Hi, I’m a short seller

[Sudre]

Nice to see a short turn up again. Question which I have been wanting to ask but the bulls never have an answer for.... Altho if you are really in it for the money part you may not know the answer either.

Why is so much shorting with TSLA always done at the bottoms?

Like to day. The obvious day the SP would be down short activity is WAY up. I would think when the SP is at it a support low the shorts would be covering and taking profits. I know I would. Just like when the stock is up at it's historical high resistance I sell my trading shares. Any short expecting bankruptcy is loony.

 

[bhzmark]

Hello All: As my name suggests, I have made a bet against Tesla via long dated put options. I look forward to a healthy discussion from all sides.

would have been better off shorting F from a year ago.

 

[pend1971]

would have been better off shorting F from a year ago.

WRONG. Ford pays a 5.86% dividend so you'd be better off shorting TSLA than F. And F shot up 10% today wtf.

 

[bhzmark]

WRONG. Ford pays a 5.86% dividend so you'd be better off shorting TSLA than F. And F shot up 10% today wtf.

fair enough. even w/o the div the moves today they likely switch places for the one year time period for our short seller announcement. -- But then just have to move the chart back another year . . .

 

[Treetop235]

Microsoft was a stupid buy in when they started also., no way would they become the biggest software company in the world.

Sell long puts fast!!!!!!!

... Oh wait..... those people who owned early Microsoft are now all millionaires... and most employees are millionaires from stock options......

Never mind....

 

[Reality]

Nice to see a short turn up again. Question which I have been wanting to ask but the bulls never have an answer for.... Altho if you are really in it for the money part you may not know the answer either.

Why is so much shorting with TSLA always done at the bottoms?

Like to day. The obvious day the SP would be down short activity is WAY up. I would think when the SP is at it a support low the shorts would be covering and taking profits. I know I would. Just like when the stock is up at it's historical high resistance I sell my trading shares. Any short expecting bankruptcy is loony.

Hi, Short here

Curious why BK is looney? Are you assuming they can raise capital forever?

 

[Mader Levap]

Curious why BK is looney?

Tesla was supposed to go bankrupt about 20 times over by now since 2003 according to shorts. Why anyone would treat these delusions seriously nowadays?

Are you assuming they can raise capital forever?

No, they assume Tesla will be consistently profitable in future. How far in future is different question, of course.

 

[TheTalkingMule]

Tesla had absolutely no business turning a profit in 3Q and 4Q. How are people STILL concerned that fully ramped M3 and Chinese MY production won't be absurdly profitable? It's physically impossible.

 

[Uncle Paul]

Short and long investors are as much of a religion as a science. They each visualize all the data with a bias towards their own philosophy.

Both will be right from time to time and that will keep them going. They surround themselves with like believers and tend to believe only articles that will support their beliefs.

Long believers will believe that Tesla is a great thing for the world, and will advance civilization and make steps towards environmental betterment. Short believers will believe that Elon is snake oil and is doomed to failure.

I am a middle roader. I believe that Elon has unique abilities that will propel Tesla to transforming personal and governmental transportation from buring gas/diesel to cleaner and more efficient electric power. I also believe that this will be hard and challenging, and that there will be challenges along the way. There will be successes and there will be failures, but in the end electric transportation will triumph over buring oil.

I feel the same way about the advantages of reusable rocket launch vehicles, solar power and battery storage for energy producers to balance out generation peaks and valleys.

My view of the future is pretty positive, but understand that it is frought with difficulties. Kind of the same way I feel about raising wonderful children.

 

[dqd88]

Hello All: As my name suggests, I have made a bet against Tesla via long dated put options. I look forward to a healthy discussion from all sides.

