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Business Insider
4 hours ago
- Business Insider
‘Too Many Red Flags,' Says Top Investor About Tesla Stock
Tesla (NASDAQ:TSLA) stock has faced a rough ride in 2025, with shares sliding sharply before staging a recovery in recent months – yet still leaving investors down about 15% year-to-date. At the heart of this downturn is a slowdown in EV sales, pressured by intensifying competition – particularly from Chinese rivals – and a tarnished brand image fueled by CEO Elon Musk's constant forays into politics. Elevate Your Investing Strategy: Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. The sales trend has been moving in the wrong direction for some time: Q2 2025 marked the second straight year-over-year decline, and even the ever-optimistic Musk conceded that the company could be in for a 'rough' couple of quarters. While that's a sobering admission, Tesla's future isn't devoid of promise. The company is working on multiple ambitious fronts, from full self-driving technology to autonomous robots and AI initiatives. But whether Tesla is actually on the right track to capture those opportunities is a point of contention. One top investor known by the pseudonym Noah's Arc Capital Management is worried that Tesla is not positioning itself to take full advantage of these vast opportunities. 'Tesla's growth momentum has faltered, and this downturn was more than just a blip,' explains the 5-star investor, who is among the top 2% of TipRanks' stock pros. It is not just the slowing EV numbers that have Noah's Arc up in arms, but a lack of discipline that the company seems to be demonstrating. The investor is anxious to see Tesla focus more on full self-driving, believing this to be the big money maker going forward. Instead, Noah's Arc is dismayed that Musk is chasing political sideshows and marginal business ventures (such as the Tesla Diner). 'His attention is divided among so many different endeavors, and Tesla is only getting a small share of that,' adds Noah's Arc. That's never an ideal scenario, but it becomes even more damaging when the company's full self-driving ambitions remain far behind Alphabet's Waymo. And yet, even with the most recent drop in share price, Tesla continues to trade at a 'stretched' valuation, with a Forward Price-to-Earnings multiple north of 190x. This, according to Noah's Arc, leaves nary any 'margin for error.' 'I'm double-downgrading Tesla from strong buy to hold due to Musk's distractions and operational risks outweighing prior bullishness,' sums up Noah's Arc. (To watch Noah's Arc's track record, click here) That's right around where Wall Street finds itself as well. With 14 Buy, 15 Hold, and 8 Sell ratings, TSLA has a consensus Hold (i.e. Neutral) rating. Its 12-month average price target of $307.23 implies ~11% downside from current levels. (See TSLA stock forecast) To find good ideas for stocks trading at attractive valuations, visit TipRanks' Best Stocks to Buy, a tool that unites all of TipRanks' equity insights.
Forbes
5 hours ago
- Forbes
IRS PLRs May Be Helpful For Missed IRA Rollovers Due To Internet Fraud
Internet fraud continues to rise in the United States. In an unfortunately common scenario, a fraudster befriends an individual on social media, builds a rapport, and suggests an investment opportunity. In building additional trust with the soon-to-be-victim, the fraudster urges the individual to make a small initial investment, which later delivers double-digit returns. When the investor suggests a willingness to make a larger investment, the fraudster (aware of U.S. retirement accounts and rollover rules) nudges the individual to withdraw retirement funds to make the investment under the guise that the investor can transfer the funds back to a retirement account tax-free within the applicable 60-day window for retirement account rollovers. In many instances, the criminal takes the funds and disappears, leaving the victim with a huge loss and even more massive tax headache. Specifically, the retirement plan must notify the IRS of the taxable retirement distribution by issuing an IRS Form 1099-R, Distributions from Pensions, Annuities, Retirements or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. In some cases, a taxpayer may be eligible to claim a deductible theft loss to mitigate some of the federal income tax consequences. I've discussed the theft loss issue in prior articles here and here. Fortunately, there are instances where taxpayers make a withdrawal from their retirement accounts but do not deliver the funds to the criminal. For example, taxpayers may discover the fraud in speaking of the transaction with family members or friends who advise them not to transfer the funds, or financial institutions may step in to stop what they perceive as a fraudulent transfer. Here, taxpayers may be even more fortuitous in having a window to transfer the funds to another retirement account to meet the 60-day rollover period. But can taxpayers who have their retirement funds and who miss the 60-day window to make a rollover avoid adverse tax consequences on a withdrawal that they otherwise would not have made absent the fraudster's intervention? Possibly. Section 408(d)(3) of the Internal Revenue Code of 1986, as amended, which applies to individual retirement accounts, provides that the IRS may waive the 60-day rollover requirement where 'equity and good conscience' require it. Equity and good conscience may require an extended rollover period if the rollover was prevented by casualty, disaster, or other events that were beyond the reasonable control of the taxpayer. The list is not exclusive and depends largely on the particular facts and circumstances. In addition, this type of relief generally requires the taxpayer to submit a private letter ruling (PLR). Significantly, the IRS has granted extensions of the 60-day rollover period where taxpayers were the victims of fraudulent schemes. However, taxpayers interested in requesting relief through the PLR procedures should recognize the request is not an easy one, requiring the taxpayer to submit a litany of information to the agency to review whether the taxpayer satisfies the 'equity and good conscience' exception. Taxpayers in these circumstances should also be aware that the United States Tax Court has held that it has jurisdiction to review, in certain instances, the IRS' determinations concerning a PLR request for an extension of the 60-day window. In Estate of Caan v. Commissioner, 161 T.C. 77 (2023), the taxpayer submitted a PLR that requested an extension of the 60-day rollover period due to equity and good conscience factors. After the IRS refused to grant the PLR, the taxpayer asked the court to review the agency's determination over the IRS' objection that the court lacked subject-matter jurisdiction to review it. The Tax Court disagreed with the IRS and held that it had subject-matter jurisdiction to review the IRS' PLR determinations under an abuse of discretion standard. In sum, taxpayers who have withdrawn funds from retirement accounts due to fraud sometimes have options under the federal income tax laws. In these unfortunate circumstances, taxpayers should speak with a qualified tax professional to determine whether there are valid methods to mitigate against the often unfair tax consequences associated with the retirement fund withdrawal.
