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Article: "Shorting Tesla is a complete waste of time"

Article: "Shorting Tesla is a complete waste of time"

Well this article just came out on Business Insider from Matthew DeBord. I'm not familiar with him, but maybe others of you are.
http://www.businessinsider.com/shorting-tesla-is-a-complete-waste-of-tim...

The theme of the article is interesting. It sounds from the headline like it's a positive take on Tesla, right? No, not at all. The premise is that the shorting should make sense and be a good idea if the stock behaved rationally. He is saying that Tesla longs are just such clueless idiots about finance that they are enthralled with Tesla's story and keep buying and won't let the stock go down even though Tesla is in every kind of trouble and obviously going to fail. He's just saying that shorting doesn't make sense against that kind of irrational, unfounded stock support.

"Tesla keeps upping the ante on really bad. Nothing in its history of generally awful execution has held shares down for long."

"What the shorts don't understand is that the patience of the Tesla bulls is endless, and their capacity for devising ingenious new storylines is inexhaustible. Very few companies are simply beloved, in the way that Tesla is. Shorting that kind of thing is like shorting romance or sunshine. Why bother?"

So, yeah...the guy's really a jerk.

trx430ex | 09/06/2017

I wouldn't call him a jerk, I would lean towards more out of his depth. Tesla is not going after electric transport, it is going after all forms of energy be it stored or unstored, is irrelevant. All of it, what the entire human race consumes every day in energy.

Should_I | 10/06/2017

If you are completely honest with yourself he does make some valid points. It is passion that drives Tesla stock and that passion is a big part of what lets them generate the capitol to succeed. A normal company would have trouble raising capitol after delays and product issues.
It is the belief and passion that gets people to stick with it and keep buying stock driving price up, it isn't founded in traditional stock pick thought process.

I think he is wrong about it will fail, it is the persistent belief and passion of Elon, investors and customers that will see it thru.

Saw an article where Elon himself admits Tesla wont be profitable till 2020, big companies who can't turn a profit, a decade after they began selling cars generally wont last.

NKYTA | 10/06/2017

"while at the same time running highly profitable businesses that are minting routine record profits while Tesla hemorrhages money."

SMH

So Much Hyoerbole.

NKYTA | 10/06/2017

Individual investors (toss out hedge funds and all institutional investors) make up what percentage of stock owned??

Bighorn | 10/06/2017

@NKTYA
Great minds. I was just researching that question because of the especially ill-informed comment above. It's a mighty small number of shares that aren't in institutional or mutual fund or Elon's hands.

NKYTA | 10/06/2017

Ah, to be labeled an Insider. ;-)

Should_I | 10/06/2017

By being offended by the comment I made you do little but prove the point the writer was making.

Bighorn | 10/06/2017

Yeah, that's how information works. Stay in school, bud.

SamO | 10/06/2017

Nobody competes with Tesla in the following particulars:

Fast Charging Network
Self Driving Miles captured
EVs produced
Over the air updates
Direct Sales
Direct Service
Battery Production

But please continue what you were saying about passsion over substance.

Lulz

KP in NPT | 10/06/2017

+1000 SamO.

Tesla isn't making a profit for a very good reason. They are positioning themselves to be dominant - OEMs will be years behind.

Mike83 | 10/06/2017

Safety, safety and very safe in a Tesla. Not so in a gasoline fueled vehicle.

MitchP85D | 10/06/2017

After selling my Mom's house, I was all set to invest a big portion of the proceeds in Tesla stock. My stock broker poured cold water all over that idea because she said all of the Wall Street gurus are indicating a SELL signal. Oh well, I told her to go ahead and add Tesla to my portfolio anyway. I took her advice and only stuck my toe in the water (four digits) on Tesla stock. I do think there is a bias against Tesla on Wall Street.

