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Honestly I don't think this is a "short Squeeze". (a net covering of shorts reducing the total shares sold short). Just as a dedicated long was unhappy but didn't lose faith in Feb, a dedicated short will see this as a temporary thing to ride out. Just as we say "oh well, I didn't pick the perfect bottom. Selling now would be the dumbest thing I could do; locking in my losses. It will come back up".
A short will say "oh well, I didn't pick the perfect top. Covering now would be the dumbest thing I could do; locking in my losses. It will come back down.
I think this action can be explained by just new investors who got emotionally invested once they reserved. Say that there are 300k new reservation holders/customers (that are not current S/X owners). They might have tuned out TSLA because they didn't want to get emotionally connected to a brand they could never afford. Now they are watching it, invested in it. Watching the news trying to figure out if the model 3 is real and the company is good etc. If half of them invest $5000 in TSLA that is ~3M shares. The higher volume is multiplied by day traders getting involved.
The nice thing about that theory is that the "short spring" is still tightly coiled
I hope you are right, but suspect you are wrong and that there are net shorts covering. Just as on the way down there were 'weak longs' getting out, on this dramatic move up there are 'weak shorts' getting out. This is just my gut feeling and we shall see in a few weeks on the next NEXT publication, as this one coming on Monday will help us tell the story of what was happening a couple weeks ago (not now).
Johan
Ex got M3 in the divorce, waiting for EU Model Y!
Regarding trunk, Elon is saying on Twitter they will create a larger opening:
How does the trunk work on the Model 3
Info and Hints from Elon Tweets
How does the trunk work on the Model 3
Info and Hints from Elon Tweets
Ah yes, the demographic I saw in the lines could totally do this.Honestly I don't think this is a "short Squeeze". (a net covering of shorts reducing the total shares sold short). Just as a dedicated long was unhappy but didn't lose faith in Feb, a dedicated short will see this as a temporary thing to ride out. Just as we say "oh well, I didn't pick the perfect bottom. Selling now would be the dumbest thing I could do; locking in my losses. It will come back up".
A short will say "oh well, I didn't pick the perfect top. Covering now would be the dumbest thing I could do; locking in my losses. It will come back down.
I think this action can be explained by just new investors who got emotionally invested once they reserved. Say that there are 300k new reservation holders/customers (that are not current S/X owners). They might have tuned out TSLA because they didn't want to get emotionally connected to a brand they could never afford. Now they are watching it, invested in it. Watching the news trying to figure out if the model 3 is real and the company is good etc. If half of them invest $5000 in TSLA that is ~3M shares. The higher volume is multiplied by day traders getting involved.
The nice thing about that theory is that the "short spring" is still tightly coiled
This isn't the short squeezes of yesteryear. The delivery miss news that came out turns out to be the last vestige of hope for the bears that Tesla was going to crater soon, and it didn't happen. That gave free reign for the impact to be felt from the excellent news of the reservations levels which puts a big stake into the arguments that demand for Tesla's products are non-existent, waning, or somehow limited to a small fringe group. There are those that still make those claims, but it should now be obvious that a well designed battery only vehicle can be desired, head to head, against ICE competitors. This is new. But that's not the same thing as a short squeeze. No financial news of real consequence has come out - matter of fact, as we crossed 200,000 reservations, the pressure increases on the execution side of things. If you listen to the bears, they are, in many cases, increasing their short positions. They are in pain, but they are not panic buying in huge numbers.They believe Tesla cannot execute and this is all a mirage, if not outright fraud. So... a FCF positive quarter, or something really close or other materially financial result would trigger a real short squeeze. I doubt it is this quarter's ER, but it might be.
The question is now the very real possibility of raising cash. I suspect the medium term consequence of raising a lot of cash... $2 to $3 billion is positive for the stock price. It removes a huge impediment to large Model 3 deliveries. I think Tesla is close to being able get the original quantities of Model 3 out the door without raising cash, but it would be a question mark the entire way. I think they want to show a much stronger picture before raising cash. I suspect they are weighing the pros and cons now in light of the apparent huge demand.
The question is now the very real possibility of raising cash. I suspect the medium term consequence of raising a lot of cash... $2 to $3 billion is positive for the stock price. It removes a huge impediment to large Model 3 deliveries. I think Tesla is close to being able get the original quantities of Model 3 out the door without raising cash, but it would be a question mark the entire way. I think they want to show a much stronger picture before raising cash. I suspect they are weighing the pros and cons now in light of the apparent huge demand.
