Diamonds and Dogs

7/2/18

Dell is back. The enterprise IT giant Dell Technologies wants to come public once again, courtesy of a complex share transaction involving its (DVMT) tracking stock. The tracking stock closed up 9%. Following months of rumors to the effect, Dell announced on Monday morning that Dell Technologies, which currently represents a 53% economic interest in VMware (VMW) , will be converted into a listing vehicle for Dell itself. The move comes five years after Dell was taken private by Michael Dell and Silver Lake in a $24.9 billion deal, and three years after Dell bought storage giant EMC -- and with it, EMC's stake in VMware, which currently stands at 81% -- for $67 billion.

Tesla (TSLA) was a diamond that turned into a dog. Tesla shares closed down 2.3% after rallying 5%, despite meeting its previously stated goal of producing 5,000 Model 3 vehicles in a week. Some investors remain skeptical that Tesla will be able to sustain these production levels, get to profitability, achieve cash flow independence and produce cars at the low prices it promised. Right now, Tesla is spending a lot and relying on capital markets to fund their investments. The stock will remain volatile until Tesla can produce consistent and sustainable profits and cash flow.