TSLA Investor Discussions

[Norbert]

I guess a short squeeze requires two things: that the share price goes up to the point where shorts want/need to cover, and that there are very few who sell at those prices.

The short squeeze drives the price up only until there are as many sellers as the shorts need to cover.

It would seem that if there are a lot of day traders who sell at modest price increases, then this will dampen the short squeeze a lot, or even keep it from happening. Plus, the day traders will only make modest gains compared to what they could. Effectively, the day traders will cover for the shorts.

 

[ckessel]

Trailing stops work wonders. Limit Trailing Stops are the absolute solution to this problem though.

Hmm, interesting. So I could set something up where I had limit trailing stops at say, $40, $50, $65, and $80? The theory being if there was a constant rise only the $80 would get hit, but if we had little peaks and valleys on the way up I'd do partial sells at one or more of those intermediate points?

I'm not sure if I've explained that very well...

 

[avatar]

I guess a short squeeze requires two things: that the share price goes up to the point where shorts want/need to cover, and that there are very few who sell at those prices.

The short squeeze drives the price up only until there are as many sellers as the shorts need to cover.

It would seem that if there are a lot of day traders who sell at modest price increases, then this will dampen the short squeeze a lot, or even keep it from happening. Plus, the day traders will only make modest gains compared to what they could. Effectively, the day traders will cover for the shorts.

Agree. This line of reasoning has also caused me to be a little more skeptical about a short squeeze. However I would not rule one out. In the VW scenario about 70% of outstanding shares were directly controlled by porsche which wouldn't sell causing prices to rocket. In the case of TSLA I think its safe to say Elon Musk, Fidelity, Vanguard and Capital Group would be very reluctant to sell as the price goes up in the case of increased demand. They would likely extract their pound of flesh before (if) doing so. These folks account for about 50% of outstanding shares - less than VW but comparable. If a small fraction of retail investors become reluctant to sell it could cause a similar squeeze.

 

[agelston]

Good Action today. Some Resistance at the 38.2% Fib extension but stock closed above it. Target is 34.89, 35.4 short term. Sells are at 36.12 and 37 (78.6 and 100% fib extensions). May see +36 before Friday, only 2 resistances left to go.

https://dl.dropbox.com/u/27431/Screen%20Shot%202012-12-17%20at%207.09.40%20PM.png

Hmm, interesting. So I could set something up where I had limit trailing stops at say, $40, $50, $65, and $80? The theory being if there was a constant rise only the $80 would get hit, but if we had little peaks and valleys on the way up I'd do partial sells at one or more of those intermediate points?

I'm not sure if I've explained that very well...

Yes. You pick how big a valley has to be for you to sell.

 

[rcc]

I guess a short squeeze requires two things: that the share price goes up to the point where shorts want/need to cover, and that there are very few who sell at those prices.

The short squeeze drives the price up only until there are as many sellers as the shorts need to cover.

It would seem that if there are a lot of day traders who sell at modest price increases, then this will dampen the short squeeze a lot, or even keep it from happening. Plus, the day traders will only make modest gains compared to what they could. Effectively, the day traders will cover for the shorts.

This makes no sense to me. Day traders don't buy and hold. They exit their position at the end of the day. Or at most in a few days.

So typically day traders have bought the shares they are selling sometime in the past few hours or days.

I don't see how this helps cover the shorts. Sure, they're selling which helps keep the price down. But they bought very recently which helped drive the price up. Averaged out over say a week, the impact of day traders on pricing should be a wash.

 

[Norbert]

This makes no sense to me. Day traders don't buy and hold. They exit their position at the end of the day. Or at most in a few days.

So typically day traders have bought the shares they are selling sometime in the past few hours or days.

I don't see how this helps cover the shorts. Sure, they're selling which helps keep the price down. But they bought very recently which helped drive the price up. Averaged out over say a week, the impact of day traders on pricing should be a wash.

Your response doesn't make sense to me either. It doesn't matter when they bought the stock; a day, a week, or a month ago. The point is that they sell at the time the stock goes up some modest amount, allowing the shorts to buy those stocks at that time (without driving the price up very much, which they would otherwise do, since they are forced to buy, more or less regardless of price).

