by my experiences) is the torrent of “bitcoin retirement gurus,” or “millionaire in 30 days” type strategies that used to fill my feeds. Yet that’s not the only thing that’s changed…
In a previous article I made the following insinuation in respect to Bitcoin’s recent vault from a 6 handle back toward $10K. To wit:
Most are “bandwagon jumpers.” Although, the vast majority (yes, most) will argue fervently that they are not.
As many know one of my favorite dictum’s is, “Beware when everyone’s on the bandwagon – except the band.”
I posited the above, because in another, more recent article, I posed that the recent “pop” in pricing may be nothing more than another version of “future-hype,” only of the crypto-kind.
So what transpired after the venue I reasoned for the hype ended? Hint: Fell, once again, nearly 20% in mere days. e.g., from nearly $10K to nearly $8K.
Guess what also fell? Expectations for 2018. Let me show you how, “future-hype” changes in the face of hard reality.
Remember Mr. Lee’s fervent call across any media that would provide airtime? (am I the only one that’s noticed that “airtime” has been reduced dramatically to only if/when the price suddenly pops up?) for Bitcoin to reach 25K in 2018?
Well, now that it’s been trading back with an $8K handle (and looks to want to go lower, in my opinion) it seems there’s been a slight change in the “future-hype” target range. And here is when I just had to laugh-out-loud.
Maybe you’re thinking he scaled back a bit? Sorry, but no, because it was here that even Mr. Musk would surly concede, “Well done, well done.”
Via the INQUISITR™ May, 11, 2018: “Bitcoin Price Plunges As Fundstrat’s Tom Lee Sets $64,000 Price Target For 2019”
Meanwhile, Fundstrat co-founder Tom Lee has set a whopping $36,000 bitcoin price target for the end of 2019 and said it could clear $64,000 during the year.
“We believe the current path of hash power growth supports a BTC price of about $36,000 by 2019 year end, with a $20,000-$64,000 range,” Sam Doctor, head of data science research at Fundstrat, wrote in an internal report.
And just like that, when your initial call seems in jeopardy, disregard any scaling back of any prior proclamations which could appear susceptible to any negative press. Then: Just double, if not triple the original price call – along with doubling the time frame. Bam! Problem solved. Rinse, repeat.
In other words, don’t worry if $25K isn’t hit within the next 7 months – It’s going to be worth double that in ’19!
You can’t make this stuff up folks. That’s “future-hype” crypto-style.
The issue I still see facing all crypto’s as they are currently formed and priced, is the same as I stated previously, on multiple occasions, and it is this: Any hype, of any nature, that allows for a sudden “pop,” will more than likely than be seen, as well as taken, by early “investors” as an opportunity to turn those imaginative “bits” into hard, in your hand cash, at every opportunity. Not the other way around. i.e., late to the party bandwagoneers piling in.
Has there been any evidence of this to support my claim? I’ll let you be the judge. Again, to wit:
April 17, 2018 via ZeroHedge™: “Bitcoin Tumbles After Mystery “Whale” Dumps $50 Million In One Trade”
In a “market” now trying to come to grips with precisely what QT vs QE means for any future-hype type scenarios that will work in this new monetary environment, I’ll only suggest the following. The only announcement of future-anything that will get this “markets” attention where “investors” will immediately direct their coffers towards – is a future-hyped-reality of preordained, massive, stock repurchase or buyback programs. That’s about it.
Future-hype regarding future product line or innovation? Who cares! Just show us the buyback schedule, all else is just filler.
Is there any evidence to support that thesis you may be asking? Fair question, but as always, I’ll let you decide, yet you don’t need to look long or hard for clues.
Just see Apple™ and Facebook™ announcements, along with stock-price reaction – for clues.
© 2018 Mark St.Cyr