The Perils of Shorting: A Real Life Example

Would appreciate some technical guidance please!
At current prices, should Tesla issue new stock to rid itself of its high-interest debt?! (I am aware that Mr. Musk has discounted the idea but he could change his mind!)

Also, are today's price movements primarily due to shorters giving up the ghost?
 
that's the fomo kicking in!
 

There was a few things today.

Macro started to recover from China. Tesla fought a drop in all indexs on Friday for a mild gain. This was possibility delaying some of gain from q4 results. S&P 500 inclusion has to be on everyone minds after those results as well.



Panasonic’s joint venture with Tesla turns first profit

Tesla up 20% after Panasonic posts first quarterly profit at battery business

Tesla Inc's stock surged 20% on Monday in its largest one-day gain since 2013, fueled by a quarterly profit at Panasonic's battery business with the U.S. car maker and an investor report predicting its shares would rise more than ten-fold by 2024.
www.reuters.com

There was a last two analyst upgrades on price target today. Here is the crazy 7000 , there was another with a more reasonable target I don't have a link for to hand.

Tesla’s biggest bull stampedes to a $7,000 price target

An investor famed for her call that Tesla shares could be worth as much as $4,000 in the next five years has just upped that target, significantly.
www.marketwatch.com

New batter signed deal in China

China's CATL signs battery supply agreement with Tesla

China's top electric vehicle battery maker CATL said on Monday it has signed a battery supply agreement with Tesla . Tesla will determine the battery purchase volume between July 2020 and June 2022, according to its own needs, CATL said in a stock exchange filing, adding the agreement does not
finance.yahoo.com

And of course everyone likes Elon twittering about AI and showing his head is on the FSD and not on caves in Thailand.
 
Fundamentals went out the window a long time ago. I starting to think @Fella might be right that in this instance at least a short position is a gamble.

I find the trading fascinating. The % of short interest. The volume of options traded just before the results were announced. The actual number of share transactions (most of them done by robots).

Total float shares: 141.95 m
Share volume traded yesterday: 47.2 m

When you exclude lust the top 10 large long holdings, every other share is trading hands more than once every 2nd day. There must be traders who sold the stock early in the session and bought it back later at a higher price.
 
Its like year 2000 all over again, everything tech is going up and Tesla is at the top of this pile. Its 20 years ago now so all the guys that got burnt by that bubble are not the ones driving up the Tesla and tech share prices now. For now it looks like Tesla has created its own price dynamic so its going to suck in alot more money based on the last few days. People will believe that Tesla is different to every other stock the most dangerous delusion in stock markets.
 
RedOnion said:
Fundamentals went out the window a long time ago.
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I'd be interested to know when exactly fundamentals went out the window.

Specific related question: if Tesla does manage to successfully execute the majority of its strategy, what price range should it be in 5 to 7 years time? [I have asked this question multiple times in various guises to others].
 
Gordon Gekko said:
I’m not sure that this is as complex as some people make out. The bullish case is that Tesla is the automotive equivalent of the iPhone. The bearish case is that Musk is nuts and Tesla is Blackberry or Nokia.
Click to expand...

I bought my daughter a Nokia 'dumb' phone yesterday and the technology is identical to 20 years ago. Still, I paid money for it. My work smartphone is a Nokia 7.2 and I quite like it.

I haven't seen a BlackBerry in many years though.
 
NoRegretsCoyote said:
I bought my daughter a Nokia 'dumb' phone yesterday and the technology is identical to 20 years ago. Still, I paid money for it. My work smartphone is a Nokia 7.2 and I quite like it.

I haven't seen a BlackBerry in many years though.
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I can show you a Blackberry - just had a replacement work device and it's a Blackberry. But they run on Android now. The BB operating system has become a specialised automotive operating system at this stage. But you're not missing much !!!

BTW - that Nokia 7.2 is also an android phone. And the other Nokia dumb phone isn't the same tech as 20 years ago either. It's made under license by a Chinese company to look like the old phones but other than the name and outer casing, nothing is the same
 
Gordon Gekko said:
I’m not sure that this is as complex as some people make out. The bullish case is that Tesla is the automotive equivalent of the iPhone. The bearish case is that Musk is nuts and Tesla is Blackberry or Nokia.
Click to expand...

Of course Musk is nuts. You would have to be to take on the Space industry, the oil industry and the auto industry all at the same time. Nokia and BB fell flat because they completely missed and ignored the switch to touch screen. A bit like the legacy automakers have ignored the rise of the EV.
 
James Kirk said:
My target is $1000/share and I'll be happy if it hits that in 4 years even thought i think it's possible in 2 but the market (and events) may have other ideas. Time will tell.
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Looks like my target time line might have been a bit off. 2 weeks rather that 2 years.
 
Musk is nuts, Musk is unreasonable but hey...…

The reasonable man adapts himself to the world; the unreasonable man adapts the world to himself, therefore all progress is made by unreasonable men!



What lessons can be drawn from this thread?

To me it's very simple:
Concentrated bets and trying to time the market are both risky. Coupled together are highly risky. Even if your call is ultimately proven right, you can get mushed in the process because of the trajectory of share price movements. In addition, the uncertainty of the journey is precisely why sequence of return risk is real and why consideration needs to be given to it in determining one's asset allocation in retirement. This thread should serve as a cautionary tale to all.
 
elacsaplau said:
Musk is nuts, Musk is unreasonable but hey...…

The reasonable man adapts himself to the world; the unreasonable man adapts the world to himself, therefore all progress is made by unreasonable men!
Click to expand...

But what about Tesla shareholders are they also unreasonable? , will they be patient enough to sit out the obvious topsy turvy Tesla share price ride? unreasonableness is not a good personality trait to have as a long term shareholder. The investors that make the most money in the stock markets are dull personality types unlike Elon Musk.
 

exactly if there was no risk and the stock market returned a certain % guaranteed , then it would be pointless investing as the return would be close to 0%
 


If you check out my previous posts you can back of the envelope that. You have to just make predictions on what percent of ev market Tesla will own, and what percent of total market will be ev.

If you make it that Tesla has 33% share and 45% of the global market, and can turn 4k profit per car, it's got more room to grow in price.
 
Brendan Burgess said:
OK, so I have shorted Tesla at $536.

I have set myself a stop at $1000. In other words, if it doubles in price, I will close my position at a loss. My exposure is in the order of 1% of my portfolio
Click to expand...

I know that in your wildest dreams you couldn't have imagined Tsla at $1000 3 week after opening your short. 700 800 900 are all round numbers and the sp just blasted through them. Breaking $1000 seems like a watershed though. It's "possible" the sp might just break it and then hit a wall. Is it worth adding $100 to the gamble or is that like putting another coin in the slot machine because you just have that feeling in your head of one more and it will pay out for sure.
 
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