 

[agelston]

I honestly don't think they'll be a short squeeze in awhile. Stock has been rising smoothly and retracing predictably. Shorts have been covering in a controlled manner

This has been a textbook rise over the last couple of months. The guys at Goldman are doing their job well. Buy the dips sell the rips.

https://dl.dropbox.com/u/27431/Screen%20Shot%202012-12-17%20at%207.41.29%20PM.png

 

[Norbert]

I honestly don't think they'll be a short squeeze in awhile. Stock has been rising smoothly and retracing predictably. Shorts have been covering in a controlled manner

There is still over 29 million shorts out there (as of 11/30), so in total there wasn't much covering yet. I don't know when they give up, and if they'll give up at about the same time, but I guess a complete profitable quarter would be one of the factors.

 

[kenliles]

In the case of TSLA I think its safe to say Elon Musk, Fidelity, Vanguard and Capital Group would be very reluctant to sell as the price goes up in the case of increased demand. They would likely extract their pound of flesh before (if) doing so. These folks account for about 50% of outstanding shares - less than VW but comparable. If a small fraction of retail investors become reluctant to sell it could cause a similar squeeze.

The huge difference here is ALL shorts are covered and then some without these entities selling a single share. That was not the case with VW. There is no relationship between TSLA and VW stock short situation. NONE. It's being improperly related because they are both car companies. TSLA may in fact have some short squeeze but it will NEVER match the VW case, has nothing in common with it, should not be used as a comparison. Hundreds of short squeezes occur every day, they are all different in character and severity. My advice is to stay on facts for the TSLA case and stop trying to template against a total unrelated situation.

 

[Citizen-T]

I was just catching up on some bearish articles that have been written lately. There's still plenty of negativity out there on TSLA. At this point it really sounds like they are grasping at straws to me, but the sentiment is as strong as ever (though there are more bulls showing up now).

This is good, we need someone to take the other side with as much conviction as we have to ensure that the stock keeps rising.

 

[Bardlebee]

I haven't seen many articles by Peterson lately, though frankly I haven't been looking.

 

[JRP3]

He's still taking shots at EV's and Tesla, but not a direct assault in the title.

 

[Fr23shjive]

What do you guys think the chances of Tesla being taken over by one of the bigger auto makers after the Gen III vehicle is released? I've been thinking about this and I could see this happening. Elon has stated over and over again that his goal to be the catalyst that makes EVs mainstream and accepted. By the time the Gen II vehicle is out for a couple of years do you think Elon will consider his goal achieved and let somebody else take over the company? Elon doesnt strike me as the type of guy that will stick with something after he's already achieved his goal. I see him selling and moving on to new projects.

 

[tlo]

Elon has stated over and over again that his goal to be the catalyst that makes EVs mainstream and accepted.

But he also said: "We will not stop until every car on the road is electric."

 

[rcc]

Your response doesn't make sense to me either. It doesn't matter when they bought the stock; a day, a week, or a month ago. The point is that they sell at the time the stock goes up some modest amount, allowing the shorts to buy those stocks at that time (without driving the price up very much, which they would otherwise do, since they are forced to buy, more or less regardless of price).

Ok, I think I see the confusion.

It's a matter of scale. Day traders can damp the effect of a reasonable number of extra sales. But a not a whole lot of extra sales.

Now look at the data on short interest. Short interest in TSLA is huge. Almost 30 milion shares. That's 58.9% of the total number of shares available for day-to-day trading (the float). These are ridiculous numbers.

TSLA trading volume is about 1.5M shares per day. That means that if 10% of the shorts bailed out, the trading volume would be almost 3x normal with 2/3 of the volume being short sellers that are buying. That will move the price up a lot.

The float on TSLA is about 76 million shares. That's the total number of shares available for day-to-day trading. The rest are locked up. So if the shorts all bailed on the same day and bought shares, 58.9% (according to Yahoo) of the shares that could be sold would have to be sold to meet that demand. That would drive the price through the roof and is why they won't all bail on the same day. Some will close out their positions early, some later and some will hang on to the bitter end.

