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Tesla shorts can't get a break. First a smooth $1B+ capital raise without a stock hiccup and now this.
by jpeg_hero 10y ago
Tesla shorts can't get a break. First a smooth $1B+ capital raise without a stock hiccup and now this.
- Blackthorn 10y agoEvery budding short seller needs to, at some point in their career, learn the lesson of never shorting a growth tech stock.
- jonknee 10y agoOr to confuse Tesla with a tech company.
- bredren 10y agoWhat kind of company would you call it?
- sah2ed 10y agoA battery/renewable energy company.
- reilly3000 10y agoI think the key distinction is hard costs. Tech companies have server costs. Tesla has manufacturing and contractor expenses.
- jonknee 10y agoExactly. Tesla is a tech company like GE is a tech company. It's modern manufacturing. (This only matters for valuation sake, a classic tech play can achieve profit margins far higher than a manufacturing firm.)
- lightbyte 10y agoTesla has plenty of server architecture, their cars are constantly talking to it for data collection and updates.
- Someone 10y agoThe word "tech" apparently has changed meaning in some circles. https://en.wikipedia.org/wiki/Technology https://en.wikipedia.org/wiki/Technology: "Technology ("science of craft", from Greek τέχνη, techne, "art, skill, cunning of hand"; and -λογία, -logia) is the collection of techniques, skills, methods and processes used in the production of goods or services or in the accomplishment of objectives, such as scientific investigation. Technology can be the knowledge of techniques, processes, and the like, or it can be embedded in machines which can be operated without detailed knowledge of their workings." You can argue that that isn't accurate, but I don't see how you can argue that the categorical statement "tech companies have server costs" follows from it (I can't even find the word "server" on that page, or on https://en.wikipedia.org/wiki/Tech https://en.wikipedia.org/wiki/Tech)
- olivermarks 10y agoI thought panasonic was their white label battery supplier/partner?
- sah2ed 10y agoYes, but even they can't keep up with the projected demand for batteries which is why Tesla is building out its own factory [1] in partnership with Panasonic [2] to manufacture batteries. [1] https://www.tesla.com/gigafactory https://www.tesla.com/gigafactory [2] https://www.tesla.com/blog/panasonic-and-tesla-sign-agreement-gigafactory https://www.tesla.com/blog/panasonic-and-tesla-sign-agreemen...
- jonknee 10y agoEvery company these days is a tech company in some respects, but I don't think Tesla fits the bill in the general sense. Tesla is a green energy manufacturing company. The only reason I think this matters is their finances are a lot different than a tech company. You are correct that Tesla is currently priced like a tech company though, so maybe I'm way off!
- debaserab2 10y ago..so what is a tech company then?
- deleted 10y ago[deleted]
- tenpies 10y agoTSLA behaves mostly like 3 X Musk Tweets Bull ETF.
- elastic_church 10y agoNow now, don't give Direxion any ideas
- xadhominemx 10y agoA car company.
- netule 10y agoThey changed their name this year from Tesla Motors to Tesla Inc. to indicate a wider focus on technologies, not just cars (solar panels, batteries). How do they not qualify as a tech company?
- jonknee 10y agoThey changed their name because they bought Elon's solar company (which was also not a tech company).
- Cerium 10y agoI'm curious about what you would consider a tech company. For me a tech company is any company that uses the development of technology as a competitive advantage. Solar is not, major solar companies are not developing innovative technology. Tesla is, they do not have an advantage in scale or low prices, but have advantage in how their vehicles function.
- deleted 10y ago[deleted]
- greglindahl 10y agoSo you don't think that 3d printing solar roof tiles is innovative solar technology? I don't think anyone else is talking about that.
- vkou 10y agoIs 3d-printing car parts an innovative technology? Is Ford now a tech company? [1] [1] https://techcrunch.com/2017/03/05/ford-begins-testing-3d-printing-large-car-parts-for-cost-effective-customization/ https://techcrunch.com/2017/03/05/ford-begins-testing-3d-pri...
- dkrich 10y agoFor me a tech company is any company that uses the development of technology as a competitive advantage. So then is Ford a tech company? If not, then I'd be interested to hear why not, based on that criteria. Their cars are technology and they continuously develop and improve them as a competitive advantage. I think people think of Tesla as a tech company because the founder is Elon Musk. If Tesla were a spin-off brand of GM or Ford, it would be another car company.
- lanna 10y agoyou seem to have a very narrow understanding of what technology means. computers are not the only "technology" in the world.
