Monday, January 13, 2020

I Know We Have A General "Don't Short Tesla" Rule But Man.... (TSLA)

....the darn thing is approaching verticality.

The stock is up $39.86 (+8.34%) at $518.01.


TSLA Tesla, Inc. daily Stock Chart

We have a few hundred posts on Tesla, going back to before the IPO including some thoughts* on shorting TSLA.
Some links after the jump.
From TechCrunch:
Tesla surges past $500 on back of analyst upgrade, China momentum
Today in regular trading, shares of American electric car manufacturer Tesla surged past the $500 mark.

Tesla, perhaps the most famous electric vehicle company in the world, has had a tumultuous last 12 months on the public markets. The company’s shares have traded as low as $176.99 in the past 52 weeks, and, as has high as $507.50 today.

The company is worth $507.28 per share at the moment, valuing Tesla at $91.38 billion according to Google Finance. As is often pointed out, Tesla is worth more than Ford and General Motors combined. In a slightly more exotic formulation, Tesla is worth just under 64 times as much as Aston Martin.

What’s going on?
Why is Telsa surging? We presume that it’s not the latest from Musk, that “Teslas will soon talk and make fart noises,” according to CNBC. (At least we hope not.)

Instead, an investor upgrade this morning could be the key reason for the company’s gains today. As IBD points out, the new target from Oppenheimer is over $600 per share.

That’s today’s runup explained. The morning’s rally, however, is tied to the company’s rising growing operations in China and global delivery figures....MUCH MORE
We've violated the 'Don't short Tesla' rule a half-dozen times and fortunately escaped with tactical profits but the thing is, in bull markets it is just so dangerous to make valuation shorts. Even shorting outright frauds can kill you if you don't have staying power and/or a friendly banker who won't pull your credit lines at the worst possible moment.
Some previous posts on this topic:
 * April 1, 2013 
Why We Don't Short Tesla: The stock is up 16% On The Day (TSLA)

April 22, 2013 
Tesla Motors Trades At All-Time High (TSLA) 
The stock is at $49.75, up 4%, after trading as high as $50.19.
The thing to remember with all-time highs is there is no overhead supply, no shareholders thinking "As soon as I get to breakeven I'm getting out"....
August 2015
Short Selling and The Information Embedded In The Cost To Borrow Stock (TSLA)

August 2016
...For the longest time we had a Don't Short Tesla policy because it showed signs of being a cult stock and cult stocks can kill shorts. Plus it can be very hard to locate stock and very expensive to borrow when you do,
From an August 2015 post:

Morgan Stanley Gives a $465 Target For Tesla, Stock Jumps 5%...
We've publicly shorted Tesla twice on the blog, both times worked out because nothing like this happened during the holding period.
For the most part this April 2013 headline is operative "Why We Don't Short Tesla: The stock is up 16% On The Day (TSLA)". That was at $44.00, up $6.11.
Recently $255.30 up $12.15.
Morgan Stanley was one of the firms that sold the recent half-billion stock offering....
However, after the SolarCity deal and Elon's purchase of SCTY debt (on top of his SpaceX buying SCTY debt) I'm more open to betting against the company, at least tactically if not to zero.
Remember, your mileage may vary, close cover before striking etc.

June 2017
"Einhorn Compares GM to Apple and Explains Why He’s Short Tesla" (TSLA; GM)
...It is just so dangerous to put valuation (as compared to fraud) shorts on in a bull market.
We have had a general rule, "Don't short Tesla" virtually since the IPO, that we've violated on three occasions, fortunately profitable but it is tough to tell if it was worth the risk.
Finally, if you do short, don't be this guy (no, seriously, don't be this guy):



That was posted to YouTube Aug 23, 2013.
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