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I opened a massive short position on NKLA today after seeing it up almost 10%. Uneducated speculators that have forgotten the lessons of Theranos are fueling it

by xwdv 6y ago

I opened a massive short position on NKLA today after seeing it up almost 10%. Uneducated speculators that have forgotten the lessons of Theranos are fueling its rise, and for them it will end in tears. For me? I will make a fortune.

Miner49er 6y ago
I wouldn't be so sure. Fundamentals don't matter much in this market.
- xwdv 6y ago
  The time for fundamentals will return soon.
  - bryanlarsen 6y ago
    If "soon" is "less than a decade" I'd probably agree with you, but I still wouldn't be certain. The housing market took 6 years to go from front cover of the Economist to crash. A large reason for the market strangeness is the helicopter money from the Fed and the essentially zero interest rate environment. The helicopter money might end soon, but the crazy low interest rates might be here to stay. We might have to redefine what the fundamentals are.
    - yholio 6y ago
      There is only so much zero interest money you can burn through before people taking those loans realize that you have no product and they will be still liable for the principal. Nikola has no battery edge. Their hydrogen tech is vaporware - after more then 20 years of massive public and private investment in Japan and Germany, Hydrogen failed to achieve a competitive position in the marketplace. Hell, it has been 17 years since Bush Jr announced his plan for a "Hydrogen economy" - nothing materialized. Hidrogen is dead an buried, not coming back. Nikola has no propulsion in a market where even the company that has the best electric propulsion - Tesla - is struggling to put a compelling semi.
    - pgwhalen 6y ago
      A small note: Helicopter Money has a relatively precise definition, and what the US government (and Federal Reserve) has done in 2020 does not fit that definition. The Fed's activities still fall under the umbrella of Quantitative Easing. https://en.wikipedia.org/wiki/Helicopter_money https://en.wikipedia.org/wiki/Helicopter_money
  - josefresco 6y ago
    "The market can remain irrational longer than you can remain solvent."
  - mschuster91 6y ago
    I assume you are referring to the upcoming elections with "soon" - the problem is, the Fed won't be stopping the money presses so soon, and with all the cheap money in the market it will always drive to find even the most tiny returns. Even if these "returns" are scams.
  - NationalPark 6y ago
    Right, but when you're shorting this stock you're assigning a deadline to this prediction. And a pretty aggressive one - I assume your expiration is before the election, otherwise you're essentially buying election IV.
  - valuearb 6y ago
    Warren Buffett and Ben Graham would laugh uproariously at this statement.
paxys 6y ago
The market can remain irrational longer than you can remain solvent.
xkjkls 6y ago
I'm not sure you've learned the lessons from Tesla
- bob33212 6y ago
  I have been investing in TSLA since 2014, This situation is exactly the opposite.
  - xkjkls 6y ago
    Both companies are fake it until you make it businesses to the extreme. Tesla is just 10x the size of Nikola.
    - ric2b 6y ago
      Tesla was already selling cars when it went public. Nikola doesn't even have a functional prototype as far as I'm aware, the best they have is a truck that can drive at what looks like 20mph while towing nothing, and I'm giving them the benefit of the doubt that it is actually running on an hydrogen fuel cell.
      - batsigner 6y ago
        it can go 20 mph in neutral downhill. it cannot even move under its own power
bob33212 6y ago
I almost took a short position on Friday. The risk is that Softbank does a front running scam again and you get caught down 300% before NKLA actually goes under.
- person_of_color 6y ago
  How is Masa Son not in jail?
ericd 6y ago
What kinds of borrowing costs are you seeing? The numbers I saw earlier would make it extremely sensitive to timing.
wh1t3n01s3 6y ago
Good call! NKLA is down 8% aftermarket
- RandyRanderson 6y ago
  I see a long TSLA / short NKLA position much safer than just shorting NKLA. I think the question might just be the ratio of capital.
- xwdv 6y ago
  Yup, it’s already happening, and it’s only going to go down more.
blantonl 6y ago
massive short position I hope you are WELL capitalized to prepare for pain. First, this stock has surely reached HTB status (hard to borrow) and so it is going to be very expensive, prohibitively so depending on timing, to borrow these shares for your adventure for any decent amount of time. And don't worry, you aren't the only person who will be shorting these shares, which means there's gonna be months of fu*kery going on regarding this company and it's stock. There are already people lining up on the other end of this in anticipation of the fun, and when crazy news hits, or something short term favorable happens, the short squeeze will be on. This is where you are going to need to be well capitalized. I've decided to play this one in the options market with a defined time horizon. Even though, like the borrowing shares market, there is significant expense associated with this trade because of super high implied volatility, I still think there is upside, with defined risk instead of unlimited risk like straight shorting the shares. I've decided to purchase 1/15/2021 Calls and Puts on this stock, and let it go to zero in the end. Good luck.

