8 ms·

It seems like TSLA is one of the most tirelessly shorted stocks out there. Why are there so many people betting against them?

Fej 10y ago
Tesla is going up against an old, entrenched industry. Competitors have been around for many decades. Their odds have been slim. They have made mistakes. But it's looking better for them as time goes on.
- 2curious 10y ago
  Somehow reminds me of Tucker Corp.
sandworm101 10y ago
Because they are a fledgling car company. Those are generally doomed. A few wrong moves, a few bad models, and you disappear. Either that or one of the established companies uses their resources to launch at competing product. Frankly, the likes of Honda and Toyota are probably laughing at tesla. Once their ducks are all lined up their size will allow them to produce electric cars at an insane scale. Shortsellers bet on this happening sooner than later and have so far lost that bet. But that doesn't mean it cannot happen tomorrow. Telsa is still on a knife's edge, will be for a decade or more. Tesla knows this an so is trying to leverage its battery know-how into other fields, a hedge against a decent honda electric hitting the US market.
- deepGem 10y ago
  Yep. I am a Tesla shareholder and the growing short interest makes owning the stock all the more exciting. Just because Toyota, Honda and the like manufacture gasoline cars at a large scale, one cannot postulate that they will overnight produce electric cars at the same scale. Assembly line retooling is a big deal.
  - yessql 10y ago
    It's the batteries. Tesla has a big lead over other OEMs in battery cost. This is obvious in the energy storage space. Also, if some new battery tech comes out, then Tesla will get their hands on it, being half the world's battery supply.
    - Gustomaximus 10y ago
      Plus alternates. Toyota is pushing strongly for Hydrogen. And if petrol station chains are forward thinking they will encourage this too. Electric is too easy to make the petrol station redundant. If I was Caltex/Shell/BP/Exxon etc I would be forming a group to drive support to hydrogen, both via govt and manufacturers. Should consumers largely go electric not many people will turn up to their shops any more.
      - bjarneh 10y ago
        It is going to be difficult to make money with hydrogen filling stations; both liquid and compressed hydrogen come with huge challenges in terms of transportation and storage. Petrol stations will not make much money on electricity if they install chargers, but they will sell a lot of food to customers waiting to charge, even "supercharging" is quite slow..
        Gustomaximus 10y ago
        Food/waiting thing is a good point but I imagine the bulk of people, if electric, will charge overnight and rarely need out-of-home power. According to wiki the cost to put in Hydrogen fueling infrastructure would be about 20% of electric: https://en.wikipedia.org/wiki/Hydrogen_station https://en.wikipedia.org/wiki/Hydrogen_station
        ZeroGravitas 10y ago
        That sounds like one of those "alternative facts". After following the cite trail from Wikipedia, it was apparently something someone from the hydrogen car industry said at a conference. No further cite or info on what exactly they are counting in that figure.
- sixQuarks 10y ago
  Having followed the industry closely, I can assure you the likes of Honda and Toyota are not laughing at Tesla anymore. As the saying goes, "first they laugh at you, then they fight you, then you win". The laughing stage is far gone.
  - messick 10y ago
    Tesla's sales are a rounding error for Toyota. Even if Tesla somehow delieved 100% off their Model 3 preorders in 2017, that would be less than 5% of the number of cars sold by Toyota.
    - _ph_ 10y ago
      They are indeed a small number compared to the total number of cars produced by Toyota, but they are all-electic. How many all-electric cars does Toyota build? Of course, Tesla won't be taking over the car market by numbers any time soon. But they are about to take a huge slice of a profitable segment of cars, with models Toyota at the moment cannot compete with. They are working busily to change that, but right now, Tesla has no competitor in their segment.
