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Tesla short sellers lose $1B
- anoncoward111 8y agoThe time to short was months ago, to be honest. Reversing the news is always a good strategy [1] [1] unless it's news about Sears
- std_throwaway 8y agoIf there's enough money believing in the company the stock price doesn't really matter. They will hold as long as they believe the company has a chance to pay out (far) in the future. It's less a publicly traded stock and more a long term investment.
- Xcelerate 8y ago> It's less a publicly traded stock and more a long term investment I thought that was kind of the original point of stock.
- std_throwaway 8y agoThe point is a lower barrier of entry because anyone can just buy your stock and therefore a larger pool of potential investors. The downside is that the mass of those investors (on average) are not as well informed as a few select big investors. This gave Tesla a great amount of money to work with as long as their star was shining but now it could backfire badly.
- anoncoward111 8y agoYour theory is partially correct. Let's say Tesla is 10x overvalued. If the dumb believers weren't holding the stock, it would be 1x. This, as you said, is correct-- they're propping up the stock. However, Tesla isn't immune to short-term stocks. It will fluctuate between 5x and 10x overvalued, e.g, the stock should really be at $50 but is trading around 300-400. I'd be very happy if I shorted Tesla at $370 or whatever its high price was.
- std_throwaway 8y agoThe market doesn't follow the news. The news follows the market. If it's on TV it's already too late.
- sublimino 8y agoPerhaps counterintuitively (in British English at least) the noun news is uncountable (e.g. referring to a mass rather than something that can be counted), and is singular in grammatical construction (so cannot be pluralised). https://dictionary.cambridge.org/grammar/british-grammar/uncountable-nouns/news https://dictionary.cambridge.org/grammar/british-grammar/unc...
- std_throwaway 8y agoThanks.
- drdeadringer 8y ago> If it's on TV it's already too late. The same applies to when I hear about something from certain people. A part of me expects to hear about Columbus' "discovery" of America any century now from a few folks.
- tim333 8y agoWell, it's too late to buy or sell the move they just reported but do many people do that?
- anjc 8y agoIt's still in the same downward channel
- std_throwaway 8y agoThe company itself seems to be in a downward spiral getting hit from multiple sides. To me it's unclear if they'll make it.
- toomuchtodo 8y agoCan you provide a citation? If they make their 5k/week production target by the end of this month (which it looks like they will), they’re on their way to being cash flow positive, and also not needing another capital raise in the near term. Challenges for sure, but “downward spiral”? Hyperbole.
- Judgmentality 8y agoI am not sure why you think it's likely they'll hit 5k/week by the end of the month, considering Musk has been promising that for the better part of a year now. I admittedly do not know enough about the financials to know if that will truly make them cash flow positive, but even if it does they still have to pay back over $1 billion in debt at the beginning of 2019. Tesla is going to need to raise more money in less than a year (probably less than 6 months). If you truly don't believe that, I will happily take a bet.
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- toomuchtodo 8y agoBased on Musk’s track record, he delivers. Late? Sure. But always delivers. Disclaimer: TSLA investor with extremely high limit order set in order to prevent my shares from being lent to short sellers
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- n1231231231234 8y agomaybe it's narrow minded, but for me, investing is all about giving a company mid- to longterm support so that they can expand their business. shorting is none of that. it doesn't create any value for society at large. if anything, it is, imv, close to professional gambling. but even gambling isn't this destructive. that's why i have zero empathy for those who lose money from shorting.
- hsienmaneja 8y agoPurchasing common stock after an offering (I.e. on the open market) doesn’t do anything to support a company, either. It’s essentially just paper being traded back and forth.
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- TheSoftwareGuy 8y agoBut having the ability to liquidize their stake at almost any time makes it easier for investors to put money into the company, and therefore gets more investors on board.
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- ndonnellan 8y agoUnless the company needs to sell more stock or gives options/grants to employees. In either case, a higher price reduces the fraction of the company needed to be sold to get the same amount of cash. An increase is share price is almost always still beneficial to the company.
- Areading314 8y agoIt creates a lot of value when short sellers discover that businesses are lying or cooking the books, see enron, worldcom, etc.
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- stevievee 8y agoDo not bet against Tesla unless you are a professional. Tesla has incredible PR and Finance departments with background proponents holding enough capital to help them through rough patches. Side note, their Q2 2013 is still one of my favorite Finance/PR plays in recent memory.
- confiscate 8y agowhat happened in Q2 2013? sorry I did not follow news about Tesla until later
- stevievee 8y agoThey used stock issuance to repay their government loan and the only headlines the public saw was "Tesla repays government loan early!" leaving stock price a net gain after the issuance
- hinkley 8y agoThere was a time when half of Microsoft's net profits came from stock dilution. They were issuing new shares for employee stock option grants, so the strike price went into revenue every time options were exercised. The schadenfreude crowd was waiting and hoping for MS to make a big misstep. Any slip in profit would reduce their P/E, and if the stock price leveled off they would get hit again when option exercises declined, taking them negative (fewer new employees also equals less stock revenue). As one person put it, they were a bicycle. Stable while moving but would fall over as soon as they stopped. But I got bored of following MS long before those supposed hens came home to roost so I have no clue what really happened.
- slededit 8y agoThe price leveled out, the last few years of employee options expired out of the money. New employees got stock grants instead and the stock was stagnant in a narrow range for a decade.
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- iblaine 8y agoReminds me of Bill Ackman's bet against Herbalife.
- astrodev 8y agoIs this the "short burn of the century" that Musk predicted at the beginning of May? (https://twitter.com/elonmusk/status/992388944774938626 https://twitter.com/elonmusk/status/992388944774938626)
- toomuchtodo 8y agoIt’s the beginnings of it. Keep an eye on the price of deep out of the money calls on TSLA between $340-$380 to see what the market is predicting as we get closer to the next earnings call.
- marketgod 8y agoWe need to break $330~ on TSLA with power
- marketgod 8y agoSPY is going to $300 this year.
- Jugurtha 8y agoCan people in finance and analysts start using stagger charts[0], please? Making predictions and not keeping score of predictions is useless. That's exactly what tarot readers do. In the left column the months (or years or days) you make the predictions in. Top months are the months you're making the predictions for. The trace (R) is the actual real value (forecast of January in January, i.e: you have the number). So: The forecast for October made in January is 22. The forecast for October made in June is 13. The forecast for October made in September is 42. This way, we can track all forecasts and track errors. The chart has memory. The chart cuts through bullshit. J F M A M J J A S O N D J R 12 13 14 53 12 21 34 19 20 22 19 F - R 14 13 51 10 20 30 17 22 24 15 M - - R 51 11 27 35 19 20 21 19 12 A - - - R 55 17 20 32 18 21 28 19 M - - - - R 73 42 11 34 17 23 12 J - - - - - R 61 21 67 13 22 82 J - - - - - - R 42 11 34 17 23 A - - - - - - - R 42 11 34 17 S - - - - - - - - R 42 11 34 O - - - - - - - - - R 42 11 N - - - - - - - - - - R 12 D - - - - - - - - - - - R [0]: High Output Management - Andrew Grove
- Jugurtha 8y agoThe forecast for October made in January is 20. Sorry.
- tim333 8y ago> Making predictions and not keeping score of predictions is useless. Perhaps but I think you may misunderstand how these things work. "Nomura Instinet advising clients that the electric car maker's shares could rally 42 percent over the next year." is a sales pitch for people to become clients of Nomura and trade stuff. They have no interest in any one keeping score of their predictions. It's like "England may win the FA cup, place your bets with Ladbrokes" - not really about testability.