The Perils of Shorting: A Real Life Example

@James Kirk Interesting video. Thanks for posting. We shouldn't take everything he says as gospel, though. He is the CEO of Volkswagen and has his own agenda, which is not necessarily the truth, the whole truth, so help me God. I was particularly sceptical of his dismissal of Google's self-driving technology. That's completely at odds with an article I read last year (see post #100 on this thread) which said that Waymo (the Google subsidiary) was able to do 11,018 miles without manual intervention. Next was GM with 5,205. Some of the big players were nowhere. For example, Apple had 1.15 miles. Tesla didn't appear on the chart. In the comment section of the article, someone said that Tesla's number was 0 - presumably because of its inability to stop at stop signs and traffic lights. That's what I had in my mind when I wrote that Tesla was nowhere.
 
Colm, while you wait for the results tonight have a look at this up to date video on Waymo v Tesla. You can decide then on who is where. https://www.youtube.com/watch?v=6SCj3S3ZoOU

As for Volkswagen, their ID.3 will be the biggest competitor to Tesla cars eventually I think. Unfortunately for them they screwed up a bit at the point of manufacture. Reports say they have thousands of the actual car ready to go but without the software package installed. When it's ready every car will have to have the software manually inputted from a laptop because over the air is not installed yet either. 2021 is now the expected release date.
There is one other thing (probably more than one). No auto company has the battery availability of Tesla, so they for now are numbers restricted.
 
jhegarty said:
Have my big bag of popcorn at the ready. I expect either a $700 or $400 open tomorrow.
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I think Tesla will post excellent numbers but at $580 that's in the price. Unless the beat is way beyond expectations there may well be a sell the news drop. We know the delivery numbers so it will come down to gross margin (analyst expectation -1% from Q3) and future guidance ( Is Y ready to deliver). If spending was controlled over the quarter, the end of year cash position could hit $6 billion. Not bad for a company about to go bust.
 
Despite analysts upping their estimates in December Tesla still easily beat them. profit of $359 and and $1.1billion of free cash flow. Y in production which is hugely important to Q1 20 results. We'll see what the call brings but I think it's fair to say the days of a $200 or $300 hare price are well gone.
Sorry Colm, no good news for you.
 
I know it's after hours trading but as of now SP is up $100 in 3 days. It will hardly hold that gain but this is short squeeze territory. Definitely short squeal
 
James Kirk said:
We'll see what the call brings but I think it's fair to say the days of a $200 or $300 share price are well gone.
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Hi James

It's way too early to say that. A few good quarters does not mean that it justifies the current share price.

So it's not "fair to say" that.

Brendan
 
Brendan Burgess said:
It's way too early to say that.....
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I didn't watch any presentations or study the paperwork in detail but I think Brendan's point is completely reasonable. It really is too early to say where Tesla goes from here and I suspect that it will continue to divide the jury. Expect much confirmation bias to appear in these here parts and elsewhere in the coming days! For what it's worth, if I bought Tesla at $200 a few months ago, I'd be very tempted to cash-in at the $650 or so, currently being quoted in after hours. Investments can often be governed by emotion - those who shorted may now regret their greed in not taking the previously available profit and may now be experiencing its twin emotion, fear.

What I think is "fair to say" is that betting on individual stocks - as I have mentioned many times previously - is a high risk sport. It can work out very well for long periods but, sooner or later, such punts may turn sour.

In fairness to Brendan, allocating 1% or so to such high risk punts is justifiable. My concern is for those who may be tempted to over expose themselves. As Buffett reminds us........"you only know who's been swimming naked when the tide goes out!" I trust that people will be able to understand this analogy. Feedback is that yesterday's analogy caused some people difficulty!
 
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It doesn't make sense to short this stock when you could have been long from around $200 - $250 ..... the question is do you want to make money or do you want to be right? But the market is a great teacher as they say :-/
 
Can't we all just agree that nobody has a clue and move on .
Colm writes about stocks and he's losing money hand over fist , I'm clueless and making money every where on stocks .
 
I criticised Colm yesterday for his inaccuracy and feel bound to do likewise now.

It is simply not true to say that Colm is losing money "hand over fist". This particular punt has gone wrong but my understanding is that the losses in Tesla are less than the gains in the remainder of Colm's portfolio so that he continues to enjoy superior returns than more orthodox approaches. Whether his risk adjusted returns are superior is a different question.

It may very well be true to say that trying to pick individual stocks is generally a loser's game.

My concerns regarding Colm's writings are not for Colm personally - I think that there is a substantial chance that less financial savvy people will try replicate his approach and get mushed. I believe that he doesn't make the risks of his approach sufficiently clear. At a general level, in my opinion, his writings are disproportionately reward focused. That has always been my concern and in that I remain steadfast.
 
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The truth is not gong to sell many papers .
 
It's certainly true that the Racing Post doesn't overly concern itself with the fact that most readers would be better off not going to war!!

Edit:

Sunny has correctly pointed out that this is unfair and I agree with him!
 
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Guys, that is grossly unfair. Look at the title of the thread. look at the first post and show me how that is reward focused. Neither Colm or Brendan have advocated anyone following them at any stage. You can disagree with them without making disparaging remarks about their intentions.

Anyway, the shorts put on by Colm and Brendan are not really why this thread is interesting. The interesting thing is why this stock drives such an emotional response in people (almost like bitcoin). This stock is bonkers and the reaction to it is hysterical.

What I am reading this morning and is also bonkers is the compensation package for Musk and other executives......
 
Sunny,

I agree that it might be somewhat unfair. I have put an edit in the original.

Just to note, when referring to Colm's articles, I specifically mentioned "AT A GENERAL LEVEL"...……I also qualified my statement saying that it was "in my opinion". I think it is valid to have a different opinion to Colm? (Note: The background here is that for a long-time, I have struggled to understand the purpose of Colm's articles and he has refused to explain! I am also deeply concerned by the messaging.)
 
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