Shorting the Also-Rans

[TheTalkingMule]

Watching Fisker and all the Chinese EV stocks ride the TSLA wave. If they continue to track with TSLA from here, a rational person has to assume the likes of:

Fisker ($5B run up to maybe $8B. 100% doomed)
Nikola ($10B maybe up to $15B. 95% doomed)
Nio ($63B maybe up to $100B? Dramatically overvalued)
[Insert popular RB EV play]

...could be ripe for shorting.

Lets track some of these guys from today's baseline and see who ratchets up right along with TSLA leading up to inclusion. Obviously we're not interested in shorting TSLA on Jan 1, but we can certainly pick some of these guys to fail or come back down to Earth(potentially right along with TSLA).

 

[vikings123]

Great idea!. I have been looking into these, will likely buy long term puts if they are rightly priced.

 

[TheTalkingMule]

I have done zero research into these other EV companies other than what I know from TSLA. I know Fisker and Nikola are garbage, and that Chinese EV companies with "the party's blessing" have a decent enough chance of survival.

With these guys riding Tesla's momentum through inclusion.....should we make a list, track valuation, and rank these clowns for most likely to tank by 2023? I have a buddy in this area, I'll see if he can start a list for me. Obviously won't tell him the purpose yet

Nio is valued at 75 BILLION DOLLARS today. Up 12.45% Monday. And this is before the real Tesla inclusion wave which they will almost certainly ride to $100B+.

 

[ammulder]

Yeah, but... Tesla can't own the entire EV market. There HAVE to be other players.

It's OK if you don't think Fisker or Nio are it... but then, who is? I wouldn't put Nikola on any future success list for sure. I don't know enough about Fisker's funding and future prospects. I know Nio is actually selling a meaningful number of EVs in China, if not at Tesla's level. Still, before I shorted Nio or many others, I'd want to have a decent thesis on who else could (in aggregate) make up 50-80% of the eventual EV market. Having not really seen a competitive offering to Tesla, I'm sort of wondering if there won't be Tesla plus a lot of other small players, meaning there's still a lot of room for small EV companies to grow a bunch while still not getting anywhere near to Tesla's volume, and with growth ahead of them, shorting might not be a good idea. If VW (or even possibly GM) were to break out, that could change things, but they haven't blown me away so far.

OK, in reality, I'd put more money in TSLA way before I'd put it into shorting anything... but as a thought exercise...

 

[Featsbeyond50]

Would you include EV bus/van and 3-wheel companies in the category?

 

[TheTalkingMule]

Yeah, but... Tesla can't own the entire EV market. There HAVE to be other players.

It's OK if you don't think Fisker or Nio are it... but then, who is? I wouldn't put Nikola on any future success list for sure. I don't know enough about Fisker's funding and future prospects. I know Nio is actually selling a meaningful number of EVs in China, if not at Tesla's level. Still, before I shorted Nio or many others, I'd want to have a decent thesis on who else could (in aggregate) make up 50-80% of the eventual EV market. Having not really seen a competitive offering to Tesla, I'm sort of wondering if there won't be Tesla plus a lot of other small players, meaning there's still a lot of room for small EV companies to grow a bunch while still not getting anywhere near to Tesla's volume, and with growth ahead of them, shorting might not be a good idea. If VW (or even possibly GM) were to break out, that could change things, but they haven't blown me away so far.

OK, in reality, I'd put more money in TSLA way before I'd put it into shorting anything... but as a thought exercise...

If you add up all these other players, without Tesla obviously, I think we'll see they're quickly approaching the market cap of the automotive industry pre-2016. That's irrational, especially if you think there will be fewer cars and Tesla will take the "iPhone share" of the marketplace.

Pretty soon there's gonna be too much total market cap in EV startups even if Tesla and the entire legacy industry didn't exist.