I don't know much about the VW short squeeze so I can't compare the two situations. But if Tesla executes well, there will be a short squeeze because the stock will go up as as Tesla demonstrates that:

- they can sustain manufacturing rates that make the company profitable
- they can deliver cars at that volume without crippling quality defects
- there's enough demand to buy as many cars as Tesla plans on making

Tesla's going to have to demonstrate this over time. Assuming they do it, I don't know that there will be a day or a week that you can point to and say "there was the short squeeze". But the short position in TSLA is so big that unwinding it *will* move the stock price up a fair bit.

 

[Doug_G]

I just saw on my browser "TSLA Investor Discussions - Page 404". For a moment there I thought it was indicating an error 404!

This thread is unbelievably huge.

 

[Discoducky]

It seems that TM has built and now delivered north of VIN 3000 so it would seem as if they are either on target or surpassing. Wonder if that is priced into the stock currently?

 

[clea]

It seems that TM has built and now delivered north of VIN 3000 so it would seem as if they are either on target or surpassing. Wonder if that is priced into the stock currently?

It is worth noting however that the only VINs in the 2000 range have gone to Canadian cars and these have not been delivered yet and will probably only deliver to the Canadian Sigs this year. Have any US cars been give a VIN in the 2000 range?

 

[Tempus]

It is worth noting however that the only VINs in the 2000 range have gone to Canadian cars and these have not been delivered yet and will probably only deliver to the Canadian Sigs this year. Have any US cars been give a VIN in the 2000 range?

lots have. my guess would be they just reserved enough VINs to get through the canadian signatures and went back to the GP cars after that.

 

[Norbert]

Ok, I think I see the confusion.

It's a matter of scale. Day traders can damp the effect of a reasonable number of extra sales. But a not a whole lot of extra sales.

Now look at the data on short interest. Short interest in TSLA is huge. Almost 30 milion shares. That's 58.9% of the total number of shares available for day-to-day trading (the float). These are ridiculous numbers.

TSLA trading volume is about 1.5M shares per day. That means that if 10% of the shorts bailed out, the trading volume would be almost 3x normal with 2/3 of the volume being short sellers that are buying. That will move the price up a lot.

The float on TSLA is about 76 million shares. That's the total number of shares available for day-to-day trading. The rest are locked up. So if the shorts all bailed on the same day and bought shares, 58.9% (according to Yahoo) of the shares that could be sold would have to be sold to meet that demand. That would drive the price through the roof and is why they won't all bail on the same day. Some will close out their positions early, some later and some will hang on to the bitter end.

I don't know much about the VW short squeeze so I can't compare the two situations. But if Tesla executes well, there will be a short squeeze because the stock will go up as as Tesla demonstrates that:

- they can sustain manufacturing rates that make the company profitable
- they can deliver cars at that volume without crippling quality defects
- there's enough demand to buy as many cars as Tesla plans on making

Tesla's going to have to demonstrate this over time. Assuming they do it, I don't know that there will be a day or a week that you can point to and say "there was the short squeeze". But the short position in TSLA is so big that unwinding it *will* move the stock price up a fair bit.

I'm not sure which "confusion" you believe to be addressing, as I agree with very much of what you are saying, in the first place. When I say "day trader", I include "week trader" and "month trader", anyone who is trying to take advantage of fluctuations around a some (perhaps rising) price level, as opposed to a long term investor who is waiting for either a longer time, or a larger price move to some higher level. The long term investor usually does not expect to buy again, after selling.

With TSLA, the opinions about whether a short squeeze (of some magnitude which would be worth the name) can occur, seem to be split. And if that is on the edge, then a number of day traders can make the difference.

I'm not a stock market expert in even a "hobby" way, but if I am looking for a criteria where our views differ, it is probably that I don't see "trading volume" as a constant number. The short squeeze is likely to happen if there will be a development that causes the number of sellers to drastically reduce, while on the buyer side, the shorts will not only want to cover because of that development, but additionally the price increase will be large enough to *force* them to cover, since they cannot afford to take a larger risk.

In the case of VW (which apparently is an extreme example), the situation occurred because Porsche, by itself, was enough in control of the seller side to keep the shorts from "escaping" through some "leak".