Are you still around? I'm wondering - do you/shorts believe there is a sales volume that could be reached to get to break even or is it that the whole company is too flawed and there's no way to make this a viable company? If you think it could get to breakeven/profit - what is the volume needed for that (can give a rough average)? Thanks

 

[Yeomen]

I

Are you still around? I'm wondering - do you/shorts believe there is a sales volume that could be reached to get to break even or is it that the whole company is too flawed and there's no way to make this a viable company? If you think it could get to breakeven/profit - what is the volume needed for that (can give a rough average)? Thanks

I could chime in here. We have a clear rotation of a number of institutional holders leaving the name. Algos will follow along on any trend. You will hear a lot about 180 and longer term technical support and that could well be the case regarding the trading You are seeing some of that now at these levels

There are a few trade related things working against the stock now The biggest I see is Tesla has a full and health options trade open. All longs who have bought put options as hedges on their positions will eventually put the equity to the sellers of those options which will result in fast and reckless selling As such beware Fridays, especially monthly and trip/quad witching Fridays

As for when it stops, it stops when there is a rotation of new institutional buyers, fund sold on the tech and the FSD story. If they believe it can and will remain solvent there will be a price they reenter. But with the story shift toward FSD and AI and away from 1-2MM cars and 20% margins it will be a new crowd of buyers and we dont know that level as of yet

 

[Yeomen]

Additionally, and now lets not jump all over me here because I am not saying it is going to happen, But if a fund or institution wants to be long Tesla and believes in the Tech and FSD but may think that there is a legitimate reorganization threat they would become bond buyers thus placing themselves first in line for equity in the reorg. This would create a decline in institutional demand for the equity even if there was institutional interest in the story

 

[dqd88]

I


I could chime in here. We have a clear rotation of a number of institutional holders leaving the name. Algos will follow along on any trend. You will hear a lot about 180 and longer term technical support and that could well be the case regarding the trading You are seeing some of that now at these levels

There are a few trade related things working against the stock now The biggest I see is Tesla has a full and health options trade open. All longs who have bought put options as hedges on their positions will eventually put the equity to the sellers of those options which will result in fast and reckless selling As such beware Fridays, especially monthly and trip/quad witching Fridays

As for when it stops, it stops when there is a rotation of new institutional buyers, fund sold on the tech and the FSD story. If they believe it can and will remain solvent there will be a price they reenter. But with the story shift toward FSD and AI and away from 1-2MM cars and 20% margins it will be a new crowd of buyers and we dont know that level as of yet

I appreciate the analysis, but that's all technical trading stuff. I simply want to know, from a shorts POV, how many units does Tesla have to sell to break even?

 

[Yeomen]

I appreciate the analysis, but that's all technical trading stuff. I simply want to know, from a shorts POV, how many units does Tesla have to sell to break even?

With or without the cash from regulatory credits.
What depreciation number are you using on the PP&E (they have changed it twice)
What gross margin do you bake in?
Since it is growing and has yet to achieve a stable run rate and since they flip around expenses these factors matter in analysis

 

[Yeomen]

With or without the cash from regulatory credits.
What depreciation number are you using on the PP&E (they have changed it twice)
What gross margin do you bake in?
Since it is growing and has yet to achieve a stable run rate and since they flip around expenses these factors matter in analysis

Also, yes I believe there is a break even number, I do not believe it will be easy to achieve break even and at the same time dig out of the negative working capital situation

I do believe they have tech will in advance of most all of the peers and I do believe the battery supply is a huge advantage

 

[dqd88]

Also, yes I believe there is a break even number, I do not believe it will be easy to achieve break even and at the same time dig out of the negative working capital situation

I do believe they have tech will in advance of most all of the peers and I do believe the battery supply is a huge advantage

That's a reasonable assumption. It seems this ultimately comes down to demand (and production). It seems that most shorts believe that demand will not be high enough to get to sustainable break even levels.

 

[Doggydogworld]

Also, yes I believe there is a break even number, I do not believe it will be easy to achieve break even and at the same time dig out of the negative working capital situation.

Negative working capital is not a "situation". Dell ran negative WC for ages. It's just a function of the business model. It's really nice when you're growing, but can exacerbate a downturn so they need to manage it prudently.

