Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[Mike Smith]

Those rates are set daily, if shares shorted are running low (indicating high demand) why aren't the rates going up? Is it normal for such high short interest to barely move the interest needle?

I'd ask @ihors3 myself, but no twitter and all that...

There are a bunch of competing brokers lending shares, so without an actual supply shortage there's no power to raise rates. But as soon as there's the slightest sign of tightness in supply the rate can go up really fast.

 

[humbaba]

There are a bunch of competing brokers lending shares, so without an actual supply shortage there's no power to raise rates. But as soon as there's the slightest sign of tightness in supply the rate can go up really fast.

and yet... other stocks have higher interest while $TSLA remains GC and a short interest leader.

For example, back in May $BYND was ~50% SI and had ~54% interest. Even according to @ihors3, $TSLA is something like 88%* short interest and yet is still somehow general collateral? Something doesn't smell right.

[edited: perhaps I should've looked at his most recent $TSLA post where he says ~35%, but that doesn't square with his "5 million shares available to short" statement which is what I remembered and used to arrive at my estimate from. Even if the 35% is true it puts it inline with lending fees for ~3% to 10% (or more) when looking at other short positions -- that information from @ihors3 as well, https://pbs.twimg.com/media/D7wMWHYXoAgHsb7.jpg]

 

[urarthur]

Interesting move today. I think shorts have cornered themselved badly. The no demand BS was so overblown that even 80k deliveries might make the stock soar sharply. They know this and given short interest is ATH, they are covering slowly. I think we'll see a slow squeeze the next 2 weeks.

Also, I think big money is stepping in again. The bleeding has stopped, connentraded analyst attacks have stopped, short interest is ATH, guidance is solid so good time to step in again!

 

[Zaxxon]

OT:

The problem with that is that using the (as stated by Jerry33 and in my own experience) average mph gives a much higher charge rate than indicated. It could easily say 100 mph when the instantaneous rate is only 10 mph. That makes its finishing time harder to estimate.

This topic has far past run its course (for this thread, at least), but since this keeps coming up: No one is suggesting that we're talking about the displayed MPH within the car, but with the metric of miles per hour returned via charging as an item to compare across vehicles, rather than the nebulous (in terms of real-world impact) kW charge rate. Whew.

While what you say is correct, noone cares about filling time for ice vehicles because it is generally accepted in society that you just refill your vehicle when it is empty. They care about MPG because it is a shorthand for cost.

At the moment with EVs people are worried they will have to stand around all day while their car charges and stop frequently to recharge. They don't care about cost because charging is cheap. Therefore the range per unit time of charging is the better metric for EVs.

The argument is not about comparing the same metrics between ICE and EV, it's what metric covers the most prominent concern for the respective purchasers.

 

[urarthur]

and yet... other stocks have higher interest while $TSLA remains GC and a short interest leader.

For example, back in May $BYND was ~50% SI and had ~54% interest. Even according to @ihors3, $TSLA is something like 88% short interest and yet is still somehow general collateral? Something doesn't smell right.

Don't believe Ihor's numbers, he's been wrong often. But as long larger brokers have enough supply, interst will be low. 5 mln is still plenty. Once it hits 1-2 mln some brokers will run out and increase the rate.

It's really a matter of supply and demand.

 

[Mike Smith]

and yet... other stocks have higher interest while $TSLA remains GC and a short interest leader.

For example, back in May $BYND was ~50% SI and had ~54% interest. Even according to @ihors3, $TSLA is something like 88%* short interest and yet is still somehow general collateral? Something doesn't smell right.

[edited: perhaps I should've looked at his most recent $TSLA post where he says ~35%, but that doesn't square with his "5 million shares available to short" statement which is what I remembered and used to arrive at my estimate from. Even if the 35% is true it puts it inline with lending fees for ~3% to 10% (or more) when looking at other short positions -- that information from @ihors3 as well, https://pbs.twimg.com/media/D7wMWHYXoAgHsb7.jpg]

Nothing in your chart indicates how many shares are available to short in those other companies. You're looking at 'SI as % of float'. What you need to know is 'SI as % of shares available to short'.

 

[shrspeedblade]

Very little short covering yesterday, but we won't get today's numbers from Ihor until tomorrow.

Ihor Dusaniwsky‏ @ihors3 2h2 hours ago

$TSLA short interest is $9.91 bn; 46.13 mm shs shorted; 35.03% of float; 0.97% borrow fee. Shs shorted are up 2.16 mm shs, +4.92% over the last week even as stock price rose +5%. Shorts are down $405mm in mark-to-market losses today, YTD gain is $3.18bn.

0 replies 7 retweets 30 likes​

Looking at this chart, it seems the reasonable places one would expect much resistance on a climb, or lots of covering after it is past, is around 260 and 300. At those two points short interest climbs significantly with a corresponding drop in stock price. I follow Ihor as well and am unconvinced at the "only 5million shares left to short" theory as is he.

