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This is a short squeeze. The people that shorted the stock are buying the stock to close their position and forcing the stock up. This has happened with Tesla b

This is a short squeeze. The people that shorted the stock are buying the stock to close their position and forcing the stock up. This has happened with Tesla before. The stock went from the 40s to over 100 in a very short time and never looked back. The stock will find a top and collapse a bit. But the stock price will end up higher than when it started the run. Those that shorted the stock before the run will never get even. Ouch!

spectramax 7y ago
Would it be worth shorting Tesla now at $900?
- blueadept111 7y ago
  Good luck sleeping at night
  - spectramax 7y ago
    Why not? If this is a short squeeze, wouldn't there be a balancing market incentives to short the short squeeze?
    - whymsicalburito 7y ago
      Unless you happen to have a magic crystal ball, it's a purely speculative gamble. Nothing about tsla's price is rational right now. The people who shorted yesterday probably thought the same thing...
    - WheelsAtLarge 7y ago
      Unless you know that all the panic buying has stopped there's no way to know when the stock will stop going up. Not only are the shorts buying but all those that feel they are missing out are buying too. It's a hit or miss situation now.
    - vikramkr 7y ago
      Yes. And there might be even larger forces like people seeing Tesla going up and just wanting to buy buy buy that throws off the balance again and keeps it moving up. So you can short it, and you might be right that the stock will crash within a few months, but Tesla likely isn't cheap to short, and if the price rises up in the meantime to the point that you can't afford the collateral to short anymore, you might find yourself desperately trying to buy back your shares to close your position to avoid bankruptcy and in the midst of another squeeze.
- WheelsAtLarge 7y ago
  No way to know. $900 seems high but people though $40 was high too a few years ago. No one knows until it's over.
  - NotSammyHagar 7y ago
    At $40 it was a question of valuation. At $900 it's overvalued, 98% of even tesla owners (like me) would agree. They have a fantastic future, their technology is world leading. The company even seems to be thriving. Remember the real goal is pull the other auto companies along in their wake to make more sustainable electric cars. They actually seem to be doing it. Let's see how it seems in another few years when every company has serious custom designed electric cars (instead of much less viable converted gas cars with transmission tunnels running down the car. I love my tesla but the more important thing is converting the world to electric cars - it will take years and needs lots of work to get there (more range, faster charging, way more chargers). But we'll get there.
    - WheelsAtLarge 7y ago
      That's how the current short-sellers have gotten themselves in trouble. They all thought that the stock was overvalued. It may be overvalued but there are enough buyers that are willing to bet that the stock can still go up. This is a stock that gets traded on things other than current value or even future value. This stock was at $215 less than 6 months ago. Wow....
      - xkjkls 7y ago
        The problem is that there really isn’t any data the stock trades on. Like — imagine if you were an insider trader. What number from inside the company would you consider the most valuable? Units sold? Revenue? I honestly wouldn’t even know what to ask that I could be certain would move the stock one way or the other.