- mayukh 10y agoRather needs to understand how to have a basket of shorts and manage risk as opposed to shorting single names.
- GCA10 10y agoYes. Short-selling pioneer Bob Wilson nailed the key insight on these situations. They are "manana stocks," Wilson declared, way back in the 1970s. Their valuation is premised on the notion that something wonderful will happen in the future. Time horizons keep being pushed out, but the stocks' fans don't mind. Shorts can get very cranky and righteous about each little bit of slippage. But as long as new enthusiasts keep showing up, and old ones feel lenient, it's hopeless to insist on strict accountability. Even a short-lived burst of optimism is sufficient to arrange more funding, so manana always seems within reach. Worst case: you're shorting Amazon. The bulls were right, and you go broke. Best case: you're shorting something like Energy Conversion Devices, which eventually did run out of money and file for Chapter 11 in 2012. Shorts had been predicting its demise since the 1970s. That is a long time to wait.
- kornish 10y ago"The market can stay irrational longer than you can stay solvent." – John Maynard Keynes
- clock_tower 10y agoBest case: you're shorting Sun Microsystems at the beginning of 2000, and it goes from $300/share to $3/share in the next 3 years. (http://www.1stock1.com/1stock1_211.htm http://www.1stock1.com/1stock1_211.htm) My advice is to just not touch tech stocks; going short on them is just as dangerous as going long.
- marvin 10y agoEven the best case wouldn't have you more than double your money, if you put up 1:1 collateral. I guess you could have less collateral than this, but in that case, given a growth stock, you would be wiped out if there was a modest increase. I don't see the risk/reward curve for long-term shorting.
- mortehu 10y agoWhen the price starts dropping, you would have to sell more shares to maintain a 1:1 ratio. For example, you can double the number of shares each time the price drops by half, and make up to 200%.
- jgalt212 10y agoThe raise will dilute earnings for common shareholders, so definitely a downward force on stock price. That being said, this investment and the recent raise you alluded to should clobber the put skew. http://www.volcube.com/resources/options-articles/what-is-option-put-skew/ http://www.volcube.com/resources/options-articles/what-is-op...
- PaulHoule 10y agoOne of life's little mysteries is that you almost always lose money if you invest internationally. A friend of mine says it is because the locals know what is going on better than you do. Tencent was a major investor in Magic Leap and the Saudi Sovereign Fund invested heavily in .coms in early 2000. It is definitely not a sell signal, but I would not buy what Tencent is buying.
- g123g 10y agoYou should have told this fact to Yahoo management before they invested in Alibaba or maybe to Naspers before they invested in Tencent.
- edsheeran 10y agoSounds like confirmation bias, also one of life's mysteries.
- davedx 10y agoCitation definitely needed. Most of my investments are in stocks and funds outside of where I live (Netherlands). Guess which parts of my portfolio aren't doing so well? The EU bonds.
- deleted 10y ago[deleted]
- dkersten 10y ago"I would not buy what Tencent is buying." Tencent own a lot of stock in (international) companies that are doing well too. For example, Riot Games, Epic Games and Snapchat. Similar things can be said about Alibaba.
- Mikeb85 10y agoIs anyone actually short Tesla to a significant degree? I can understand the normal hedging positions and daily trading, but shorting a stock with so much positive sentiment is folly...
- marvin 10y ago31 million TSLA shares are currently held short, which represents somewhere in the region of 20% of the non-insider shares. (Yahoo finance says 38% of the float, so I guess it depends how many shares you consider freely available on the market). http://www.nasdaq.com/symbol/tsla/short-interest http://www.nasdaq.com/symbol/tsla/short-interest
- restalis 10y agoPetrodollar players doubling-down?
- erikpukinskis 10y agoThere are some reasonable bets here. Russia has a vested interest in climate change... their biggest liability is cold and ice, a rise in sea level and 5 degree bump in average temps would give them a much bigger role in agriculture and shipping. Add that to the petrodollars from selling their oil reserves and you've got a game changer for them economically. China probably loses at least temporarily in the runaway climate change event due to destroyed cropland and refugees. The U.S. has exposure on both sides so it's a little more moot for us. We'll lose quite a lot of biodiversity, and may take a big hit to agriculture but we're banking petrodollars and have so much upside when people move to virtual reality we'll be fine. If we were horribly exposed Dems/Reps wouldn't be split on the issue, as clueless as they are. And of course there are the Saudis and corporate/investment petro interests you allude to. Russia/Saud/Exxon vs China with U.S. on the sidelines... not sure who wins there. I really hope we can transition to sustainable energy, but there are big players that stand to gain from delaying it until the reserves are burnt. It's not a bet I would take but I understand why people would bet on there being plenty of feet sticking out to trip up Tesla and co.