      - bgarbiak 10y ago
        All-electric cars are not "a profitable segment". They might be in the future, but it's a bet.
        _ph_ 10y ago
        Do you have any numbers to back up your statement? How is the revenue of Renault and Nissan from their electric car programs? At least they sell well, so I would assume they are profitable. And of course Tesla is not really profitable as in the quarterly revenue, but according to their statements, they do get above 20% profits from selling cars which get eaten up by their aggressive reinvestments - the company is growing by about 50% year over year.
        10y ago
- belltaco 10y ago
  Toyota(and Daimler) invested in Tesla 7 years ago when things were more dicey. http://www.ft.com/cms/s/0/433ddb64-653a-11df-b648-00144feab49a.html?ft_site=falcon&desktop=true http://www.ft.com/cms/s/0/433ddb64-653a-11df-b648-00144feab4...
- TeMPOraL 10y ago
  > Once their ducks are all lined up their size will allow them to produce electric cars at an insane scale. For Elon Musk, that would be the "Mission. Fucking. Accomplished." moment[0]. His point all along is to make cars electric, not to be the one who sells most of them in the long run. [0] - https://xkcd.com/810/ https://xkcd.com/810/
closeparen 10y ago
TSLA is one of the most hyped companies out there. To vindicate the short-sellers, TSLA doesn't have to flop, it simply has to justify slightly less exuberance.
- s0ulphire 10y ago
  I'm very new to the stocks game so excuse what's probably a simple question, but would vindicating the short-sellers require TSLA shares to drop back down to around $180-190 or whatever level they were at before the shorts were in place?
  - fnbr 10y ago
    Yes, exactly. Ideally (for the short-sellers) the stock would fall even further, as if the stock is at the exact level it was when they bought, then they'll only break even.
    - laichzeit0 10y ago
      It would have to fall more than that to make up the interest they're paying on the shares they borrowed as well as brokerage fees.
      - fnbr 10y ago
        With current interest rates, it wouldn't have to fall much more, but yes. Plus opportunity cost, and a return to compensate for the risk [1], etc. [1] It's very risky to short a stock as you can end up losing a very large amount of money, as stocks can increase many times in value. When holding a stock, your risk is finite, as it can only lose 100% of it's value. When shorting, the stock can double or triple in price.
        kgwgk 10y ago
        > With current interest rates, Borrowing costs for TSLA stock have been over 20% annualized (I don't know the current situation).
yessql 10y ago
Because the valuation is insane. Tesla is worth as much as Nissan, yet has no sign of the ability to turn a profit. I have a hundred shares. I wouldn't bet against Elon.
- pseudometa 10y ago
  But they do turn a profit... then turn around and invest in growth.
  - vkou 10y ago
    Only via particularly tortured accounting.
    - _ph_ 10y ago
      No, the profit after all investment costs is thin and may depend on accounting, but the car production itself produces the money they are investing into e.g. the Gigafactory.
      - dragontamer 10y ago
        Tesla sold stock several times to fund the Gigafactory. Then they got Panasonic to pay for half of the Gigafactory. That's not from profits, that's from shareholder investments. Its the power of the stock market to dump money into an asset. But don't pretend that Tesla managed to scrap together like $3 Billion from their years of operating losses. https://media.ycharts.com/charts/aa2e00215ae08b27274cafbb493fd6e8.png https://media.ycharts.com/charts/aa2e00215ae08b27274cafbb493... Here's Tesla's stock offerings, diluting Tesla shareholder value: https://www.nytimes.com/2016/05/19/business/tesla-to-offer-2-billion-in-stock-to-meet-model-3-production-goal.html?_r=0 https://www.nytimes.com/2016/05/19/business/tesla-to-offer-2... http://money.cnn.com/2013/05/15/investing/tesla-stock-offering/index.html http://money.cnn.com/2013/05/15/investing/tesla-stock-offeri... http://ir.tesla.com/releasedetail.cfm?ReleaseID=927533 http://ir.tesla.com/releasedetail.cfm?ReleaseID=927533