As to the breakeven question, Autos need to produce ~1.4b per quarter of gross profit to cover 1b opex, 200m+ interest and other and an annoyingly persistent 150m+ gross loss from Services, other.

25k S/X @ $25k margin each = 625m
75k Mod 3 @ $10k margin each = 750m

That's GAAP breakeven with positive non-GAAP and cash flow. TSLA survives that while waiting for Model Y, Pickup, Roadster, Semi and Robofantasy. The company hit 25k like clockwork when S/X were the only premium BEVs available. Now you have Model 3 plus Jag/Audi and soon Porsche. Doesn't mean S/X go to zero, but maybe 15k or 20k is the new normal? That cuts S/X contribution to 375-500m.

They pulled the SR+ lever late in Q1, but where does Model 3 settle once that final wave crests? COGS were 46k in Q1. SR+ costs a few grand less to build, but even with that and cost cuts I don't see average COGS dropping below 42k. That means they need 52k ASP. IMHO sustained demand at 52k ASP is about 60k/quarter, especially once the US tax credit expires.

Bulls have to believe S/X will soon return to 25k and Model 3 demand is either 75k+ at 52k ASP and/or COGS are much lower than what I see. Real bears (not the TSLAQ clowns) believe Tesla sales will settle closer to 15k S/X and 60k Model 3s, which creates 3-400m quarterly losses and a diving share price.

 

[trentbridge]

annoyingly persistent 150m+ gross loss from Services, other.

I think this is the key element - the "dealership" part of Tesla's business. If Tesla can get the parts distribution to work efficiently - it should improve the productivity of the service centers and that would mean that this loss can be reduced or eliminated...

 

[dqd88]

Negative working capital is not a "situation". Dell ran negative WC for ages. It's just a function of the business model. It's really nice when you're growing, but can exacerbate a downturn so they need to manage it prudently.

As to the breakeven question, Autos need to produce ~1.4b per quarter of gross profit to cover 1b opex, 200m+ interest and other and an annoyingly persistent 150m+ gross loss from Services, other.

25k S/X @ $25k margin each = 625m
75k Mod 3 @ $10k margin each = 750m

That's GAAP breakeven with positive non-GAAP and cash flow. TSLA survives that while waiting for Model Y, Pickup, Roadster, Semi and Robofantasy. The company hit 25k like clockwork when S/X were the only premium BEVs available. Now you have Model 3 plus Jag/Audi and soon Porsche. Doesn't mean S/X go to zero, but maybe 15k or 20k is the new normal? That cuts S/X contribution to 375-500m.

They pulled the SR+ lever late in Q1, but where does Model 3 settle once that final wave crests? COGS were 46k in Q1. SR+ costs a few grand less to build, but even with that and cost cuts I don't see average COGS dropping below 42k. That means they need 52k ASP. IMHO sustained demand at 52k ASP is about 60k/quarter, especially once the US tax credit expires.

Bulls have to believe S/X will soon return to 25k and Model 3 demand is either 75k+ at 52k ASP and/or COGS are much lower than what I see. Real bears (not the TSLAQ clowns) believe Tesla sales will settle closer to 15k S/X and 60k Model 3s, which creates 3-400m quarterly losses and a diving share price.

Then how did they get $2.90 eps Q3 '18 on < 90k units? Something isn't adding up. Zev credits were not substantial.

 

[sunny-value]

This is truly funny. Back in 2010 - 2012, do you think the numbers made sense? They were literally on the brink of bankruptcy for the majority of that entire period. Not like today where the press claims they are going bankrupt when really they have money to last at least 12 months without cap raise at minimum. No, back then they were literally on the edge of the cliff. Survival was day to day. And you say you would have invested if you knew how it would turn out. Who wouldn't if they knew how it would turn out? The whole point is you have to see what Tesla has been through to know what they will be likely able to go through in the future.

Based on their history, you're on the wrong side of the trade, regardless of what the numbers tell you.

I strongly believe we will see $400 before $200. If your puts are in the green, I suggest cashing those in while you still can.

I guess this didn't age that well.