To put it in perspective, the net cash they didn't make because of falling short on delivery guidance was about 1/10 as much as they took in from model 3 pre-orders (as of last Saturday).
At (or near) the bottom, I bought some very ITM calls, Sept $110s, for essentially no time premium. They're up 222% as I write.
At opening on Monday, I also bought some weekly $255s; paid too much at $1.10, at the time, but I was afraid of instant reversal. They are now up 1006% (ten-bagger in two days... wish I had bought more!)
Gerasimental
Member
I wonder if that spike was Andrew Left finally saying F this, last ditch attempt on CNBC didn't work. Close the trade!
We agree I could be wrong. I am looking for those capitulation days where things go up way more, way faster than they should, just as things went down way lower, way faster than they should have in Feb. We had 4 of 5 days with 6-8% drops, for perspective. But, shooting up today so the market seems intent to prove me wrong. I am not mad
I doubt rational long support will falter without some specific downside catalyst - like the China / Oil bust in January or some other difficult to foresee thing. I think we will see numbers over $300 this year and considerably so in Q3 but all froth - a bit of hubris and short covering in the first half of the year. Lots of distressed short covering in the second half of the year. My guess is that rational long support will stand at about $300 at year end and currently stands at about $240-$250 and climbing steadily beneath the action. If that trajectory is exceeded most likely in my view it will fall back to that trajectory with minimal hysteresis absent some really bad thing happening. Tesla is in great shape, competitors are not, there are no really bad things currently on the tour guide.
pz1975
Active Member
This is crazy price action this week. Imagine the feeling if you had a big short watching this just...keep...going...up. I am sure there are a ton of shorts closing out this week and this rise is partly a short squeeze of some sort. The ones still holding one must feel like we all did in February when it looked like it wouldn't stop going down.
Or somebody getting second leg of the time delayed credit spread in. For example one could have bought calls with $240 strike a while ago (when SP was lower-pick any day within the last week), and now completing forming spread by selling $260. If $260 costs the same or more than what was paid for $240, it becomes a no risk transaction, netting $20 on each call at the expiration assuming that SP is above $260.
The article was either written by the uninformed person or is designed to manipulate the SP.
Yeah, it would not be a good feeling to be short and have the CEO who happens to be one of the most outspoken ones, and one who probably thinks the car business is pretty boring considering he builds rockets, is tweeting that it's unwise to be short.
I am not an expert on squeezes, but my sense is that we are seeing sort of a slow squeeze right now, hard to say if it will peter out or turn into a full on squeeze, but I'd guess a full on one is on the horizon. Key indicator---Musk is pretty much gunning for one with this week's twitter campaign.
I disagree with the word "capitulate"... I'm about as gung-ho for buy and hold as it's possible to be, but I had a lot of money tied up in Tesla shares, and trading on margin, so when the stock tanked, I had to sell. Fortunately my faith remained strong; for every share I sold, I turned some of the capital around and bought medium- or long- term ITM calls. That's working out nicely now.
The thing about shorting is that one has to be trading effectively on margin, and so it's even easier to be forced to realize losses.
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Would forget about short squeeze for a while. It sounds like vulnerability to hubris and it probably is. Right now this is a very nice momentum play. Enjoy. The rolling short piñata will still be there when it's time for proper pay day.
Massive Q1 beat would I think have triggered a short squeeze, didn't happen and probably no new perfect storm of that magnitude will appear as long as shorts can comfort themselves that Tesla is not making any net profits yet and no net free cash flows. The dam will burst on them when that is no longer true in conjunction with narrative surprises up Tesla's sleeve. Patience.
Massive Q1 beat would I think have triggered a short squeeze, didn't happen and probably no new perfect storm of that magnitude will appear as long as shorts can comfort themselves that Tesla is not making any net profits yet and no net free cash flows. The dam will burst on them when that is no longer true in conjunction with narrative surprises up Tesla's sleeve. Patience.
Well, I suggest typing name of commonly accepted competitor
into the "+Add Item" field on the top of the chart - you know, Chevy Bolt - for laughs and giggles - Status
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