- xsmasher 7y ago
  “The market can stay irrational longer than you can stay solvent.”
  - inkeddeveloper 7y ago
    I feel this comment in my bones.
- realdlee 7y ago
  Much safer to buy put options if you think the stock will go down. https://www.investopedia.com/terms/p/putoption.asp https://www.investopedia.com/terms/p/putoption.asp
- darkteflon 7y ago
  If you have to ask, you can’t afford it.
- ithinkinstereo 7y ago
  The squeeze aint over yet; 22% of its float is short [1]. We may see this pop into the 1000s by the end of the week. 1. https://www.gurufocus.com/term/ShortPercentageOfFloat/NAS:TSLA/Short-Percentage-of-Float/Tesla https://www.gurufocus.com/term/ShortPercentageOfFloat/NAS:TS...
  - xkjkls 7y ago
    That 22% isn’t exactly capital that can easily be margin called. So much of it is quant funds, where it’s one of 100 short positions, and even the massive shorts like Chanos/Einhorn only have a few percentage of their funds in it
- elhudy 7y ago
  Well, did you?
derivagral 7y ago
As someone who was looking into the stock somewhat seriously way back then, I'll offer an alternative story. That was their first "profitable" quarter, for which they cashed in a bunch of single-use accounting gimmicks. The part that taught me the most at the time was that they then rapidly leveraged that huge rise to issue debt/equity at the new valuation. That cash infusion all but cemented what otherwise would've been quite temporary. Fascinating stuff.
- elsurudo 7y ago
  Fascinating. Where can I read more such analysis? About TSLA, but also just in general.
  - derivagral 7y ago
    This was homegrown stuff we did; the credit bit is from their 2013 annual[0], under "Revenues -> Automotive Sales". This discusses the start of their credit sales. The 2013 Q1 [1] shows a ~11m net income; later, they discuss credit sales [2]. Then, the market went nuts over >0 net income: this 2013 article [3] seems like a reasonable summary. You can find the reports from ir.teslamotors.com/sec-filings or the SEC's Edgar database. [0] https://ir.teslamotors.com/node/12956/html#tx452995_10 https://ir.teslamotors.com/node/12956/html#tx452995_10 [1] https://ir.teslamotors.com/node/13166/html https://ir.teslamotors.com/node/13166/html [2] During the first quarter of 2013, we recognized $67.9 million in ZEV sales, which contributed to our gross margin. ZEV credit revenue should decline in future quarters relative to our automotive sales as we grow our sales outside the United States and earn fewer credits on the 60 kWh Model S battery variant for those sales that occur in the United States. Other regulatory credit sales recognized during the first quarter of 2013 were $17.1 million. While we will pursue opportunities to monetize ZEV credits we earn from the sales of our vehicles, we do not plan to rely on these sales to be a significant contributor to gross margin, and our business model is not predicated on such ZEV credits." [3] https://www.reuters.com/article/autos-tesla-debt-idUSL2N0DY12C20130517 https://www.reuters.com/article/autos-tesla-debt-idUSL2N0DY1...
- WheelsAtLarge 7y ago
  You have a good point. Companies often use a stocks run up to issue new stock. Many have all the paperwork done so they are ready to issue the stock in no time once they decide to do it. Tesla needs a lot of capital to produce their cars. I bet we'll be hearing about a new stock issue relatively soon.

