Just in general terms it is absolutely nuts to short a company with a line of customers out of the door for a $100K product and to go through life lying that the company is going to the wall in the hope that some greater fool will believe you.
Yet this is the fascination of politicized TSLA shorts. No doubt there are some smart ones that sell high and cover low but I don't think it's the critical mass. I don't get surprised that often but I have to say I thought it was really important for the stock to hold above $180 to prevent shorts escaping to cover. Not so. To my delight not only on aggregate did they fail to cover at the bottom but the short interest actually rose!
As I understand it, 67% of TSLA is held long by institutions. About 27% is held long personally by Elon Musk (who isn't selling) which leaves about 6% of the float genuinely free floating of which probably 2% is actually held by die-hard buy and hold retail longs leaving about 4% of the stock actually in play and setting the stock price vs 37% or something held short.
When this goes north, which it will, violently, where on Earth is the liquidity to cover going to come from? Even now it is difficult to find shares to short. Technically speaking I suppose a short squeeze involves margin calls and so on that is unlikely to occur much below $240~$250, but in the mean time we have a time bomb ticking away and when it goes off, which it will, the longs will be in a pitched battle with the shorts to BUY shares. The longs to get on the escalator and the shorts to get off.
As far as I am aware there is nothing else like this in the entire stock market. In every other stock both longs and shorts are primarily market savvy investors. In Tesla, no. There is incredible sophistication on the Long side: Musk, GS, MS, Fidelity, DFJ and the list goes on to include a critical mass of Silicon Valley retail tech investor/customers. On the Short side there would appear to be a mob of incredibly unsophisticated players that behave like they are fresh out of a UAW meeting in Detroit after listening to pump pitch from GM's PR department. This is a simple chess game between the disruptors and the disrupted. To make it any more complicated than that is to expend brain cycles needlessly on a solved problem.
@Lump I think it was pointed out the merits of modest scale (and no merit in huge scale in the wrong tech). 10 points to that fellow - but deduct 5 for the stuff about competition. There really isn't any except in the minds of these poor shorties and that leg of the short thesis definitely won't survive the Model 3 unveil. Really, honest to goodness. In fact the short thesis all bar mud slinging has been in tatters ever since Tesla failed to come up short on 2015 unit delivery guidance. GM Bolt, what a joke. There will never be competition from big auto, why that isn't obvious I cannot explain more than to repeat the obvious. It is absolutely impossible to compete with Tesla without first and foremost competing with ICE vehicles and if that is what you need to sell to make any money, you will implode and die well before taking a single sale from Tesla. The first credible competition to Tesla will be from a startup that is not encumbered with ICE making machines, not from an ICE company - and it's highly likely that said competitor would need to source batteries and a bunch of other stuff from Tesla anyway. Anyone that gets this owns the TSLA shorts. Not necessarily within a week hence, but eventually. Guaranteed.
Yet this is the fascination of politicized TSLA shorts. No doubt there are some smart ones that sell high and cover low but I don't think it's the critical mass. I don't get surprised that often but I have to say I thought it was really important for the stock to hold above $180 to prevent shorts escaping to cover. Not so. To my delight not only on aggregate did they fail to cover at the bottom but the short interest actually rose!
As I understand it, 67% of TSLA is held long by institutions. About 27% is held long personally by Elon Musk (who isn't selling) which leaves about 6% of the float genuinely free floating of which probably 2% is actually held by die-hard buy and hold retail longs leaving about 4% of the stock actually in play and setting the stock price vs 37% or something held short.
When this goes north, which it will, violently, where on Earth is the liquidity to cover going to come from? Even now it is difficult to find shares to short. Technically speaking I suppose a short squeeze involves margin calls and so on that is unlikely to occur much below $240~$250, but in the mean time we have a time bomb ticking away and when it goes off, which it will, the longs will be in a pitched battle with the shorts to BUY shares. The longs to get on the escalator and the shorts to get off.
As far as I am aware there is nothing else like this in the entire stock market. In every other stock both longs and shorts are primarily market savvy investors. In Tesla, no. There is incredible sophistication on the Long side: Musk, GS, MS, Fidelity, DFJ and the list goes on to include a critical mass of Silicon Valley retail tech investor/customers. On the Short side there would appear to be a mob of incredibly unsophisticated players that behave like they are fresh out of a UAW meeting in Detroit after listening to pump pitch from GM's PR department. This is a simple chess game between the disruptors and the disrupted. To make it any more complicated than that is to expend brain cycles needlessly on a solved problem.
@Lump I think it was pointed out the merits of modest scale (and no merit in huge scale in the wrong tech). 10 points to that fellow - but deduct 5 for the stuff about competition. There really isn't any except in the minds of these poor shorties and that leg of the short thesis definitely won't survive the Model 3 unveil. Really, honest to goodness. In fact the short thesis all bar mud slinging has been in tatters ever since Tesla failed to come up short on 2015 unit delivery guidance. GM Bolt, what a joke. There will never be competition from big auto, why that isn't obvious I cannot explain more than to repeat the obvious. It is absolutely impossible to compete with Tesla without first and foremost competing with ICE vehicles and if that is what you need to sell to make any money, you will implode and die well before taking a single sale from Tesla. The first credible competition to Tesla will be from a startup that is not encumbered with ICE making machines, not from an ICE company - and it's highly likely that said competitor would need to source batteries and a bunch of other stuff from Tesla anyway. Anyone that gets this owns the TSLA shorts. Not necessarily within a week hence, but eventually. Guaranteed.