I want to see the stock price punch through 260 and then 300 and then see what happens!
It's encouraging, however, to see the climb over the last couple of weeks while short interest has continued to increase.

 

[M3Rider]

Looks like LR RWD joins the herd of MR and silver unicorns, no longer available "off menu"

Tesla Discontinues Long Range Rear-Wheel Drive Model 3

More profit per cell.

 

[Mike Smith]

I know this isn't the TA thread but today is forming a perfect bull flag and TSLA looks ready to soar right about now..

 

[graphix25]

Interesting move today. I think shorts have cornered themselved badly. The no demand BS was so overblown that even 80k deliveries might make the stock soar sharply. They know this and given short interest is ATH, they are covering slowly. I think we'll see a slow squeeze the next 2 weeks.

Folks on this board have been calling for a short squeeze for years. I think it's just a myth at this point. With a daily volume of over 10m and with many days 15m+ shares I think if shorts wanted to cover they could do so without too much effort or impact. There is so much profit on the short side in 2019 I don't see the strong conviction of the shorts being easily shaken. It would not surprise me if short interest has been climbing all of June as being reported.

What is going to move the stock is when the big funds start getting back into Tesla and the momentum traders take notice. I'm hoping for the mythical short squeeze to take us to $500 or $600 a share by early 2020 but I'm not holding my breath. Up 20, 30% is not a short squeeze in the making when they have 50% profits and crazy conviction the stock is worth $0. Like you I expect a slow grind upwards before we get to Q2 earnings. Tesla has to reach sustained profitability for the shorts to really exit this stock and move on to greener pastures.

 

[urarthur]

Norway deliveries are going solid. Crossed 200 today.

 

[j6Lpi429@3j]

does anyone have any way to identify the percentage of short interest that is small, retail investors shorting a few thousand or tens of thousands of dollars versus the big multi-million+ short positions?
I can see this steady climb over a number of days scaring the former, but maybe not the latter (who can likely snap their fingers and get some more made-up FUD in the national newspapers.. )

 

[kyzhk]

Folks on this board have been calling for a short squeeze for years. I think it's just a myth at this point. With a daily volume of over 10m and with many days 15m+ shares I think if shorts wanted to cover they could do so without too much effort or impact. There is so much profit on the short side in 2019 I don't see the strong conviction of the shorts being easily shaken. It would not surprise me if short interest has been climbing all of June as being reported.

What is going to move the stock is when the big funds start getting back into Tesla and the momentum traders take notice. I'm hoping for the mythical short squeeze to take us to $500 or $600 a share by early 2020 but I'm not holding my breath. Up 20, 30% is not a short squeeze in the making when they have 50% profits and crazy conviction the stock is worth $0. Like you I expect a slow grind upwards before we get to Q2 earnings. Tesla has to reach sustained profitability for the shorts to really exit this stock and move on to greener pastures.

Just by looking at volume alone doesn't tell you whole story of how many shares are actually available for purchase at some given price. As an extreme example how volume can be misleading, two person trading 1 share back and forth 10 million times a day is a lot of volume, but once you have someone come in to buy 2 shares liquidity dry up at the previous price.

A lot of volume nowadays are driven by HFT and algo trading, I think volume is a poor indicator for share availability at different price point (condition for squeezes).

Overall I think mini squeezes due to short covering happen all the time, but the legendary vw style short squeeze require a complete dry up of liquidity which I think is unlikely to be seen without coordinated drastic actions from some wealthy group of people.

 

[Nocturnal]

Two friends received their deliveries this past week. An SR+ in Florida (he says he is already considering upgrading to FSD) and a (I'm blanking on the number) the Pre-Raven S with 335 miles of range. Both are very happy and geeking out. One was my first referral. I promise to share pics of me with the Roadster BTW.

 

[kbM3]

Adam "Terminator" Jonas's bear case and valuation for the all of Tesla, which includes Autopilot, installed in hundreds of thousands of cars, which have already driven over a ~billion miles with half the accident rate of human drivers: 5% of today's stock price, less than $2bn valuation...

To be clear:
1) 63% more miles between accidents for AP.
2) It’s a combination of Autopilot and human achievement.
3) Critics say AP miles are predominately highway which fact by itself should cause a greater number of miles between accidents.

 

[Mike Smith]

I think GM is at serious risk of lawsuits over the claims they made before they raised billions of dollars from Cruise Automation. They said they were 'quarters away' from launching a commercial service. A year or two later they're nowhere remotely close to launching anything. They were obviously lying about the state of their technology.

 

[Fact Checking]

Folks on this board have been calling for a short squeeze for years. I think it's just a myth at this point. With a daily volume of over 10m and with many days 15m+ shares I think if shorts wanted to cover they could do so without too much effort or impact.

A short squeeze might or might not realize in 2019 (Q3 is a significant hurdle), but it's highly misleading to calculate short covering capacity of the market by using the daily volume:

• Firstly, there's been several short squeezes already: last June and last October were examples of ~50% up-moves in TSLA, in significant part fueled by short covering. So to claim that Tesla short squeezes are a myth is simply false.
  