Forbes
8 hours ago
- Forbes
The Case For Luxury Stocks While They're Still On Sale
If you've been following the luxury sector, you've probably seen your fair share of sobering news. On the surface, it may look like the era of high-end handbags and bespoke suits is coming to an end. But dig a little deeper, and a different story emerges—one filled with possible opportunity for the patient, value-oriented investor. I've studied markets for decades, and if there's one thing I know, it's that cyclical downturns have often presented the best entry points. I believe the current luxury slump is no exception. In fact, the data tells me we may be on the verge of a comeback. Last year, global luxury sales posted their weakest performance since the 2008 financial crisis—excluding the COVID years—and 2025 isn't off to a roaring start, either. Bain & Company projects sales will shrink by another 2% to 5% this year. That's not what you'd expect from an industry that's historically grown at twice the rate of global GDP. But here's the thing: This isn't the first time luxury has hit a soft patch, and in the past, it's come back stronger. Take 2015, for example. Back then, consumers began to turn away from flashy logos, and major brands like Louis Vuitton were forced to rethink their design philosophy. The result? A pivot to more understated, timeless styles like the Capucines bag, now one of LV's bestsellers. Sales bounced back, and those who kept the faith were rewarded. No discussion of luxury is complete without China. Before the pandemic, Chinese travelers accounted for roughly two-thirds of their luxury spending outside of China. That changed when the pandemic hit, and many brands pivoted to local markets. Now, with international travel picking up again, we may be on the cusp of a reversal. Chinese tourists are venturing back into Europe, where luxury goods often sell for 5% to 45% less than in China due to taxes and pricing strategies. That price gap could create an incentive to buy abroad. To be clear, sales in mainland China are still soft. Bain estimated a 20% drop last year, and some brands like Richemont reported a 23% decline. But we don't think the secular tailwind of rising wealth in China has gone away. In 2024 alone, over 141,000 new millionaires were minted in China—more than 380 a day. Over time, that wealth could find its way into high-end purchases, whether from Western brands or increasingly popular domestic designers. Closer to home, the U.S. continues to lead the world in absolute wealth. According to the latest UBS Global Wealth Report, the country now boasts nearly 24 million millionaires—more than the next seven countries combined. That's nearly 40% of the world's total. And that number is only expected to grow. UBS forecasts that 5.3 million Americans will join the millionaire club by 2029, a nearly 9% increase. This matters because luxury demand has tended to track wealth creation more than overall GDP. Good news, then, that financial markets are booming. The S&P 500 recently hit an all-time high, before Trump announced a new battery of tariffs. Bitcoin, often a leading indicator of risk appetite, touched $120,000. That tells me that investor confidence is healthy. When you pair that with a tax environment that favors high earners (thanks in part to the One Big Beautiful Bill), the case for luxury demand staying strong looks compelling, at least to me. Not all brands are hurting. Hermès reported an 8% increase in revenue for the first half of 2025. Prada's total sales rose 9%, with its trendier Miu Miu line surging a whopping 49%. Even Richemont, which owns Cartier, saw group sales rise 6%, despite Chinese weakness. As for the laggards, Gucci's sales fell 26% in the first half, dragging down Kering's overall numbers. Some, like LVMH, are using this period to buy back shares. Bernard Arnault, the group's founder and CEO, has personally bought over $1 billion worth of LVMH stock this year. As I often say, follow the money, especially when it's coming from insiders.
