TSLA at $166.45
Here are some thoughts from the price action over the past few days.
Monday's large intraday price drop had me leaning in the direction of thinking we'd see a price trend reversal. However, the following two days the price action has been very strong. One of the key signals was the strong price action on Tuesday when the rest of the market was selling off (due to Syria war concerns). TSLA valiantly held the mid 160s and even got a boost at the end of the day.
Volume has been very high the past 3 days. 24m shares on Monday, 17.5m shares on Tuesday, and 14.7m shares today. With such high volume (and a previous huge rise from $148 in just a few days), you'd expect a lot of volatility and for the stock to break up or down. I think a lot of shorts have been expecting the stock to break down. (Note: I wouldn't be surprised if the # shorts have increased the past 3 days.) So, when the stock starts dipping they're thinking it's going to tank under 160. The bulls are thinking that this could be a move to 175 and beyond, so any action toward or above 170 is met with a lot of exuberance. I think these two views/sentiments have been driving much of the price action and the high volume the past 3 days.
However, I think there's another scenario that might be playing out (besides a break up or break down in action). The scenario is that TSLA might have been consolidating in the $164-167 area over the past few days. On Tuesday and Wednesday, most of the price action has been in that area. Even on Monday, if you average things out it probably ends up averaging in the $164-167 price level. However, since we've got high volume and strong extreme sentiments, that's been leading to more than usual price swings.
If TSLA has been consolidating in the $164-167 level, then that means the TSLA's uptrend has not been reversed and it's an overall bullish sign. But of course, things can change in a moment's notice.
So, currently my personal expectations is tomorrow I'm leaning toward seeing more consolidation in the $164-167 and lower volume (maybe in the 10-12m share range). If that happens, then that would be the third (or fourth) day of price action at that level and that provides some support in the 160s for TSLA to continue uptrending if it chooses to do so.
However, there are so many unknowns and the market is very unstable right now, so really TSLA could also break down (ie., under 160 like the shorts want) or break up (ie., over 170 like the bulls want).
Overall though, TSLA's price action has been very resilient over the past 3 days and it's held it's ground very well in the mid 160s.
In terms of my short-term trades, I don't have personal confidence in any scenario enough to make any bold moves. Over the past two days, I've made some short-term trades but have had to exit due to price action going against me (ie., I lost money on both short-term put trades and call trades, which sucks.) I'm just glad and relieved I'm out of all my short-term trades at the moment. Right now I don't have enough confidence to make a significant trade in either direction. But of course this can change at any moment.
Anyway, I usually post on this thread my thoughts just on current short-term price action, but I though I'd take some time to share a quick take on my current 3-12 month outlook on TSLA and valuation. Overall, I'm very bullish. I know there are legitimate risks (ie., market tanking, economy, war, production road bumps, etc), so nothing is guaranteed. That's the inherent risk with investing. However, it appears that more people are becoming aware of the hugely disruptive potential of Tesla and the Gen3/Model E car. Couple that with more people believing that the electric cars will outsell ICE cars (new vehicles sold) by 2030, and you've got a very strong investment thesis for more believers to latch on to.
I also realize that the markets can price into a stock very future earning power especially for super high-growth stocks with huge potential (ie., large market size). This is one of the reasons why I personally haven't been tempted to sell any of my core positions (stock, deep ITM LEAPs/calls). I know my "feelings" of whether TSLA is overvalued right now is largely irrelevant to my core holdings because my "feelings" don't determine what the market will value TSLA at. In other words, I'm relatively comfortable in letting the market determine the valuation for TSLA regardless of how I "feel" about it.
AustinEV wrote a post about a week ago regarding his thoughts on valuation (
Short-Term TSLA Price Movements - Page 701) which I thought was a good read. I also wrote a post a while back how I can see "justification" for a current valuation of $20-30b for TSLA (
Long-Term Fundamentals of Tesla Motors - Page 25). But even my "justification" for a current market cap of $20-30 billion is conjecture because there really is no way to forecast demand/revenue for Tesla's products in 3-5 years to any degree of precision or certainty.
I look at my core holding like this 1) I believe in Tesla's ability to execute Gen3 (and beyond) with even stronger conviction than when I first invested in the company in 2012, 2) my views on the potential size of their market hasn't changed, and 3) I currently don't have any better investments I want to get into (in terms of risk-reward ratio). Thus, while it truly is incredible that TSLA is trading in the 160s and it's only August (just 5 months ago it was trading in the 30s), I'm still holding and likely will unless one of those 3 beliefs I just mentioned changes.
