• May 13, 2013
As A. Whitney Brown once said, "There's really no use in beating a dead horse. I mean, except for the pure joy of it." Well, if Tesla's recent string of successes is said horse, then we hope you enjoy the rest of this post.

Let's start with politics, and Tesla CEO Elon Musk's step back from Facebook founder Mark Zuckerberg's new immigration reform political action group, Fwd.us. Musk is one of the big names that is taking his name off the supporter list because Fwd.us gave money for ads that supported US senators who also supported the Keystone XL pipeline and Alaskan oil drilling.

Then we have Tesla stock, TSLA, which has more than doubled so far this year. It was news when it crossed the $50 mark a few weeks ago but right now it's sitting at $83.75, up almost $7 from Friday. The reason for the rapid rise is clear to anyone who's paying attention, as you can see in the interactive widget below, but there is a trading history here that involves a lot of people betting against Tesla. There's a good rundown on the history of TSLA stock shorting here, and it includes these words of warning: there are a number of factors that "could drive the stock down in time. Probably will, say some analysts" and "If you own Tesla stock, enjoy the ride." We recommend the same if you own an actual Tesla.


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  • 55 Comments
      Electron
      • 1 Year Ago
      Is Tesla really worth more than Fiat? Or Mazda? Because that's how it's currently valued. Is it really in Tesla's interest to be the object of wild speculation games like this? Tesla has done everything right that was under its control but the most important factor it has little control over: demand. It's an expensive car introduced during an economic downturn of epic proportions. Convincing the early adopters wasn't the hard part; that starts now, with the reservation list all but gone as it would appear. Now people need to be convinced that they are better off with a Model S rather than say an A7,CLS or XF. Of course it helps that organizations like Consumer Reports say that very same thing. It's great that Tesla managed to report a small profit but factors like selling from backlog, enormous but incidental ZEV credit income and shifting cost across quarters definitely played a role in that. There is already signs that demand is starting to fall short of Tesla's production capacity, like ultra fast delivery times, the quick introduction of the finance option, the end of the reservation system that coincided with those tracking Model S reservation noticing a drop off in new reservations back in early February. Sales outside the US will need to pick up the slack but those markets may need further developing like the roll out of Supercharger networks, something that can't be done overnight. The result could be that earning and sales reports from the later quarters this year cause a serious collapse in stock prices that could be as unwarranted as the current bubble. Time will tell.
        Vlad
        • 2 Days Ago
        @Electron
        All you said is true, but... the market is all about expectations. Nobody expects a great breakthrough from Mazda. Significant number of people expect more great breakthroughs from Tesla.
        markrogo
        • 2 Days Ago
        @Electron
        "Is Tesla really worth more than Fiat? Or Mazda? " Probably. In the meantime, the fact that 40+% of the shares were shorted is what has led to the huge move. It was a bad bet the company was going to collapse.
          Electron
          • 2 Days Ago
          @markrogo
          This is all about the battery. Tesla would definitely be worth more than Fiat, Mazda or any other car company if it were sitting on a huge battery breakthrough. That's not the case though. I'm not even aware of it having substantial stakes in potential battery breakthroughs like Toyota and GM. If any of those companies get the exclusive right to some sort of "miracle battery" things will change radically for Tesla. The point being that investing in Tesla is pretty speculative and short squeeze driven bubbles do not really reflect the risks involved.
      Giza Plateau
      • 1 Year Ago
      Jon, the stock market is not tied to reality in any strong way. It's a gamblers anonymous meeting. It's all fiction. If people believe the stock is worth a lot then it's suddenly worth a lot. Doesn't matter if they are near bancruptcy. Perception is king. It's no more controlled than a flock of birds.
      Spec
      • 1 Year Ago
      87.83 +11.07(+14.42%) 4:00PM EDT|After Hours : 87.61 0.22 (0.25%) 4:08PM EDT - Nasdaq Real Time Price ***Market Cap: 10.01B*** Boom. $10 Billion market cap. Amazing.
        Giza Plateau
        • 2 Days Ago
        @Spec
        Question is will it break through 100 tomorrow : ) It has completely departed reality and the sky is the limit. This could be a bloodbath for the shorts. This is why I never recommended shorting even though TSLA fundamentals are still terrible. There is so much optimism attached to that company. Like a lightning rod for pent up anticipation for EVs. Just remember what Gordon Gekko said: that's smart, green is the next bubble. And this could be a big one : )
        Grendal
        • 2 Days Ago
        @Spec
        Just broke $90 in aftermarket trading.
        Rotation
        • 2 Days Ago
        @Spec
        The market cap doesn't make much sense. They're worth more than FIAT right now.
      Val
      • 1 Year Ago
      at 20000 they might make money for a moment but even´╗┐ that I doubt. remember what Elon said.... The numbers from Q3 and back tell a very devastating story and I essentially consider the bankruptcy a certainty at this point. But if Q4 doesn't show a dramatic move´╗┐ towards profitability then I will call it as an absolute certainty. I'd say it's 99% now and after Q4 I expect it will be 99.99% certain. I expect a loss between 60 and 120 million and that really makes debt repayment look hard. It's over. Execs also sell their stock Dan, 3 months ago...
