Reciprocity
Active Member
LOL Shorts on twitter. I almost feel sorry for them, not really.
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OK shorts, you had your dip, hope you jumped out while you could... 
The Tech Wreck on Friday was related to Goldman Sachs comments about FAAMG stocks, mainly software developers and a retailer (Amazon, which is highly software dependent and does not make the products it sells). Apple is mainly software, as its physical products are small and cheap to produce overseas. A short recomendation for Nvidia was also a negative catalyst on Friday, but it is also largely a writer of software; manufacturing chips is relatively cheap and easy.
While Telsa is deep into software and sells physical products, its large and complicated products are self-made, making it largely a capital intensive industrial manufacturing company. The previous sentence can also apply to Tesla's more nearly "peers", the other automakers. Therefore it should not be surprising that TSLA is to the upside right now with the automakers, and not down with the types of companies that were dissed on Friday. Those sellers on Friday who caused TSLA to be dragged down with the FAAMG stocks may have reacted rather hastily with little thought.
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Jonas out with a new note today-
Tesla’s (TSLA) valuation is not too high when you consider Waymo could be worth $70 billion, says Morgan Stanley
Tesla’s (TSLA) valuation is not too high when you consider Waymo could be worth $70 billion, says Morgan Stanley
That's worth saying twice!
I'm asking around for clarity. One thing I can say is I find S3 daily data very noisy to my taste. I personally won't draw any conclusions based on it. That's just me.
Maybe I'm reading too much into it. But I think Elon's taunting of shorts is very telling. He said "could be worse" referring to losses they are making. Then he posts a video of two people hanging off a cross, who obviously can't move except for sing.
Somehow the data and what Musk said are pointing to the same thing. Shorts are trapped. If they cover, they are screwed and infact if they cover swiftly they will run themselves into higher prices and greater loses. If they don't cover, they are screwed anyway as buying momentum is increasing and is expected to increase with the upcoming catalysts (M3 and level-4 demo).
Musk has always taken shorts personally. If you think about it, all along shorts have caused greater harm than oil companies, dealers or other auto companies. They spread FUD like crazy. I still remember back in 2013 Cory Johnson went on TV saying that the batteries on Model S last a max of 3 years at which point people would have to replace them with $27K minimum... Their dues are coming up. They have many more billions to pay. This is not going to be pretty.
For longs, this scenario plays as a hedge. As soon as there are any dips, shorts step in to cover. So my big advice to people, if you have to sell, don't sell in a panic.
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bdy0627
Active Member
That’s what usually happens after a sudden emotional sell-off based on a herd mentality rather than company specific news. Weak longs continue to bail out, while stronger ones see a dip buying opportunity. Prudent shorts see a chance to cover, while others feel encouraged to short some more.
Before long the price normally tends to stabilize, and often soon returns to the level before the surprise sell-off and resumes the previous trend. If so, that would imply that the fluff has been shaken out and cooler heads are back in charge.
jhm
Well-Known Member
Thanks. It reminds me of PEG, but with OpCF instead of earnings. I wonder how it plays out for the market as a whole. Suppose you look at S&P. Maybe the ratio A = MktCap/OpCF/Grwth evolves with time for the market as a whole. You may be able to apply the current market ratio A back to individual stocks with MktCap = A*OpCF*Grwth. There may be other ways to calibrate this to a broad market, but this may be the easiest.
Essentially, there is some price that the market is willing to pay for growth. That price may change in different markets, bear or bull. But for the same positive operating cash flow or earnings, the market should always be willing to pay more for the stream that is growing faster. This is not so helpful where OpCF is negative. And it is not so helpful if the growth rate is unstable. So a certain maturity of business model is necessary as you point out.
Musk has helped investors by setting the clear expectation that revenue should keep growing at 50% and delivering against that expectation. He can do that even before OpCF is reliably positive. This sets the stage.
jhm
Well-Known Member
The prey kicks and bucks as the python's coils slide into position.
bdy0627
Active Member
And don't forget, while sitting in his meetings with Trump, Cook, etc..., he's not afraid to go commando
On a RSI basis - TSLA and the rest of the markets were mostly all overbought.. This was a welcome break to work oversold conditions -- I sold a big % of shares and rolled into LEAPS - Jan 2019 - 300 calls.. Plan is to ride them high till July (M3 event) and then will likely sell the 500 or 600 calls against them to create a bull call spread OR --- just buy shares again...
Trade em well - Not an advice - etc...
Trade em well - Not an advice - etc...
AnneBoleyn
Anne Boleyn
Bon voyage! I will also be taking an 8 day hiatus. To a place the original Anne Boleyn spent a good deal of time. Hoping Tesla moves back up to Friday's numbers!
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