spectramax 7y ago

Would it be worth shorting Tesla now at $900?

blueadept111 7y ago
Good luck sleeping at night
- spectramax 7y ago
  Why not? If this is a short squeeze, wouldn't there be a balancing market incentives to short the short squeeze?
  - whymsicalburito 7y ago
    Unless you happen to have a magic crystal ball, it's a purely speculative gamble. Nothing about tsla's price is rational right now. The people who shorted yesterday probably thought the same thing...
  - WheelsAtLarge 7y ago
    Unless you know that all the panic buying has stopped there's no way to know when the stock will stop going up. Not only are the shorts buying but all those that feel they are missing out are buying too. It's a hit or miss situation now.
  - vikramkr 7y ago
    Yes. And there might be even larger forces like people seeing Tesla going up and just wanting to buy buy buy that throws off the balance again and keeps it moving up. So you can short it, and you might be right that the stock will crash within a few months, but Tesla likely isn't cheap to short, and if the price rises up in the meantime to the point that you can't afford the collateral to short anymore, you might find yourself desperately trying to buy back your shares to close your position to avoid bankruptcy and in the midst of another squeeze.
WheelsAtLarge 7y ago
No way to know. $900 seems high but people though $40 was high too a few years ago. No one knows until it's over.
- NotSammyHagar 7y ago
  At $40 it was a question of valuation. At $900 it's overvalued, 98% of even tesla owners (like me) would agree. They have a fantastic future, their technology is world leading. The company even seems to be thriving. Remember the real goal is pull the other auto companies along in their wake to make more sustainable electric cars. They actually seem to be doing it. Let's see how it seems in another few years when every company has serious custom designed electric cars (instead of much less viable converted gas cars with transmission tunnels running down the car. I love my tesla but the more important thing is converting the world to electric cars - it will take years and needs lots of work to get there (more range, faster charging, way more chargers). But we'll get there.
  - WheelsAtLarge 7y ago
    That's how the current short-sellers have gotten themselves in trouble. They all thought that the stock was overvalued. It may be overvalued but there are enough buyers that are willing to bet that the stock can still go up. This is a stock that gets traded on things other than current value or even future value. This stock was at $215 less than 6 months ago. Wow....
    - xkjkls 7y ago
      The problem is that there really isn’t any data the stock trades on. Like — imagine if you were an insider trader. What number from inside the company would you consider the most valuable? Units sold? Revenue? I honestly wouldn’t even know what to ask that I could be certain would move the stock one way or the other.
xsmasher 7y ago
“The market can stay irrational longer than you can stay solvent.”
- inkeddeveloper 7y ago
  I feel this comment in my bones.
realdlee 7y ago
Much safer to buy put options if you think the stock will go down. https://www.investopedia.com/terms/p/putoption.asp https://www.investopedia.com/terms/p/putoption.asp
darkteflon 7y ago
If you have to ask, you can’t afford it.
ithinkinstereo 7y ago
The squeeze aint over yet; 22% of its float is short [1]. We may see this pop into the 1000s by the end of the week. 1. https://www.gurufocus.com/term/ShortPercentageOfFloat/NAS:TSLA/Short-Percentage-of-Float/Tesla https://www.gurufocus.com/term/ShortPercentageOfFloat/NAS:TS...
- xkjkls 7y ago
  That 22% isn’t exactly capital that can easily be margin called. So much of it is quant funds, where it’s one of 100 short positions, and even the massive shorts like Chanos/Einhorn only have a few percentage of their funds in it
elhudy 7y ago
Well, did you?

derivagral 7y ago

As someone who was looking into the stock somewhat seriously way back then, I'll offer an alternative story. That was their first "profitable" quarter, for which they cashed in a bunch of single-use accounting gimmicks. The part that taught me the most at the time was that they then rapidly leveraged that huge rise to issue debt/equity at the new valuation. That cash infusion all but cemented what otherwise would've been quite temporary. Fascinating stuff.

elsurudo 7y ago
Fascinating. Where can I read more such analysis? About TSLA, but also just in general.
- derivagral 7y ago
  This was homegrown stuff we did; the credit bit is from their 2013 annual[0], under "Revenues -> Automotive Sales". This discusses the start of their credit sales. The 2013 Q1 [1] shows a ~11m net income; later, they discuss credit sales [2]. Then, the market went nuts over >0 net income: this 2013 article [3] seems like a reasonable summary. You can find the reports from ir.teslamotors.com/sec-filings or the SEC's Edgar database. [0] https://ir.teslamotors.com/node/12956/html#tx452995_10 https://ir.teslamotors.com/node/12956/html#tx452995_10 [1] https://ir.teslamotors.com/node/13166/html https://ir.teslamotors.com/node/13166/html [2] During the first quarter of 2013, we recognized $67.9 million in ZEV sales, which contributed to our gross margin. ZEV credit revenue should decline in future quarters relative to our automotive sales as we grow our sales outside the United States and earn fewer credits on the 60 kWh Model S battery variant for those sales that occur in the United States. Other regulatory credit sales recognized during the first quarter of 2013 were $17.1 million. While we will pursue opportunities to monetize ZEV credits we earn from the sales of our vehicles, we do not plan to rely on these sales to be a significant contributor to gross margin, and our business model is not predicated on such ZEV credits." [3] https://www.reuters.com/article/autos-tesla-debt-idUSL2N0DY12C20130517 https://www.reuters.com/article/autos-tesla-debt-idUSL2N0DY1...
WheelsAtLarge 7y ago
You have a good point. Companies often use a stocks run up to issue new stock. Many have all the paperwork done so they are ready to issue the stock in no time once they decide to do it. Tesla needs a lot of capital to produce their cars. I bet we'll be hearing about a new stock issue relatively soon.