Hey guys!
So I've been getting a ton of messages asking me about my opinion on Tesla, and whether this is a long, a short, or what have you, and I thought I would make this post to illustrate the framework I'm working from when trading it.
From a fundamental perspective, Tesla has an unbelievable valuation. It's valued at 230 times 2021 Earnings, and at OVER 100 TIMES 2023 EARNINGS. People, this is a car company. 20 years from now this will trade for 0.8x sales. Even if you make the argument that Tesla is more than a car company (which it hasn't even come close to proving), then you still need to understand that there isn't a single industry on earth where companies trade with these multiples. Even asset light, subscription based cloud software SaaS companies don't trade at over 100x their FY4 MULTIPLES. The valuation here is insanity. Because of this, I'm very much working with a "the market can stay irrational longer than you can stay solvent" approach to trading it.
I think that the previous move actually provides a decent framework for understanding what the stock is capable of. In early August, the stock was trading around without much momentum following a massive 5 month run, and suddenly the split news came out. The stock instantly jumped 50%, consolidated for a few days, and then flew up another 18% from there before taking a MASSIVE dive. I think a similar situation is happening. The S&P inclusion turned from speculation into a real, concrete catalyst (mechanically, not from a business operations perspective), and the stock ran about 50% before consolidating for a week or so. Now, the stock has continued to breakout, with about 8% in gains so far, mostly from today's 50 point move. If you extrapolate the move from August into today's situation, then we have a bit more room to rally before we run out of steam. I'll be looking to short this name on lower timeframes with tight risk once we get up into that region.
If Tesla hadn't split, the price right now would be 3200. We were trading beneath 200 early in the year this year. Seem right?
Markets aren't efficient.
Cheers!
So I've been getting a ton of messages asking me about my opinion on Tesla, and whether this is a long, a short, or what have you, and I thought I would make this post to illustrate the framework I'm working from when trading it.
From a fundamental perspective, Tesla has an unbelievable valuation. It's valued at 230 times 2021 Earnings, and at OVER 100 TIMES 2023 EARNINGS. People, this is a car company. 20 years from now this will trade for 0.8x sales. Even if you make the argument that Tesla is more than a car company (which it hasn't even come close to proving), then you still need to understand that there isn't a single industry on earth where companies trade with these multiples. Even asset light, subscription based cloud software SaaS companies don't trade at over 100x their FY4 MULTIPLES. The valuation here is insanity. Because of this, I'm very much working with a "the market can stay irrational longer than you can stay solvent" approach to trading it.
I think that the previous move actually provides a decent framework for understanding what the stock is capable of. In early August, the stock was trading around without much momentum following a massive 5 month run, and suddenly the split news came out. The stock instantly jumped 50%, consolidated for a few days, and then flew up another 18% from there before taking a MASSIVE dive. I think a similar situation is happening. The S&P inclusion turned from speculation into a real, concrete catalyst (mechanically, not from a business operations perspective), and the stock ran about 50% before consolidating for a week or so. Now, the stock has continued to breakout, with about 8% in gains so far, mostly from today's 50 point move. If you extrapolate the move from August into today's situation, then we have a bit more room to rally before we run out of steam. I'll be looking to short this name on lower timeframes with tight risk once we get up into that region.
If Tesla hadn't split, the price right now would be 3200. We were trading beneath 200 early in the year this year. Seem right?
Markets aren't efficient.
Cheers!
Comment:
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