Time to short Tesla?
Looks like Wall Street got under Musk's skin again and he's rushing out whatever next model he has planned.
Waymo has true level 4 on the streets already, unclear if/when Tesla accomplishes the same.
Time to short?
Considering the insights from the WSO dataset, shorting Tesla (TSLA) has historically been a challenging proposition. Here are a few points to consider:
High Short Interest but Tesla Outperforms: Nearly 30% of outstanding TSLA shares were sold short at one point, indicating a significant bet against the company. Despite this, Tesla's stock has shown resilience and growth, especially after beating cash flow and earnings expectations, leading to substantial losses for short sellers.
Government Support and Innovation: Tesla has benefited from government loans, similar to other companies in the automotive and financial sectors. This support, coupled with Elon Musk's ability to secure funding, has been a positive signal to investors. Tesla's innovation and push towards electric vehicles (EVs) have also positioned it as a leader in the industry, making betting against it risky.
Investor Sentiment and Musk's Influence: Tesla's stock performance has often defied traditional financial metrics, partly due to investor sentiment and Elon Musk's influence. Investors are not just investing in a car company but in Musk's vision for the future of transportation. This sentiment can drive the stock price independently of current financial performance.
Competition and Autonomous Driving: While competitors like Waymo are advancing in autonomous driving technology, Tesla's broader ecosystem and brand loyalty should not be underestimated. The timeline for achieving full autonomy and its impact on Tesla's valuation is still uncertain, making shorting based on this factor speculative.
Historical Performance: Historically, Tesla has confounded critics and short sellers, particularly those betting against the company's long-term vision and Musk's ability to innovate and deliver.
In summary, while there are valid concerns about Tesla's valuation and competition in the autonomous driving space, the company's history of outperforming short-seller expectations and the significant risks associated with shorting high-momentum stocks like Tesla suggest that caution is warranted. Betting against Tesla has proven costly for many, and the factors driving its stock price extend beyond traditional financial metrics.
Sources: Long TSLA: History Repeats Itself (Money Where Your Mouth is Edition), Long TSLA Update: Better Good Than Lucky, Long TSLA, https://www.wallstreetoasis.com/forum/investing/tesla-q1-earnings-call?customgpt=1, Tesla Q1 Earnings Call
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