      Val
      • 1 Year Ago
      Are the shorts hurting Dan, are they really hurting? Because when you were saying to months ago that they will never be profitable, i told you to just short the stock if you think so. And your response was that if everyone shorts, there won't be much of a profit to be made. And yet there is no other way to make money out of stock you think (and believe desperately) will fail miserably. So how much money did you lose from that short squeeze? Or you thought it was going to go the other way (up) all along, but just spewed nonsense, hoping to cash in?
      raktmn
      • 1 Year Ago
      This type of valuation prices in future successful rollouts of both the Model X, and the GEN III less expensive model. If Tesla pulls both of those off, these share prices will be justified.
        Spec
        • 1 Year Ago
        @raktmn
        Yes . . . it is 'priced for perfection'. And perhaps it could hold it. But at some point, some kind of scandal, disappointment, change in conditions, etc. could happen causing it to drop.
          PeterScott
          • 2 Days Ago
          @Spec
          Yep, hard to jump in now, great if you already did.
          Giza Plateau
          • 1 Year Ago
          @Spec
          Actually, while it's quite true it's hugely overvalued, don't think that it is in any way tied to reality and will stop there. The price is about hype and it is greatly amplified by the enormous amount of shorts. I'd actually recommend a buy right now albeit risky. The stock could well explode and I expect it to continue to rise substantially the next few weeks.
      Grendal
      • 1 Year Ago
      Elon predicted the "tsunami of hurt" for those shorting. In this case he was absolutely correct. Ouch.
        Giza Plateau
        • 2 Days Ago
        @Grendal
        Nono, the tourists are still amused by the first wave. The tsunami has yet to come : ) It could be clobbering time. Thousands of dead bloated bodies scattered around in the ruins of a once fertile financial landscape : ) I would not be surprised if we pass 100 today and similar rise to continue for the next 2-3 weeks. I haven't tried to run some simulations on the shorting tsunami situation but I hunch it could be ridiculous :) In principle we could see TSLA market cap eclipse GM's although it's hard to imagine things going that bad. And all this based on a company that produced a 73m$ loss on their operation last quarter if not for the enormously generous ZEV credits and some creative accounting.
        Grendal
        • 2 Days Ago
        @Grendal
        How much stock is still being shorted? Isn't it hard to tell exactly how much? Realistically, now would be the best time to short with the stock over inflated. Even I think the number is too high. I am new to the stock market and options and shorting are well beyond what I know.
          Giza Plateau
          • 2 Days Ago
          @Grendal
          You can look at the daily volume and compare to thte size of the shorts and see how quickly they could have been unhanded. but like you are saying people might also be buying shorts now making the situation even worse : )
      Spec
      • 1 Year Ago
      85.74 +8.98(+11.69%) 12:24PM EDT - Nasdaq Real Time Price Market Cap: 9.73B For reference, GM that makes 5 million cars a year only has a market cap of $42Billion. Crazy. Remember though, the market can remain irrational longer than you can remain solvent.
        Letstakeawalk
        • 1 Year Ago
        @Spec
        Tesla keeps getting compared to Apple (Mkt Cap 429.46B). Irrational? Sure. OTOH, it could still go a lot further.
        Jon
        • 1 Year Ago
        @Spec
        Is that crazy in a good way or bad way? Wikipedia has given me a basic understanding of what market cap is.. Does GM's smaller market cap (relative to the size of the company) basically just mean they are more conservative with their funds i.e. a smaller portion of the company is publicly traded?
      Grendal
      • 1 Year Ago
      Good luck, LTAW. ;-) Do you have a target number? Or just going to wing it, like me? Or just staying long period and watching it grow over the years? This was my first try at buying stock. One of the lessons I've learned is that I did about the same as if I had just bought in and left it alone as trying to sell at the highs and buy at the lows. Oddly, I dropped SolarCity because I thought it was just too risky and that would have been the best bet of all. It went from $10 (when I bought it) to $39 today. I sold it at $14.
      Spec
      • 1 Year Ago
      Depends on if you down TSLA shares or are short TSLA shares. ;-)
      2 wheeled menace
      • 1 Year Ago
      I'm glad he's pulled out of fwd.us. Actually rather sad that he was a part of it in the first place tho. Facebook is another site that i usually have my ad blocker turned on for..
        2 wheeled menace
        • 2 Days Ago
        @2 wheeled menace
        That's usually how politics works. Nothing good comes of it, ever!
        paulwesterberg
        • 2 Days Ago
        @2 wheeled menace
        I think fwd.us was a scam created by some political players to suck money out of silicon valley with promises of influence while continuing to do business as usual. fwd.us created,... senate passes internet tax.
      car czar
      • 1 Year Ago
      I am enjoying the ride every time I look at my portfolio! But I'm wise to bubbles and debating when I should get out before it burst. I'm glad TSLA is doing well for my own financial gain, but i'm even more happier than a true AMERICAN car company is succeeding. Tesla now needs to make a car to compete in the premium luxury hybrid market (lincoln MKZ, Lexus GS 450h and soon the Cadillac Verge) if they can get a pure E.V into that market its game over.
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