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I understand your reasoning. But I think Tesla has much more risk than S&P 500. For instance, Tesla can go to bankruptcy, S&P 500 can't.
Yes it can. I'm sure you learned what happened in 1929?I understand your reasoning. But I think Tesla has much more risk than S&P 500. For instance, Tesla can go to bankruptcy, S&P 500 can't.
Ding ding ding. We have a winner. I defined what sort of risk I care about. Other people care about different sorts of risk.Suggest it might be more useful to define the risk under consideration, before the conclusary statements are offered.
H
Here's the psychological view/explanation. There's lots of hype/exuberance when a stock is hitting ATHs, so in August/Sept 2014 a lot of people bought into TSLA out of fear of missing out. However, when the stock turned down, they were in pain. A lot of pain, especially as the stock headed to $180. Now, for the individual investor that's a lot of psychological stress/trauma to go through. Can you imagine forking over a lot of money into TSLA at $280-290, only to see your investment go down 35% in just a few months?
People are *so weird*. This is just not how competent investment is done. This actually ties in to what I've been saying about proper evaluation of risk.And as it goes down, there's nothing you can do... some ponder selling, but it's too painful to sell for some. Some can't handle to pain, so they sell just to end the pain (and they probably sell near the bottom).
So when the stock rises again to $280 or so, those who had previously purchased around there want to sell because it's their opportunity to end this terrible chapter. They're able to get out without a loss, and they're just happy to not feel the pain/trauma/stress/anxiety anymore.
How do you know that Elon would say that?I'd rather folks take this discussion of S&P500 vs TSLA elsewhere, because as far as I'm concerned even Elon Musk would say that TSLA is a far more risky investment (greater risks and greater potential reward) than the S&P500.
Good point. Elon put in his letter to employees over the union stuff something along the line that he expects the next 4 years to be like the last 4. He didn't give a probability like he normally does but it sounded like a vote of confidence to me for good share price performance.How do you know that Elon would say that?
Why do you consider Elon to be a market oracle?
Dave,So, Tesla just announced Q1 deliveries of just over 25,000 (Tesla Q1 2017 Vehicle Production and Deliveries (NASDAQ:TSLA)).
This is fabulous news. For one, most people were expecting a delivery number of 21-23k (roughly). Tesla's guidance for 1st half of 2017 is 47,000-50,000 deliveries. So for Tesla to deliver 25k cars in Q1 means they can easily meet their 1st half guidance, and even have a good chance of beating it.
Second, 25k deliveries for Q1 sets up a likely strong Q1 earnings (which will report likely in early May).
Third, strong Q1 sales demonstrates the resilience of Model S and X demand.
I had previously shared four recent de-risking events that I thought could drive TSLA higher (2017 Investor Roundtable: TSLA Market Action):
1. Q3 blowout earnings. First earnings to show Tesla at a 100k vehicle run rate.
2. Q4 earnings showing SCTY finances integrated and not big risk.
3. $1.2-1.4B raised to de-risk cap needs.
4. Repeated confirmations that production of M3 is on track for July deliveries.
Since then, we now have two more key de-risking events:
5. Tancent revealed that they now own a 5% stake in TSLA.
6. Tesla delivers 25k cars in Q1.
Further, we have some imminent potential catalysts coming up as well:
7. Q1 earnings in early May.
8. First Model 3 deliveries in July.
All of these past and future events provide a good foundation and possible fuel by which TSLA could break out of it's 3-year consolidation range of 180-280. And after it breaks out, then 280 could provide support.
Besides these fundamental reasons for TSLA to break out into the 300s (which we could see as this week), there are also technical (and psychological) reasons also as I shared in this post, Articles/megaposts by DaveT .
Dave,
What`s your take on the possibility of a short squeeze?
I think many of us expected it to happen as TSLA was on it`s way up 30%+ this year, but there were no fireworks. Maybe we just haven`t reached that threshold, maybe it would be more of a balloon slowly deflating rather than exploding, I am not much of an expert in this, but you gotta think once we go past ATH or even past 300, it would be kind of inevitable.
Would love to hear what you or @jesselivenomore think about this.
Thanks!TSLA's got a few things going for it that makes it an especially volatile stock. For one, the high short interest. It tends to exaggerate moves both to the upside and downside because there are more shares on the market. Second, Tesla's a high-growth stock whose value is largely based on future projections, which nobody can agree upon. That makes it so that Tesla's valuation range is extremely wide, thus contributing more to TSLA's wide range of volatility.
So, when TSLA's going up there's going to be a natural "squeeze" effect of sorts where underwater shorts need to cover, and buyers join in on the upward rise. Now, how far that "squeeze" takes the stock is anybody's guess. Personally, I think we've got such a long consolidated base of 3 years at 180-280, that 280 can act as a support for the stock to make it's next leg up. And as it does so, that next leg up could be higher than a lot of people think. Of course, all this doesn't happen in a day, but it could happen faster than a lot of people think. I wrote a while back I thought TSLA could see 380 by October. But I wouldn't be surprised to see that much earlier. And I wouldn't be surprised to see mid 300s by Q1 earnings either. Nor, would I be surprised to see a ton of volatility as well. At some point, traders who rode the ride up will start to bale as it stalls, and shorts will start pilling in again, and we could see a big move down to try to test support.
TSLA's got a few things going for it that makes it an especially volatile stock. For one, the high short interest. It tends to exaggerate moves both to the upside and downside because there are more shares on the market. Second, Tesla's a high-growth stock whose value is largely based on future projections, which nobody can agree upon. That makes it so that Tesla's valuation range is extremely wide, thus contributing more to TSLA's wide range of volatility.
So, when TSLA's going up there's going to be a natural "squeeze" effect of sorts where underwater shorts need to cover, and buyers join in on the upward rise. Now, how far that "squeeze" takes the stock is anybody's guess. Personally, I think we've got such a long consolidated base of 3 years at 180-280, that 280 can act as a support for the stock to make it's next leg up. And as it does so, that next leg up could be higher than a lot of people think. Of course, all this doesn't happen in a day, but it could happen faster than a lot of people think. I wrote a while back I thought TSLA could see 380 by October. But I wouldn't be surprised to see that much earlier. And I wouldn't be surprised to see mid 300s by Q1 earnings either. Nor, would I be surprised to see a ton of volatility as well. At some point, traders who rode the ride up will start to bale as it stalls, and shorts will start pilling in again, and we could see a big move down to try to test support.