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- prolly_a_moron 10y agoThe stock has been stagnant for a long time, and it's still off its high. Shorts have done fine. What's amazing are the longs seeing capital raises at mediocre terms as a wide open positive.
- davedx 10y agoWho says the capital raise is a 'wide open positive'? As someone long TSLA I'm not ecstatic. But short of selling my stock, how else can I signal?
- prolly_a_moron 10y ago>Who says the capital raise is a 'wide open positive'? The guy at the top of this thread who said "Shorts can't buy a break". It's at least arguable that these sorts of capital raises are exactly what the shorts are looking for.
- danhak 10y agoThis was not a capital raise. Read the filing. Tencent acquired most of the shares on the open market and the remainder in the round that was announced earlier this month.
- prolly_a_moron 10y ago>This was not a capital raise. Read the filing. I don't need to read a filing to know that when you create shares out of nowhere, and sell them, diluting current shareholders, it's a capital raise. What else would you call it?
- danhak 10y agoDo you understand that's not what happens when shares are acquired on the open market?
- prolly_a_moron 10y ago
- Afforess 10y agoThis is why you should purchase put options instead of short selling. Exposure to short selling is theoretically infinite. Exposure to put options is just the price you paid for the option. Shorting generally should only be for companies whose solvency is in doubt.
- samfisher83 10y agoWith put option you pay a big premium for the right for someone else to take that risk. If the company has a high volatility like Tesla you will pay a big premium to buy that option.
- paul_milovanov 10y agoUpside insurance isn't free. There's no free lunch.
- reverend_gonzo 10y agoThis is wrong. You should not be trading options if you only have a directional view of a stock, as you will get eaten alive. Options pricing involves much more than just the underlying stock. Most importantly, as another poster said, there is implied volatility. There is also time risk and interest rate risk priced into the option. With options, you could be right on direction, and still lose money.
- martinko 10y agoIf your strategy is to hold them in order to exercise them you do not need to worry about their pricing.
- FeepingCreature 10y agoI wish people could buy something like an "implied short", which would basically be an index minus Tesla.
- Ericson2314 10y agoIn general, I wish there were safer ways to short.
- laurent123456 10y agoI didn't short the stock but I can understand why someone would. They are expected to generate over 90% of their value after 2020 [0]. There's the expectation that Elon Musk will definitely deliver, that Tesla market share will not be eaten up by other carmakers when they seriously start releasing electric vehicles. The expectation that electric and not another form of energy, such as hydrogen, will dominate, etc. There's a lot that could go wrong and a lot of unknown variables. Then again everything might turn out fine, the point is that no-one know for sure. [0] https://webcache.googleusercontent.com/search?q=cache:UBQtFuwrjtEJ:www.economist.com/news/business/21717421-three-financial-sanity-tests-whether-there-bubble-are-technology-firms-madly+&cd=9&hl=en&ct=clnk&gl=us https://webcache.googleusercontent.com/search?q=cache:UBQtFu...
- spyspy 10y ago> when they seriously start releasing electric vehicles They've been "serious" for a long time. Chevy has been selling the Volt since 2010. If they were going to muscle out Tesla they would have done it by now. And it's not just about technology. Tesla has the customer reputation that companies like GM will never have again.
- Robotbeat 10y agoI own a Volt. Best car I've ever driven. GM doesn't care much for it. The only advertising they really do for it basically is trying to steal EV customers from Nissan's Leaf. Really dumb. And the dealers don't like it because 1) they don't know how to service them and especially 2) they almost never need servicing. If you run almost exclusively on electric, you only need like 4-5 oil changes in the entire life of the car. And the brakes last forever, too.
- vvanders 10y agoYup, which is why any entrenched player is going to have to both build an incredible car and fight against their dealerships to sell it.
- M_Grey 10y agoOver the next year or so, it should be clear if they'll be left in the cold, or very wealthy. Pretty much everyone seems to agree that the Model 3 needs to do well in an unprecedented way (not impossible), or Tesla is in very deep trouble (not impossible). It's hard to imagine the BMW and Mercedes aren't working on things too, and they won't have horror stories of their cars being in the shops for the better part of a year. This is still so uncertain, and I for one wouldn't feel comfortable even guessing, never mind guessing with real money.
- enahs-sf 10y agomeanwhile the straddlers and long haul guys are making a killing right now.