Fej 10y ago

Tesla is going up against an old, entrenched industry. Competitors have been around for many decades. Their odds have been slim. They have made mistakes. But it's looking better for them as time goes on.

2curious 10y ago
Somehow reminds me of Tucker Corp.

sandworm101 10y ago

Because they are a fledgling car company. Those are generally doomed. A few wrong moves, a few bad models, and you disappear. Either that or one of the established companies uses their resources to launch at competing product. Frankly, the likes of Honda and Toyota are probably laughing at tesla. Once their ducks are all lined up their size will allow them to produce electric cars at an insane scale. Shortsellers bet on this happening sooner than later and have so far lost that bet. But that doesn't mean it cannot happen tomorrow. Telsa is still on a knife's edge, will be for a decade or more. Tesla knows this an so is trying to leverage its battery know-how into other fields, a hedge against a decent honda electric hitting the US market.

deepGem 10y ago
Yep. I am a Tesla shareholder and the growing short interest makes owning the stock all the more exciting. Just because Toyota, Honda and the like manufacture gasoline cars at a large scale, one cannot postulate that they will overnight produce electric cars at the same scale. Assembly line retooling is a big deal.
- yessql 10y ago
  It's the batteries. Tesla has a big lead over other OEMs in battery cost. This is obvious in the energy storage space. Also, if some new battery tech comes out, then Tesla will get their hands on it, being half the world's battery supply.
  - Gustomaximus 10y ago
    Plus alternates. Toyota is pushing strongly for Hydrogen. And if petrol station chains are forward thinking they will encourage this too. Electric is too easy to make the petrol station redundant. If I was Caltex/Shell/BP/Exxon etc I would be forming a group to drive support to hydrogen, both via govt and manufacturers. Should consumers largely go electric not many people will turn up to their shops any more.
    - bjarneh 10y ago
      It is going to be difficult to make money with hydrogen filling stations; both liquid and compressed hydrogen come with huge challenges in terms of transportation and storage. Petrol stations will not make much money on electricity if they install chargers, but they will sell a lot of food to customers waiting to charge, even "supercharging" is quite slow..
      - Gustomaximus 10y ago
        Food/waiting thing is a good point but I imagine the bulk of people, if electric, will charge overnight and rarely need out-of-home power. According to wiki the cost to put in Hydrogen fueling infrastructure would be about 20% of electric: https://en.wikipedia.org/wiki/Hydrogen_station https://en.wikipedia.org/wiki/Hydrogen_station
        ZeroGravitas 10y ago
        That sounds like one of those "alternative facts". After following the cite trail from Wikipedia, it was apparently something someone from the hydrogen car industry said at a conference. No further cite or info on what exactly they are counting in that figure.
sixQuarks 10y ago
Having followed the industry closely, I can assure you the likes of Honda and Toyota are not laughing at Tesla anymore. As the saying goes, "first they laugh at you, then they fight you, then you win". The laughing stage is far gone.
- messick 10y ago
  Tesla's sales are a rounding error for Toyota. Even if Tesla somehow delieved 100% off their Model 3 preorders in 2017, that would be less than 5% of the number of cars sold by Toyota.
  - _ph_ 10y ago
    They are indeed a small number compared to the total number of cars produced by Toyota, but they are all-electic. How many all-electric cars does Toyota build? Of course, Tesla won't be taking over the car market by numbers any time soon. But they are about to take a huge slice of a profitable segment of cars, with models Toyota at the moment cannot compete with. They are working busily to change that, but right now, Tesla has no competitor in their segment.
    - bgarbiak 10y ago
      All-electric cars are not "a profitable segment". They might be in the future, but it's a bet.
      - _ph_ 10y ago
        Do you have any numbers to back up your statement? How is the revenue of Renault and Nissan from their electric car programs? At least they sell well, so I would assume they are profitable. And of course Tesla is not really profitable as in the quarterly revenue, but according to their statements, they do get above 20% profits from selling cars which get eaten up by their aggressive reinvestments - the company is growing by about 50% year over year.
        10y ago
belltaco 10y ago
Toyota(and Daimler) invested in Tesla 7 years ago when things were more dicey. http://www.ft.com/cms/s/0/433ddb64-653a-11df-b648-00144feab49a.html?ft_site=falcon&desktop=true http://www.ft.com/cms/s/0/433ddb64-653a-11df-b648-00144feab4...
TeMPOraL 10y ago
> Once their ducks are all lined up their size will allow them to produce electric cars at an insane scale. For Elon Musk, that would be the "Mission. Fucking. Accomplished." moment[0]. His point all along is to make cars electric, not to be the one who sells most of them in the long run. [0] - https://xkcd.com/810/ https://xkcd.com/810/

closeparen 10y ago

TSLA is one of the most hyped companies out there. To vindicate the short-sellers, TSLA doesn't have to flop, it simply has to justify slightly less exuberance.

s0ulphire 10y ago
I'm very new to the stocks game so excuse what's probably a simple question, but would vindicating the short-sellers require TSLA shares to drop back down to around $180-190 or whatever level they were at before the shorts were in place?
- fnbr 10y ago
  Yes, exactly. Ideally (for the short-sellers) the stock would fall even further, as if the stock is at the exact level it was when they bought, then they'll only break even.
  - laichzeit0 10y ago
    It would have to fall more than that to make up the interest they're paying on the shares they borrowed as well as brokerage fees.
    - fnbr 10y ago
      With current interest rates, it wouldn't have to fall much more, but yes. Plus opportunity cost, and a return to compensate for the risk [1], etc. [1] It's very risky to short a stock as you can end up losing a very large amount of money, as stocks can increase many times in value. When holding a stock, your risk is finite, as it can only lose 100% of it's value. When shorting, the stock can double or triple in price.
      - kgwgk 10y ago
        > With current interest rates, Borrowing costs for TSLA stock have been over 20% annualized (I don't know the current situation).

yessql 10y ago

Because the valuation is insane. Tesla is worth as much as Nissan, yet has no sign of the ability to turn a profit. I have a hundred shares. I wouldn't bet against Elon.

pseudometa 10y ago
But they do turn a profit... then turn around and invest in growth.
- vkou 10y ago
  Only via particularly tortured accounting.
  - _ph_ 10y ago
    No, the profit after all investment costs is thin and may depend on accounting, but the car production itself produces the money they are investing into e.g. the Gigafactory.
    - dragontamer 10y ago
      Tesla sold stock several times to fund the Gigafactory. Then they got Panasonic to pay for half of the Gigafactory. That's not from profits, that's from shareholder investments. Its the power of the stock market to dump money into an asset. But don't pretend that Tesla managed to scrap together like $3 Billion from their years of operating losses. https://media.ycharts.com/charts/aa2e00215ae08b27274cafbb493fd6e8.png https://media.ycharts.com/charts/aa2e00215ae08b27274cafbb493... Here's Tesla's stock offerings, diluting Tesla shareholder value: https://www.nytimes.com/2016/05/19/business/tesla-to-offer-2-billion-in-stock-to-meet-model-3-production-goal.html?_r=0 https://www.nytimes.com/2016/05/19/business/tesla-to-offer-2... http://money.cnn.com/2013/05/15/investing/tesla-stock-offering/index.html http://money.cnn.com/2013/05/15/investing/tesla-stock-offeri... http://ir.tesla.com/releasedetail.cfm?ReleaseID=927533 http://ir.tesla.com/releasedetail.cfm?ReleaseID=927533