Devils advocating...from someone who shorted TSLA

[ckessel]

There are those who say that Tesla is over-valued right now, there are shorts who say that it's one move from collapse, and there are believers who see Tesla as one ramp-up away from massive profitability.

I think all of those are probably true. It's the nature of being small, you're often just one significant event away from either disaster or glory.

 

[jeff_adams]

There are those who can make money shorting Tesla, but their timing will have to be perfect. One wrong move could be disaster.

People outside these forums don't understand how powerful Tesla can become.

Think about this. Right now, the Model S is disrupting the luxury car market. Why can't they disrupt the SUV market? The truck market? Affordable passenger car market?

If their sales were comparable in those segments, how many vehicles would they sell?

They've shown the ability to build compelling vehicles in luxury and sports car markets. How dumb is it to assume they can't do the same in the other markets? That's the short argument.

 

[ElSupreme]

Sure TSLA is very overpriced if you base your valuation on the current production. But it's a cult stock. So the current production does not matter. The only thing that matters is a shining growth image. If this image gets cloudy, the stock drops. If it shines, the stock keeps going up and it at least double from the current position. Just my speculations.

This is my problem with stocks. They have ceased to be a accurate representation of a companies value. They have become a representation of a companies perceived value. And thus companies can try to do things that raise that perception (Enron perhaps). Sure having real value helps the perception of value. But stocks only represent the perception of value.


I personally don't think that is necessarily a bad thing. But it is NOT the same as a companies value.

 

[Causalien]

Agree with most of your post but I'm not sure that Elon has real ability to execute; I find him a great visionary but he's also good at finding and motivating people to execute the ideas.

I don't think investors differentiate between who executes. Whatever is done, is done by Elon. A hero CEO just sounds better than a mindless corporation name. Just like all Apple IPs are co-invented by Steve Jobs.

 

[Realist]

Is there any company ever in history to deserve a valuation like TSLA currently holds? And do you believe in multipliers?

I think a lot of "believers" do not understand the nature of the car business.

 

[Johan]

I think a lot of "believers" do not understand the nature of the car business.

Au contraire mon frère. A lot of nay-sayers have to stop bundling Tesla with the rest of the car business.

Is Tesla overheated?Talking Numbers CNBC video

I haven't see such a bullish statement from the Wall St. Pro. Time to pause and think how did they get it finally?

"$17 billion market cap is a joke.... even if it triples, it is still cheap....(compare to Facebook $90 something billions)"

 

[Realist]

I think facebook is still undervalued.

But how can you compare facebook with Tesla? They have more than a billion users. Tesla is a low volume niche car producer.

TSLA can easily drop to a 10billion$ market cap and there would be still no room for complaints.

 

[marvinat0rz]

This is my problem with stocks. They have ceased to be a accurate representation of a companies value. They have become a representation of a companies perceived value. And thus companies can try to do things that raise that perception (Enron perhaps). Sure having real value helps the perception of value. But stocks only represent the perception of value.


I personally don't think that is necessarily a bad thing. But it is NOT the same as a companies value.

I don't know, stock prices sort of have to be based on perceived value. If Tesla was valued on fundamentals right now, at $5/share or something, it would be the bargain of a lifetime, sell-everything-else stock if you allowed even a 5% possibility that it would be able to ramp up production and become something resembling a major automaker. At $150/share, this might or might not be the case. I'm still long, but I'm only about as bullish as I was at $30. Like you guys are saying, a company in startup mode is usually one move away from the history books or disaster.

 

[Zythryn]

This is my problem with stocks. They have ceased to be a accurate representation of a companies value. They have become a representation of a companies perceived value. And thus companies can try to do things that raise that perception (Enron perhaps). Sure having real value helps the perception of value. But stocks only represent the perception of value.

I personally don't think that is necessarily a bad thing. But it is NOT the same as a companies value.