Captain_Zap | 10/06/2017

@MitchP85D

I had a broker do the same to me in 1988 for MSFT. I dipped my toe anyway and I ended up getting a lot more shares for a lot more money in the 1990's. I have never listened to a broker since. If I did, I wouldn't have gotten into TSLA with an average of 33.

muddy | 10/06/2017

Auto sales are cyclical. For luxury cars in the price range of Model X and S the cycles are mild. For cars in the price range of the Model 3 more pronounced. When the economy goes south, the customers simply stop coming into the showrooms.
It will be a remarkable car company indeed that doesn't contract, maybe holds its own or even thrives during an economic down turn. We'll see if the bears dance on top of TSLA when the next mild economic slump comes along.
But then Tesla was spawned at the end of a really bad recession. Maybe it has good genes. Anyway, I'm in for the long haul.

muddy | 10/06/2017

And I'm happy that TSLA is into energy production with roofs and batteries.

muddy | 10/06/2017

@Zap: Your stock broker still got paid when you dipped your toe. Those with only tunnel vision are quickly exposed as you found out.
"Tunnels" have I opened up a boring can of worms?

Frank99 | 10/06/2017

If your stock broker could actually differentiate good investments from bad ones, he wouldn't have a day job talking to the great unwashed. He'd be sitting on a beach somewhere trying to keep little paper umbrellas from poking him in the eye.

tessnme | 10/06/2017

I wonder how many of the short sellers have actually driven a Tesla?

tessnme | 10/06/2017

I wonder how many of the short sellers have actually driven a Tesla?

Earl and Nagin ... | 10/06/2017

The problem is that beancounters (including stock brokers and professional investors) can't seem to understand that no-profit does not mean money-lost. Tesla has done exactly what Musk and the long-term investors want them to do - grow the company into a big company.
I guess it makes sense that these beancounter don't understand since they make their money by simply moving money around, not actually growing real value. They've lost sight of what capitalism really means.
When I first bought TSLA shares at $17/share, they had a couple of showrooms and service centers, rented someone else's factory, bought batteries, had a few thousand customers, and promised to make an awesome sedan.
Today, they have a world-class automobile factory, a Gigafactory for batteries, hundreds of showrooms and service centers, thousands of charging stations (super and destination), over 100,000 customers, and prototypes of an awesome sedan that the majority of car buyers can afford.
You don't get this by pocketing the difference between price and cost.

SbMD | 10/06/2017

The article is superficial at best. Clickbait. Good points posted above.

muddy | 10/06/2017

How long did it take for Amazon to return a profit to its investors? That company didn't turn out too bad. And now they're everywhere.
It would be interesting to go back in history and read the opinions of the Wall Streeters heavily invested in the horse, buggy, tack and livery industries when Henry Ford began to roll the cars out of his factory. How long before the angst set into those who remained firm on horses?
Will Exxon Mobil et al realize that they are energy companies and not just petroleum producers? Will they see the handwriting on the wall and invest in renewables?

Haggy | 11/06/2017

It's passion that drives short sellers. Their theory is predicated on nonsense. Their predictions have been wrong time and time again. The notion that nobody would buy the Model S was obviously false. The regular statements that demand has dried up or that Tesla had thousands of cars sitting on lots unsold were all false. The notion that Tesla loses money on every vehicle sold is not based on the financials. The 10-K shows high gross margin per vehicle. Their statements are based on ignoring the financials, pretending that every dollar that Tesla spends on a roof tile should be prorated across Model S sales and that every penny that Tesla spends is on making the Models S and X, It literally suggests that everything that Tesla spent on everything from the factory to robots to showrooms to repair centers to development of the Model 3 was a one time expense needed to make the Model S and it must be repeated for each new car. The notion that Tesla will go out of business is based on the idea that Tesla's own financial people who have been planning for years, tracking the cost of every part, who know exactly what all the contracts with suppliers are, who know exactly what it cost to retool the factory, who know labor and material costs, and who know what Tesla has spent on development, somehow know less than outside people who are sure that Tesla will lose money on every Model 3 they sell. The notion that Tesla will go bankrupt is based on the idea that Tesla loses money on cars, when they are actually quite profitable. The demand couldn't be more obvious, and it's also very clear that Tesla spent a lot of money recently to ramp up production capacity years ahead of schedule, and still spent less than was predicted.