• 80% of the daily volume is bots trading with bots, trying to front-run and to pick pennies. The overwhelming majority of HFT and algorithmic trading entities go flat at the end of the day, i.e. they close whatever short or long positions they have opened. They have no effect on net long or short positions and offer no real liquidity for shorts to use to cover.
  
• Long-term trading volume is 11 million shares per day according to Yahoo Finance (TSLA). While there are 15m+ days, there are also ~7m shares traded days - the average is 11 million shares per day. The 20% "true liquidity" of that is only 2.2 million shares of net accumulation/distribution power, on average.
  
• If all of those shares are investors selling to shorts so that they can cover, then it takes about 20 trading days or about 1 calendar month to cover the 46 million shares sold short.
• But during any short squeeze covering shorts will have to compete for liquidity with new investors who are seeing the up-move and the improvement in sentiment - both opportunistic short-term ones and long-term investors. Every failed short thesis is an investor's promising bull thesis. Existing longs will also upgrade their price/profit expectations and will not sell at price levels favorable to shorts.
• If we assume that new investors compete with covering shorts on a 50%/50% basis then during the up-leg of a short squeeze liquidity becomes even thinner: only 1 million shares a day - 46 trading days and over 2 calendar months. This only stops once the up-move reaches price levels that many investors equate with an overheated price. Even today TSLA is far away from such price levels.
• But it gets even worse: the "Summer doldrums" in U.S. markets usually mark an about seasonal 15%-20% drop in liquidity. So if a short squeeze started today, they'd have even less liquidity to cover.

I.e. in practice the TSLA short trade is way overcrowded, and it will be largely bulls/longs who determine the price levels and timing when most of the 46 million shares short will be allowed out of their short positions: them trying to do it only drives up the price. Only longs have the shares they need to cover in any significant quantity.

A recently leaked analysis from Morgan Stanley estimated that around 75% of the selling below $200 levels came from short sellers. Such selling pressure is simply not sustainable, and the TSLA borrowing rate is increasing already.

There is so much profit on the short side in 2019 I don't see the strong conviction of the shorts being easily shaken. It would not surprise me if short interest has been climbing all of June as being reported.

Around 50% of the short position came in at price levels below $300. Should TSLA reach $300 again all those profits and the trading power will evaporate. I'd say shorts will be significantly weakened in their ability to control the TSLA price at $250 already.

I'd agree that a 2008 VW style "fast" short squeeze is unlikely, but if Tesla posts robust results and the macro sentiment doesn't deteriorate then a 1999 Qualcomm style or a 2013 Tesla style "slow" short squeeze is in play I think.

As @neroden said it recently: a short squeeze will eventually happen, but at a time when we are the least expecting it.

 

[EVNow]

There is so much profit on the short side in 2019 I don't see the strong conviction of the shorts being easily shaken. It would not surprise me if short interest has been climbing all of June as being reported.

Actually, the fact that shorts have made so much profit in 2019 means they would actually be more willing to cover (because it would book profit rather than create losses). It is the same way longs are more willing to sell at high prices, rather than low.

Short squeeze is anything that makes a large number of shorts cover the position. It could simply mean the shorted stocks go from 46M to 30M, doesn't have to go to 0. This kind of covering has happened multiple time in the last couple of years.

BTW, I don't even think we need a short squeeze for the SP to go up. We just need days when they don't dump millions of shares to bring down the price. Today is a decent example (though there are a couple of high volume dumps).

 

[EVNow]

OMG.

BTW., let's contrast this with Adam "Terminator" Jonas's valuation of GM Cruise:

"We value GM Cruise in our SOTP model at $9bn"​

His overall GM valuation: +30% over today's stock price.

Adam "Terminator" Jonas's bear case and valuation for the all of Tesla, which includes Autopilot, installed in hundreds of thousands of cars, which have already driven over a ~billion miles with half the accident rate of human drivers: 5% of today's stock price, less than $2bn valuation...

I'd argue Cruise's (Waymo's) higher valuation is ok. They clearly have more advanced FSD today than Tesla. Tesla may have more data etc., but that is yet to yield in better FSD compared to Cruise/Waymo.

When Tesla can drive in SanFrancisco, slower but with little disengagements, we will see higher valuation.

 

[Earlian]

I had to sell some shares, but only to tribute to the Mission, again. -> Ordered a Model 3 LR last week.

The staff is hell bound to this quarter, even here in Germany. Looks like they try to do the impossible and
deliver within 3 weeks.

Another key-point: Sold my Model S at 52% after 4 years - That is damn impressive. The best resale value 2018 in this pricerange had the Mercedes S400 hybrid with 50%.

If everything works out like planned, I will get my Model 3 and compensate my share loss, with the calls i added end of may, when no one believed in TSLA.

No advice...