EV maker Tesla (TSLA) is no stranger to seeking the spotlight. Particularly not its CEO, Elon Musk, who has tried various outrageous schemes to garner attention.
From smoking marijuana in public to marketing a line of flamethrowers, there are few things that seem off limits for Musk. The latest maneuver called for Musk to goad McDonald’s (MCD) into accepting a line of cryptocurrency for its food.
McDonald’s response, meanwhile, was nearly as bizarre as Musk’s sally. I remain bearish on Tesla and bullish on McDonald’s, mostly because these publicity stunts are likely just that and not likely to impact either company significantly.
Tesla’s year in share prices so far suggests a possible reason why Musk is poking the bear that is McDonald’s. Tesla shares kicked off the last 12 months with a pronounced decline, dropping from just over $864 to $563 in about five weeks.
Subsequently, a recovery began in March, and held through most of April. May saw another slip before starting a gradual recovery that brought the company back around its February levels by mid-October.
A huge run-up followed, with some equally substantial slips following Musk’s rapid sell-off of stock. Now, the company is back to where it was just before Halloween.
The latest issue will leave some scratching their heads. First, Musk engaged in some promotional efforts for Dogecoin. Musk took to Twitter (TWTR) to declare that he would consume an entire McDonald’s Happy Meal on television if McDonald’s agreed to accept Dogecoin for its food.
Not out of line, given Musk’s history of supporting the cryptocurrency. McDonald’s, however, responded with perhaps the strangest measure it could. It allowed that it would be willing to accept Dogecoin, on one condition. Tesla would be obliged to, in return, accept a cryptocurrency of its own known as “Grimacecoin.”
There is, as of this writing, no such thing as Grimacecoin. However, McDonald’s did have a graphic prepared as to what it might look like, and posted as much in a tweet screencapped below.
Wall Street’s Take
Turning to Wall Street, Tesla has a Moderate Buy consensus rating. That’s based on 15 Buys, eight Holds, and seven Sells assigned in the past three months. The average Tesla price target of $1,074.69 implies 11.8% upside potential.
Analyst price targets range from a low of $295 per share to a high of $1,580 per share.
Can a Revived P.T. Barnum Help Tesla?
CEOs have engaged in stunts before to give their businesses extra visibility. Sir Richard Branson was well known for such behavior for years.
Branson once attempted to circumnavigate the globe in a hot-air balloon. Several “Dilbert” strips reflect such behavior. It’s not so much that Musk tried to draw attention to himself and Tesla.
Rather, it’s that McDonald’s took the ball and ran with it. It also managed to run off with the spotlight in response by publicly boosting a crypto of its own that doesn’t actually exist. Well, sort of.
The cryptocurrency market promptly smelled opportunity with the exchange. Nearly 10 different “Grimacecoins” were created on the Binance Smart Chain as a result.
The fictitious coin’s value shot up over 285,000% as a result. One Grimacecoin entrant started trading at $0.0007 per coin, hitting up to $2, before settling in at $0.60. Given that Dogecoin has been trying to break the $1 mark for years now, that’s quite a feat.
The stunt likely did not have the impact Musk had hoped for. Here, it seems that Grimacecoin won the day, with McDonald’s coming in a close second.
Musk’s planned stunt to eat greasy food targeted toward children in exchange for a major corporate player accepting a cryptocurrency barely registered. Meanwhile, Tesla’s dividend history remains nonexistent, which puts even more pressure on the company as a whole.
Concluding Views
Musk’s penchant for publicity stunts is widely known. It also seems to be losing its impact. That’s not a good sign.
The company’s fundamentals are still somewhat shaky, and competitors are entering the market with alarming rapidity. Tesla’s car sales were looking bright when it was the only major operation in the field, but how long can it hold out against the likes of Ford (F), Nio (NIO), and a host of others?
It’s likely going to take more than digs at McDonald’s to get Tesla back in fighting trim as a major player in the electric car market. Given the sheer number of headwinds involved and a market where Musk’s primary measure to draw interest is waning, I remain bearish on Tesla.
I also figure that potential gains for Grimacecoin are likely already baked in, even if McDonald’s never actually releases one. If McDonald’s starts accepting Grimacecoin — when and if it ever exists — that could change, however. If Burger King takes it, then it’s off to the races.
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