Tesla bulls aren't the irrational ones. It's the bears whose entire arguments rest on nonsense. When they can't win on that, they try to demean the vehicles by ignoring the reviews, taking outdated repair information out of context, and downright lie about everything. When that doesn't work, they try to say that global warming is a hoax and pollution doesn't matter (so EVs aren't needed) but electricity all comes from coal so EV's are more polluting. If pollution doesn't matter and they like coal, then what's the complaint for when they want coal usage increased?

Silver2K | 11/06/2017

someone recently repeated an old comment to me "tesla's downfall is cheap oil". I told him oil has dropped to $27 a barrel and sales never slowed.

Elon is too smart to fail. The stock "may" drop like any other stock "may" drop, but Tesla is going no where.

ReD eXiLe ms us | 12/06/2017

Rocky_H: It sounds like that guy WANTS to short 'romance and sunshine', but is pissed that he knows each will rise again anyway. Definitely a dick, just a bit more honest (aside from the title) than Jim Cramer, Corey Johnson, and Edward Niedermeyer. The sort of person that would prefer to market the benefits of smokestacks and factory waste being dumped in the river.

brando | 12/06/2017

Amazon paid dividends? I don't think so.
http://phx.corporate-ir.net/phoenix.zhtml?c=97664&p=irol-faq

TeslaTap.com | 12/06/2017

Most companies that pay dividends (and/or buy back stock) are typically those that can't figure out how to invest in the future, lack any vision and often have senior staff that is compensated for short term stock value and not the company's future success. All too common and rather sad.

SamO | 12/06/2017

TT,

Tesla won't have a problem figuring out what to do with extra CAPEX. If the rest of the automakers won't start making Gigafactories, Tesla is going to keep plowing their extra cash into grabbing a bigger slice of marketshare.

10-20 projected now. And that's assuming competitors will jump into the EV market "soon".

Do you think they'd pay a dividend over expanding market share?

Haggy | 12/06/2017

"someone recently repeated an old comment to me "tesla's downfall is cheap oil"

Since I got the car, my average monthly electric bill has been $31 higher than before I got the car. That's with an average of over 15,000 miles per year. Some of that is supercharger miles, but the amount doesn't matter since it's total cost vs gasoline that counts. My total annual electric bill increase per year, on average, assuming that 100% of the increase is for the car, is $372.

Ultimately my prior gasoline usage is irrelevant. Gasoline prices are lower and if I did have an ICE, it wouldn't be the same one. But if I wanted one that would be cheaper to operate than the Tesla, I'd have to spend under $372/year. But at the time I got the car, the savings over gasoline was considerable and certainly a big factor in buying the car.

Assuming I got a Mercedes S class, with a fuel economy of 18/26 city/highway and I got 22 mpg, I'd need to buy 668 gallons of gasoline per year on average. If gasoline dropped to 56 cents/gallon, I'd break even compared to the Tesla. If gasoline dropped to 28 cents/gallon, I'd save a whopping $186/year compared to buying electricity. Would I buy a car I liked less to save $186/year? Not personally.

There's also the long term to think about. If gasoline dropped to 28 cents per gallon and I felt sure it would stay that low for a decade, then a Mercedes S class could save me $1860 over a decade compared to a Tesla Model S. Or I could save almost as much by selecting a different paint color.

Then again, there was that $7500 tax credit, so if gasoline became free, I'd still be behind. I'd also have to consider the commute. Carpool access to the bridge saves $2.50 per day. For a five day per week commute, 50 weeks per year, that would add up to $625 per year. So even without the federal credit, or the state rebate, or the PG&E one time rebate, I'd still be ahead even if gasoline were free.

