You had me scared for a moment there saying the borrowing cost is >10%. Just checked, it is at 0.6% and I don't think it rose above 2% during the past 2 months.
OK, they must have come down a lot, which is odd with 30% of the float shorted. Everything I read said borrowing costs were 30-80% from March to May. I don't get it. Here is what Reuters said two months ago:
On the other hand, those confident the stock is way overvalued are short about 17 percent of Tesla shares - even at an annualized borrowing cost of about 30 percent, or 100 times the borrowing cost of an average stock, according to Markit.
The short percentage has since gone up. Anyone getting in at 90-100 in late May (most of the shorts) were paying those costs unless their broker was extra kind.
If you can short TSLA for 0.6%/year, have the money and keep buying up, and have the opportunity to sell when you choose, then shorting is a good trade IMO. It's priced to perfection and then some for a tech/company which has to have at least 20% chance of major doubts showing in the next year.
Still, I think the pro trade is to wait for news, predict how the market will react to the news and ride it down. TSLA is such a story stock that short term investor reaction to news isn't hard to gauge (I did just that with the Goldman downgrade).
In retrospect, I probably acted too soon and should have waited for a spike before initiating the short, especially spikes caused by stock pumping type research reports which reveal absolutely no new information to the public except to get the retail investors excited.
I think there is non trivial chance that Tesla becomes a $200 billion market cap company. Multiple things come together to make that possible. There's no way I own the stock, but while that chance exists and is confirmed by growing production/orders, and nothing obvious standing in its way, I don't see how the positivity squeezes out to send it back to $70. The longer it churns at high prices and the loss of profit fear subsides, the harder it gets to go back to $70 as well.
The longer it churns at high prices and the loss of profit fear subsides, the harder it gets to go back to $70 as well.
Just to add to this: I looked at the volume and about 8% (!!) of the float, or a billion dollars, gets traded per day. That's very, very high, many multiples of most stocks. In 2-3 weeks at a flat level all the profit fear is worked out and you're left with overly optimistic long term speculators, irrational value buyers, and a large number of shorts. You can see why the stock is so very buoyant.
That's not to say that it won't tank on bad news, but it definitely reduces the short EV.
moving 8% of float per day with so many speculators pumping up means that as soon as it even calms down everyone will catch their breath and say "wtf am i doing in this! i got in bc its superman and its not flying anymore!". fundementals matter more when its less of a story/big move stock and that isnt very good for tsla. unless im missing something.
fwiw, driving today i saw a tesla car on the road. it was definitely the most baller looking car on the highway by far.
You guys are both completely wrong about this. I wrote down a bunch of reasons and then deleted them, you can figure it out yourself. It has to do with the amount of profit sitting in each account vs the stock's long term story. High churn obviously increases volatility though.
I'm also thinking a long the same lines dude. Everyone's pnl is flying and they're just speculating with this money. People taking totally speculative positions don't like to see any red. If tsla starts to sell off people aren't going to be holding for the long haul. This name isn't attracting money with that mentality.
Almost reached its all time high today, which I consider to be $130 (as this was held for at least a couple of hours). As I stated, you dont want to short this stock. There are buyers out there who will pay whatever for the share right now.
Also, if Q2 report is bad the future is still Tesla's. If the Q2 report i good, then the sky is the limit.
Most I've heard is an analysis based on sequential VINs (Vehicle Identification Numbers) which puts production well ahead of expectations. I read a really detailed analysis on this which I can't find, this is the closest.
I easily and readily grant all this. That doesn't change the fact Tesla's market is pretty limited now.
It definitely is. Even as a non-Tesla owner though, I see something that has a backup because its primary feature is inferior.
Just because Tesla's market is limited now, doesn't mean it always will be. No one thought Musk could even make the company profitable, and even though he did it very unconventionally/artificially through government subsidies and semi-voodoo payment plans, he still did it.
If, and that is a huge if, he gets a smaller coupe/sedan car similar to a civic, in the civics price range Tesla is going to absolutely kill it.
Now that is a lot of things that have to conspire to make it work, but if anyone can do it I think it is Musk. But the stock is going to continue to rise until he is proved wrong, just like any other bull market/bubble people are betting on Tesla because the payoff is huge and they are greedy.
While I wouldn't buy Tesla now, I certainly don't have the balls to bet against Musk either. That product is really close to perfect if he can sort out cost and scale.
Last edited by LeprechaunFlute; 07-29-2013 at 10:47 AM.
Reason: word choice
You're talking about this thing like it's never had a 15 point down day.
Well this is one of those days that shows the strength of Tesla. Up 4.5% friday on a neutral / down market. Today on a down market we are seeing about 3% up. Not many companies have this strong investors and core owners.