Quote:
Originally Posted by Raev
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I will be surprised if Tesla makes it through 2019 without going bankrupt. They are not down because they laid off 7% of their workforce, but because no one wants to buy the Model 3: only 30-40,000 new orders in Q4 despite pulling demand forward due to the tax credit expiring. They have finished the American backlog and European homologation was bungled to the point that they won't be able to sell anything there before Q1 finishes.
Q1 is going to be a bloodbath. Even Elon in his latest memo said something like 'with a huge amount of hard work and luck we might be able to break even in Q1'. This is from the most optimistic (or most fraudulent, depending on your viewpoint) guy in the world who previously claimed that investors should have 'no concern at all that Tesla would fail to produce 10,000 M3/week by the end of 2018'.
Keep in mind that even if Tesla were able to maintain $300m a quarter, at a generous auto P/E of 10 that equates to a $12 billion valuation and a share price of $50. So the market is pricing in 6x growth, only Tesla has already maxed out the Fremont plant and cannot possibly grow at all without Shanghai, which won't be ready for another year even on Tesla's literally-always-wrong timeline. Rising interest rates/QT and the end of the business cycle also do not bode well for Tesla's long term survival.
If you have channel traded Tesla in the past successfully, more power to you. It's been a great trade. Just keep in mind that's inherently a short vol strategy and those have a way of blowing up spectacularly. If Tesla ever breaks $230 or so to the downside it will likely fall a long way.
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I hear ya. I have stoploss orders in place as well, and i dont really give too much of a shit on the actual value the company deserves to be priced at; reality is their share value is largely contingent upon the millennial investor, who is largely ruled by the "eco-friendly" narrative. Ive been toying with riding both nio and tesla up, and then dumping them on the fall for the past several months. In reality, NIO has a much better chance at being viable longterm, with china's support and the close relationship with their parts manufacturers but they will remain ebbing and flowing between 6.5 and 7 until trump brokers a deal with china later this year.
Anyways, back to tesla, In this scenario, im fairly confident that eco-minded optimism will come through one or two more times before the stark reality of business fundamentals comes in to play here. This is largely why i mentioned the pull n wait strategy come the 6th of february, when tesla could be on the hook for making a loan payment with company cash if their valuation doesnt surge back up to 360+/share to keep the sharks off their back. If it induces a panic we could very well see tesla dive back down to sub200/share where many analysts are saying they rightfully should be priced at.