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And why isn't everyone who knows that shorting it?

smackfu 11y ago
Maybe they are, Tesla has a lot of short interest.
peteretep 11y ago
Because the market can stay irrational far longer than you can stay solvent... Saying that a share is overvalued against its "intrinsic" value is not saying the share is overvalued or will go down, it's just saying that it's currently being priced with an expectation the company will be worth more in the future.
- kgwgk 11y ago
  > Saying that a share is overvalued against its "intrinsic" value is not saying the share is overvalued It is exactly what it means [1] > or will go down. The intrinsic value of a lottery ticket is below the price you pay, it doesn't mean you can never win. That said, nobody knows the intrinsic value. In the case of TSLA you have a range of sell-side analysts telling you it's somewhere between $178 and $400. (Edit: to be fair, probably they are using multiples [2] and not a proper intrinsic value calculation. A DCF doesn't get you very far in the current market, much less so in companies like Tesla. For a discussion based on fundamentals see [3]). [1] https://en.wikipedia.org/wiki/Intrinsic_value_(finance) https://en.wikipedia.org/wiki/Intrinsic_value_(finance) [2] https://en.wikipedia.org/wiki/Valuation_using_multiples https://en.wikipedia.org/wiki/Valuation_using_multiples [3] http://aswathdamodaran.blogspot.ch/2014/03/return-to-firing-line-revisiting-tesla.html http://aswathdamodaran.blogspot.ch/2014/03/return-to-firing-...
IBM 11y ago
Are you aware that 25% of TSLA's float is short? That's insanely high.
squeak 11y ago
Intrinsic value is something of a misnomer; in reality it simply means: I've done some sort of analysis, looked at the future cash flows, and discounted them back to the present at some rate. In reality there is nothing intrinsic about it; your valuation is your opinion about the future based on a multitude of assumptions, nothing more. But even if your valuation is remarkably different than the public markets it does not then follow that you should short; this ignores the importance of time in making a good investment decision. This is compounded by the fact that shorts and options are incredibly effective means of losing lots of money in a short amount of time.
cdash 11y ago
People actually have been shorting Tesla for a long time. The problem is they keep getting burned on it.
- nemo44x 11y ago
  In fact some would say the stock is trading at these levels due to a prolonged 2-year short squeeze. The initial squeeze brought in new retail (and institution) investors forcing margin calls which in turned raised the price more creating more short sellers and retail longs. I bought stock and options when this was trading at 35 and sold at around 140 as I put my fair market value at about 125 for this company. Would gladly reenter at that price.

Maybe they are, Tesla has a lot of short interest.

Because the market can stay irrational far longer than you can stay solvent... Saying that a share is overvalued against its "intrinsic" value is not saying the share is overvalued or will go down, it's just saying that it's currently being priced with an expectation the company will be worth more in the future.

kgwgk 11y ago
> Saying that a share is overvalued against its "intrinsic" value is not saying the share is overvalued It is exactly what it means [1] > or will go down. The intrinsic value of a lottery ticket is below the price you pay, it doesn't mean you can never win. That said, nobody knows the intrinsic value. In the case of TSLA you have a range of sell-side analysts telling you it's somewhere between $178 and $400. (Edit: to be fair, probably they are using multiples [2] and not a proper intrinsic value calculation. A DCF doesn't get you very far in the current market, much less so in companies like Tesla. For a discussion based on fundamentals see [3]). [1] https://en.wikipedia.org/wiki/Intrinsic_value_(finance) https://en.wikipedia.org/wiki/Intrinsic_value_(finance) [2] https://en.wikipedia.org/wiki/Valuation_using_multiples https://en.wikipedia.org/wiki/Valuation_using_multiples [3] http://aswathdamodaran.blogspot.ch/2014/03/return-to-firing-line-revisiting-tesla.html http://aswathdamodaran.blogspot.ch/2014/03/return-to-firing-...

IBM 11y ago

Are you aware that 25% of TSLA's float is short? That's insanely high.

squeak 11y ago

Intrinsic value is something of a misnomer; in reality it simply means: I've done some sort of analysis, looked at the future cash flows, and discounted them back to the present at some rate. In reality there is nothing intrinsic about it; your valuation is your opinion about the future based on a multitude of assumptions, nothing more. But even if your valuation is remarkably different than the public markets it does not then follow that you should short; this ignores the importance of time in making a good investment decision. This is compounded by the fact that shorts and options are incredibly effective means of losing lots of money in a short amount of time.

cdash 11y ago

People actually have been shorting Tesla for a long time. The problem is they keep getting burned on it.

nemo44x 11y ago
In fact some would say the stock is trading at these levels due to a prolonged 2-year short squeeze. The initial squeeze brought in new retail (and institution) investors forcing margin calls which in turned raised the price more creating more short sellers and retail longs. I bought stock and options when this was trading at 35 and sold at around 140 as I put my fair market value at about 125 for this company. Would gladly reenter at that price.