What to do if (epic?) short squeeze takes place?

[neroden]

The last couple pages have me thinking the squeeze either already happened or won't.

I think it happened. The recent run-up should have scared nearly all shorts out of the market. (An *actual* squeeze, where the float vanishes to the point where short-sellers desperate to buy shares can be held up for absurd prices, was impossible.)

 

[Soflason]

Remember the ownership specifics regarding the 2008 VW squeeze: Porsche had captured enough of the voting shares that there remained only about five percent of shares even potentially floating; these were being chased by shorts equivalent to something like 13 percent. I don't recall any of the details of how that five percent was divvied up, but given the capital structure of German companies, it isn't unlikely that the true float was much smaller even than that amount.

So - while Tesla's squeeze may have juice left, I'm thinking it's unlikely to spiral to the heights achieved by VW. What I hope is that the fall-off on the other side also isn't so precipitous as what happened in '08.

Agreed.

For those hungry for more backdrop and unfamiliar with Porsche's dramatic maneuvering during this epic VW short squeeze -- and if you really want in-depth understanding of what happened here, CNBC (although it looks as if this was originally aired on the BBC) televised a fascinating, riveting 1/2 hour special documentary "Fast Bucks: How Porsche Made Billions" that really provides good background and insight into the the VW short squeeze for those interested.

My thoughts: after watching this (again) -- I think Tesla's current situation is vastly different here. But, there is something to learn from digging deeper into this...

This special documentary is available on youtube in three parts.


Part 1
How they made billions(1/3) - YouTube


Part 2
How they made billions(2/3) - YouTube


Part 3
How they made billions(3/3) - YouTube

 

[mitch672]

I think it happened. The recent run-up should have scared nearly all shorts out of the market. (An *actual* squeeze, where the float vanishes to the point where short-sellers desperate to buy shares can be held up for absurd prices, was impossible.)

this round of the current short squeeze may be over, but you need to remember all of the "smart" shorts, if shorting TSLA at $35 or $40 looked good to them, why shorting TSLA at $70 or $75 must have looked irresistible

As TSLA continues to make progress (and money), even if the stock does drop temporarily, it will again make new highs and continue moving up. There will be other squeezes in the future for sure. I see TSLA with a $40-$50B valuation in its future, that's 6-7 times the current stock price if the valuation is similar (it could change, but by how much?)

 

[bhuwan]

Interesting info.

 

[kenliles]

this round of the current short squeeze may be over, but you need to remember all of the "smart" shorts, if shorting TSLA at $35 or $40 looked good to them, why shorting TSLA at $70 or $75 must have looked irresistible

As TSLA continues to make progress (and money), even if the stock does drop temporarily, it will again make new highs and continue moving up. There will be other squeezes in the future for sure. I see TSLA with a $40-$50B valuation in its future, that's 6-7 times the current stock price if the valuation is similar (it could change, but by how much?)

+100. Well said

 

[ckessel]

Not from these valuations it hasn't

I'm not sure what your point is. TSLA has always been volatile. That doesn't appear to have changed as the valuation increased.

 

[kenliles]

I'm not sure what your point is. TSLA has always been volatile. That doesn't appear to have changed as the valuation increased.

"TSLA has moved +/- 10% multiple times in the last couple years without any squeeze"

point would be, it hasn't moved 10% multiple times without a short squeeze while at current valuation-
more detailed point being: current valuations are likely caused or augmented by the short squeeze and therefore volatility may now be skewed to be a higher risk in the down direction than the up direction, as opposed to the behavior over the the last couple of years; Those years may well represent a much different behavior than what we are about to see. This point may well be wrong and misguided- never-the-less, that is the point of the statement for consideration (right or wrong)

 

[retinadoc]

Not saying that this is the case. But the parallels between Daimler and Porsche are very interesting. I would not want to be short come Monday if Daimler revealed a significant investment in TESLA.

Tesla Motors Short Squeeze May Be Imminent - Seeking Alpha

It will be interesting if new SC announcement or battery swap tech throw more fuel on the fire this week.

 

[InTheShadows]

So is this "the squeeze"? My extremely novice experience leads me to think that it is more day traders that have been attracted because of the volatility. My gut says the squeeze hasn't even started yet. The sell offs at the end of the day look to me like day traders getting out because they don't have any idea what opening will be like the next day. Any much more experienced minds have any of these same thoughts?

 

[Citizen-T]

This is definitely THE SQUEEZE.

 

[smorgasbord]

This is definitely THE SQUEEZE.

Yup.

Now, for how long and at what top?

I think people who didn't have the guts to short TSLA before are shorting it now. Can't really blame them.

 

[kenliles]

Yup.

Now, for how long and at what top?

I think people who didn't have the guts to short TSLA before are shorting it now. Can't really blame them.

I think it goes on for weeks and months (partially due to your point of new shorts); But not at the rate; My best guess is further squeeze up here approaching $100; then cooling back down, but as it comes down, further covering will push it back up. You're also going to get long buyers coming in on the way down. I'm modeling for a floor though of about $60 by the time that all shakes out. The problem is it may take so long to shake out- Tesla will making their 25% margin goals with 30,000 unit per projection and we're right back up again ...

 

[Johan]

I think it goes on for weeks and months (partially due to your point of new shorts); But not at the rate; My best guess is further squeeze up here approaching $100; then cooling back down, but as it comes down, further covering will push it back up. You're also going to get long buyers coming in on the way down. I'm modeling for a floor though of about $60 by the time that all shakes out. The problem is it may take so long to shake out- Tesla will making their 25% margin goals with 30,000 unit per projection and we're right back up again ...

Right - what if TSLA evolves at such and enormous rate (with regards to new technology, demand, public regocnition, perhaps partnerships, attempted buy-ups etc. etc.) that when time would normally come for the squeezing to subside and for the stock to return to its "proper" trading range/valuation so much has changed that the "artificially high price resulting from a short squeeze" is not so far from where the markets price TSLA?

 

[kenliles]

Right - what if TSLA evolves at such and enormous rate (with regards to new technology, demand, public regocnition, perhaps partnerships, attempted buy-ups etc. etc.) that when time would normally come for the squeezing to subside and for the stock to return to its "proper" trading range/valuation so much has changed that the "artificially high price resulting from a short squeeze" is not so far from where the markets price TSLA?

yep- that could very well happen and one of the reasons I simply will not reduce original long position- I've used option roll ups (and may do some more of that) to pull profit (so not doubling down during the squeeze); but I'm very unlikely to reduce my original position by any significant amount;
I agree those events could very well merge the squeeze drop into a support for the stock price.

 

[mitch672]

I like smorgasbord's idea of selling naked puts at these levels, or even higher, if the price doesn't come down, you make a hefty interest rate, if it does come crashing to earth, you get a heavy discount on additional TSLA shares, brilliant strategy, see this post:

Advanced TSLA Options Trading - Page 7

My long term belief is TSLA with a valuation 6-7 times what we are seeing (in 5-7 years), that or it implodes I'm in for the long hall, but it's nice to make money along the way

 

[Soflason]

Not saying that this is the case. But the parallels between Daimler and Porsche are very interesting.

Seems that Morgan Stanley may agree to some extent according to this, still vague but an allusion to something brewing:
http://www.streetinsider.com/Analyst+Comments/A+Short+Sellers+Nightmare...Tesla+(TSLA)+is+the+New+Porsche-VW+-+Analyst/8332355.html