A two sided trade in Tesla (TSLA). (October 23, 2018)
TSLA
Let’s look at Tesla ( NASDAQ: TSLA ). What happened to this puppy? This move here today, this is why I don’t short a stock like Tesla ( NASDAQ: TSLA ). I have in the past, I’ve looked at my trading results, I have had very mixed results shorting Tesla ( NASDAQ: TSLA ). But I am convinced that I’ve cut a couple years off my life because of it. It is just a really, really tough stock to game one way or another.
There are a lot of folks that are short. What happened today was, Andrew Left of Citron Research, who’s been bearish on this stock, issued a report, a public report, saying that he thinks that Tesla ( NASDAQ: TSLA ) is now a buy; he is actually long the stock. This guy can move stocks, I don’t hold it against him. He’s already in and then he publishes his report and then everybody buys the stock and this guy is making a ton of money.
Well, that’s okay, literally, there is no law against that. He doesn’t have investors, he’s not JP Morgan so he can front run this stuff. His point was, he thinks the Model 3 is a hit; their cash is going to be fine, blah ba de blah blah. I don’t know whether that is true or not and I really don’t care. I am just looking at the price action.
In a nutshell here is the deal: The company reports earnings tomorrow after the bell and I would expect the earnings to be really good. I would expect them to be cash flow positive because that is what “Elron” said they were going to do. They are going to have more money in the bank than you can possibly believe and the stock is going to jump. Will it go up to 360.00? I don’t know but I think the stock will jump tomorrow after the bell.
The reason they are going to have so much money is because they have been hoarding cash. They have been stiffing people for refunds; I’m one of them. They have not been delivering cars after taking full payment. Now magically in October I’m sure a lot of these cars will be delivered. Remember Elron said a while back that they’re in “delivery hell” and their problem is that there are not enough car carriers so they are going to have to make their own. That’s a bunch of horse crap. They are not ever going to make their own but that is the kind of stuff the guy does. That’s okay, everybody knows this, we all know this. He’s been holding all this cash. Why do you think half of the Accounting Department left?
What I think is going to happen is, he’s is going to report a number, the stock is going to jump up and that will be your opportunity, if you’re long, that will be your opportunity to sell the stock. Look, the math is the math. Ultimately, traders are not going to figure that out. Again, everybody knows it but you are going to get the Teslonians that are going to buy because they think Elron is a genius, and maybe he is. They will buy the stock up here and then at some point the stock will roll over and that is when it is your opportunity to short the stock. I don’t think you would be able to get a borrow but you can buy puts or sell out of the money calls on it,
Anyway, in a nutshell as far as what I am actually saying here; I’m saying if you are trading Tesla ( NASDAQ: TSLA ), if you are gaming Tesla ( NASDAQ: TSLA ) I think the trade is to be long going into earnings. Sell into that earnings number and then short the stock. But I will tell you this, I could be EXACTLY wrong. He could do just what I have said he was going to do and the market could go, no, that’s not going to work and the stock will trade down and that is all she wrote. So it’s a very risky trade but look for up on an earnings pop and then a post earnings drop.
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