by xwdv 6y ago

Miner49er 6y ago

I wouldn't be so sure. Fundamentals don't matter much in this market.

xwdv 6y ago
The time for fundamentals will return soon.
- bryanlarsen 6y ago
  If "soon" is "less than a decade" I'd probably agree with you, but I still wouldn't be certain. The housing market took 6 years to go from front cover of the Economist to crash. A large reason for the market strangeness is the helicopter money from the Fed and the essentially zero interest rate environment. The helicopter money might end soon, but the crazy low interest rates might be here to stay. We might have to redefine what the fundamentals are.
  - yholio 6y ago
    There is only so much zero interest money you can burn through before people taking those loans realize that you have no product and they will be still liable for the principal. Nikola has no battery edge. Their hydrogen tech is vaporware - after more then 20 years of massive public and private investment in Japan and Germany, Hydrogen failed to achieve a competitive position in the marketplace. Hell, it has been 17 years since Bush Jr announced his plan for a "Hydrogen economy" - nothing materialized. Hidrogen is dead an buried, not coming back. Nikola has no propulsion in a market where even the company that has the best electric propulsion - Tesla - is struggling to put a compelling semi.
  - pgwhalen 6y ago
    A small note: Helicopter Money has a relatively precise definition, and what the US government (and Federal Reserve) has done in 2020 does not fit that definition. The Fed's activities still fall under the umbrella of Quantitative Easing. https://en.wikipedia.org/wiki/Helicopter_money https://en.wikipedia.org/wiki/Helicopter_money
- josefresco 6y ago
  "The market can remain irrational longer than you can remain solvent."
- mschuster91 6y ago
  I assume you are referring to the upcoming elections with "soon" - the problem is, the Fed won't be stopping the money presses so soon, and with all the cheap money in the market it will always drive to find even the most tiny returns. Even if these "returns" are scams.
- NationalPark 6y ago
  Right, but when you're shorting this stock you're assigning a deadline to this prediction. And a pretty aggressive one - I assume your expiration is before the election, otherwise you're essentially buying election IV.
- valuearb 6y ago
  Warren Buffett and Ben Graham would laugh uproariously at this statement.

paxys 6y ago

The market can remain irrational longer than you can remain solvent.

xkjkls 6y ago

I'm not sure you've learned the lessons from Tesla

bob33212 6y ago
I have been investing in TSLA since 2014, This situation is exactly the opposite.
- xkjkls 6y ago
  Both companies are fake it until you make it businesses to the extreme. Tesla is just 10x the size of Nikola.
  - ric2b 6y ago
    Tesla was already selling cars when it went public. Nikola doesn't even have a functional prototype as far as I'm aware, the best they have is a truck that can drive at what looks like 20mph while towing nothing, and I'm giving them the benefit of the doubt that it is actually running on an hydrogen fuel cell.
    - batsigner 6y ago
      it can go 20 mph in neutral downhill. it cannot even move under its own power

bob33212 6y ago

I almost took a short position on Friday. The risk is that Softbank does a front running scam again and you get caught down 300% before NKLA actually goes under.

person_of_color 6y ago
How is Masa Son not in jail?

ericd 6y ago

What kinds of borrowing costs are you seeing? The numbers I saw earlier would make it extremely sensitive to timing.

wh1t3n01s3 6y ago

Good call! NKLA is down 8% aftermarket

RandyRanderson 6y ago
I see a long TSLA / short NKLA position much safer than just shorting NKLA. I think the question might just be the ratio of capital.
xwdv 6y ago
Yup, it’s already happening, and it’s only going to go down more.

blantonl 6y ago

massive short position I hope you are WELL capitalized to prepare for pain. First, this stock has surely reached HTB status (hard to borrow) and so it is going to be very expensive, prohibitively so depending on timing, to borrow these shares for your adventure for any decent amount of time. And don't worry, you aren't the only person who will be shorting these shares, which means there's gonna be months of fu*kery going on regarding this company and it's stock. There are already people lining up on the other end of this in anticipation of the fun, and when crazy news hits, or something short term favorable happens, the short squeeze will be on. This is where you are going to need to be well capitalized. I've decided to play this one in the options market with a defined time horizon. Even though, like the borrowing shares market, there is significant expense associated with this trade because of super high implied volatility, I still think there is upside, with defined risk instead of unlimited risk like straight shorting the shares. I've decided to purchase 1/15/2021 Calls and Puts on this stock, and let it go to zero in the end. Good luck.