Stocks have always been about future value, not current valuation. Even valuations take into account future earnings.
I agree TSLA is being priced based a lot on potential growth. People are seeing a lot of potential, bears are only looking at current and next quarter's numbers.

- - - Updated - - -

I think facebook is still undervalued.

But how can you compare facebook with Tesla? They have more than a billion users. Tesla is a low volume niche car producer.

TSLA can easily drop to a 10billion$ market cap and there would be still no room for complaints.

You are right, you can't. Tesla is so much better off.

Ask yourself:
Facebook's income per user would be?
Tesla's income per user is?

Room for Facebook to expand in its market is?
Room for Tesla to expand into its market is?

Yep, I would much rather bet on Tesla's growth than Facebook's.

 

[ElSupreme]

I don't know, stock prices sort of have to be based on perceived value.

Stocks have always been about future value, not current valuation.

You both made my point better than my feeble attempt. Saying a companies 'valuation' based on market cap is not related to the actual value of the company. But rather its perceived value. Thus my 'not necessarily a bad thing' comment.

My issue with perceived value isn't fundamental, but the stock market is as much a popularity contest as it is anything else. This leading to many irrational behaviors, trends.

 

[smorgasbord]

I think a lot of "believers" do not understand the nature of the car business.

I think most car company executives don't understand where the car business is going to be in 10 years.

 

[Discoducky]

I think a lot of "believers" do not understand the nature of the car business.

So no and no then?

 

[MikeC]

I did get back into the short at 150,59 by the way. Unfortunately it's only a quarter of the former position.

As the only non-troll short with the courage to post here, I think you are a valuable resource to this forum. I'm curious to know if you are still holding this position? At what point would you close it out, or do you find it looks even more tempting at 161?

 

[Realist]

I was lucky to close my last position at 143. Still far away from getting the money back of the original trade though.

I wait for some volatility for further actions.

 

[Discoducky]

I was lucky to close my last position at 143. Still far away from getting the money back of the original trade though.

I wait for some volatility for further actions.

Bought some at $138 and now waiting for a low to buy more. Volatility works both ways. Since I might not be the strongest strong there are most likely others behind me.

 

[BornToFly]

Realist, I'm sorry if you already answered this in the first 30 pages, but have you driven the car? Once you do, you realize that it is superior to anything else on the road, and that Tesla will change the auto industry for ever. That is why current P/E ratios mean nothing. There is zero chance of Tesla failing at this point, and zero chance it will be below 200 in a few years. The only question is - How big will it become?

 

[brianman]

Bought some at $138 and now waiting for a low to buy more. Volatility works both ways. Since I might not be the strongest strong there are most likely others behind me.

My last buy was around 138 as well, and sold it at 151. While waiting for the next buy opening, I noticed it spike to 170+ today. I didn't have faith in that number.

(Small numbers but...)
Bought my first put today at 170-something. Sold it back at 163ish a mere 3 hours later. 36% profit in 3 hours. There's a reason why shorts get greedy with a volatile stock.

 

[marvinat0rz]

Realist, I'm sorry if you already answered this in the first 30 pages, but have you driven the car? Once you do, you realize that it is superior to anything else on the road, and that Tesla will change the auto industry for ever. That is why current P/E ratios mean nothing. There is zero chance of Tesla failing at this point, and zero chance it will be below 200 in a few years. The only question is - How big will it become?

There is not zero chance that Tesla will be below $200 in a few years. The probability of this is considerable. I believe in Tesla's vision as much as anyone, but let's not delude ourselves to believe that this is a risk-free investment.

 

[BornToFly]

Yes, I was exaggerating slightly, but I think the chance is very low.

 

[Realist]

I got back on the short side at 162.50 yesterday.

I believe the "blow out" earnings report coming up could be baked in.

Sentiment is turning to the downside people get aware of of the risks and massive overvaluation.

I see fair value well below 50$ and I expect the stock to go there in the long term.