Even if carpool lane access went away, and the state rebate went away, and PG&E dropped the one time $500 rebate and the federal credit expired, gasoline could drop to a dollar a gallon and my costs would go up. Do these people who talk about dropping oil prices think that gasoline will drop below 56 cents/gallon, and if so, by how much?

The problem is that dropping gasoline prices (if gasoline dropped below 56 cents/gallon) could save so little that it wouldn't convince anybody to buy a car that's not as nice. On the other hand, if gasoline prices went up, people would be glad that they have EVs. Of course electricity prices could go up too. The difference is that instead of the guy coming out of the gas station and changing a few signs before he reprograms the pump, a utility would have to file for a rate increase with the PUC to raise prices by a penny. Then there would need to be public hearings. It wouldn't be easy. While gasoline prices could double, if the same happened to electricity, it would make converting to solar pay for itself in four years.

Considerations: This analysis was done by looking at all of my electric bills going back to May 2008. I did not adjust for inflation, so the pre-Tesla numbers might be artificially low. My actual annual increase might be lower if I used current rates for past years instead of actual rates. My actual annual costs to power a Tesla could be lower than what I stated.

The bottom line is that if anybody thinks that gasoline will drop so low in price that a person would be better off with an ICE, it won't happen, and even if it could, the difference could never be more than marginal. Once you factor in that Tesla's satisfaction rate is so high that all but a few percent would consider getting anything else, people will still pick the car they like better.

Silver2K | 12/06/2017

I will NEVER say that again! :-)

SO | 12/06/2017

The issue is that many people seem to be okay with paying $2.50 to $3.00 per gallon of gas and don't bother doing the analysis of how an EV can save them time/effort/money. So therefore they don't take an EV seriously.

Case in point: when gas was over $4.00 per gallon, a person wanted to car pool all the time. When it dropped to $2.50, they no longer car pool. Four dollars per gallon was unreasonable but 2.50 is reasonable according to them.

This is a case where perception IS reality....sadly.

Captain_Zap | 12/06/2017

I felt like I was being taken advantage of by a racket every time I pumped gas. It has been a liberating 4.5+ years since I had that feeling.

Silver2K | 12/06/2017

I hated passing by the signs with the gas prices. The price would go up with oil was going doing or price goes down by 2 cents when oil dropped $5 and prices shoot up instantly if oil went up a dollar. I no longer give a damn. I don't if care gas was 20 cents a gallon, I'm so happy just driving by them.

Silver2K | 12/06/2017

The price would go up when oil was going down...

SUN 2 DRV | 13/06/2017

Tesla IS profitable on a per car basis. So the more cars they make and the larger they grow the more profitable they will become.

Tesla is not yet regularly profitable on a company wide basis simply because they are in hyper growth mode. They are investing in the future, they don't want to be a stagnant company only investing enough to maintain current quarter profitability.

Judge Tesla as a gigantic startup and not a mature slow growth business, and you will see why there's LOTS of support for Tesla outside of the simple minded people with MBAs in finance.

muddy | 14/06/2017

brando: Sorry, I should have said "how long did it take for Amazon to show a profit?" Like Tesla is doing now, they put their revenue into R&D. So far, so good for both Bezos and Elon.

Al1 | 15/06/2017

@Captain_Zap

I felt like I was being taken advantage of by a racket every time I pumped gas.

And I know someone who had recently had to replace catalytic converter. You should ask his feelings.

Model 3 can not come soon enough.

zanegler | 20/06/2017

@Haggy Well said. I am personally all-in on TSLA. I am not diversified. Working out pretty well so-far. Not saying the ride will always be up, but when it drops I will look at that as a buying opportunity and back the truck up. I keep a little dry powder for any dips. Yes, I use some of Jim Cramer's language. He is actually moving toward becoming a believer. I don't always agree with him, but I do think he can and will admit when he is wrong about a certain thesis.