Bearish on Tesla (TSLA)? Buy it. Bullish on Tesla? Well, buy it. (February 26, 2019)
TSLA
Let’s talk about Tesla ( NASDAQ: TSLA ) today and here’s why: I think you can buy the stock here but I have got to qualify it because I am not a Tesla ( NASDAQ: TSLA ) fan. I am not a fan of the cars and I have owned one. I am definitely not a fan of the CEO for reasons that are irrelevant to this video so I won’t go into that.
Here’s the deal: The chat is a mess. And if you look at the “Twittersphere” and various other locations or forums there are a lot of people that really, really hate this company. They really hate the CEO and this and that. The stock is GROSSLY overvalued; it is amazingly overvalued. You can say, “Well of course it is, they’re the future, Elon Musk.” and this and that.
You can say that but think about this, and I mean this, because nobody is invincible, what if Elon Musk had some health issues and could no longer continue to be CEO? How do you think the company would do then? How would the company do without Elon? Again, I am not wishing anybody ill will or whatever. But think about it, it is a one-man company.
Think about Microsoft ( NASDAQ: MSFT ) when Bill Gates was the CEO. If he went down for whatever reason something would definitely happen to the company. If Jeff Bezos went down something definitely would happen to the company with respect to the stock. But the thing about Microsoft ( NASDAQ: MSFT ) and Amazon ( NASDAQ: AMZN ) they have a valuation that can be supported by their business model, like buy what’s happening right now.
Like I said, of course the stocks would take hits. Hello, they will. By the way, for those of you that aren’t listening that closely, I did use past tense when I’m talking about Bill Gates and Microsoft ( NASDAQ: MSFT ). Somebody is going to email me or tweet me and say, “Um, do you know that Bill Gates is no longer CEO of Microsoft?” Yes, I do but I am making a point. When the company is like a one-man band you have got to be careful about valuing that company, because what happens if the one man goes away?
In Tesla’s ( NASDAQ: TSLA ) case if the one man goes away this stock implodes, there is nothing else. The reason is because they are losing money hand over fist, the fundamentals suck, etcetera, etcetera. You can talk about all the promises and this and that you want, but I don’t care. You are entitled to your opinion but you can’t make up your facts. The facts are the facts; this stock is MASSIVELY overvalued. What I have just described though is, it is kind of like a lot of the bear argument. And then also, he tweets this and that, fraud boy, blah, blah, blah, all that jazz. I get it; I get it. I get it; I wouldn’t trust that guy with anything.
However, to be talking about ANY of that stuff and using it as the justification for shorting this stock is just ABSOLUTELY CRAZY, it is absolutely nuts. Frankly, the guy who justifies owning the stock because he believes in the mission; Oh it’s the future and Elon is a genius and this and that, and that’s his reason for buying the stock; seriously, I would have more respect for that guy than I would respect for the guy that talks about Elon this, Elon that, that’s why I am shorting the stock.
Again, that is just crazy. This is why I am telling you: I think you can buy this stock right now. It is a really, really risky buy but you can buy it if you buy into my analysis. Generally speaking, here is support, you can draw this line however you want to but here’s support for the stock, we can even go down here. So Elon makes his latest tweet. The SEC says we don’t like that, the stock gaps down. It actually closed higher on the day from the open.
Meanwhile, you see the shorts crowing about how, “Oh this is it, 290.00 is the new 300.00 on the stock.” It is like they are rooting for the stock to go down. Okay, fine. Bulls always root for their stock to go up and they crow about the dumbest things when a stock goes up. So fine, what we are talking about here are people with emotional investments in a stock, in a stock’s direction one way or another.
What I am saying is this: Think about the dynamics. I guarantee you, people bought puts or shorted the stock if they could get a borrow today because they think this stock is going to zero. They buy into the bear argument, “Musk is unhinged, the tweets,” blah, blah, blah. “The SEC is going to do this and that. I’m short the stock, I am going to get this thing before it gets down to 250.00.”
So what happens? They are shorting the stock. Who are they selling to? They are selling to some of the people that were already short, who are closing out their position. And why are they closing out their position? Because they are looking at it saying, “Well crap, this is all we get? I could get a little 1.5 percent decline here on this? Man, I have got to get out of this short before I get crushed.” So people that are shorting the stock here are literally taking the other side of an earlier short sellers trade. And so short sellers are buying the stock, which pushes the price up.
Also, at the same time that short sellers are buying the stock because they are pushing the price up new longs are coming into the stock why? They see what happened here, the stock comes down to here, they are buying. They see what happened here, they are buying just like they bought here. And then now the stock is doing this.
I am not trading this stock, but my bet is this stock goes back up above 300.00, probably even up to test the 50-day moving average so it could be a trade for you. This little mark here I just have on my calendar to remind me this is when Tesla ( NASDAQ: TSLA ) has to pay off their bonds on, I think it is the 4th, anyway in a week or two, whatever that is and the stock really needed to be up to $360.00. It is obviously not going to be at that level so they are going to have to come up with a lot of money. This is not going to be a surprise to anybody; I think it is already baked into the stock.
However, this little ceiling here could be the reason why the stock is not up more. I am not saying it is acting as resistance, I am saying that is a concern for investors. Like what is going to happen to stock after they have to pay these bonds? And so just keep that in mind as you are looking at this stock. But if I had to go long or short this stock I am telling you, I would go long this stock. And I say that, and I have a negative view of the company, of the prospects of the company and the stock, etcetera, etcetera. But man, I’m a trader. I am not a guy who needs to be right; I just want to make some money.
So think about it in terms of, if you are a real fanboy of Tesla ( NASDAQ: TSLA ), you know what? You aren’t that smart; put it aside. If you think Tesla ( NASDAQ: TSLA ) is going to zero and Elon Musk is an unhinged narcissistic ass, you are not that smart either if you are using that as a rationale for trading the stock. You have got to look at the chart. You have to look at the way the market reacts to the news, not the news but the way the market reacts to the news.
This stock actually closed UP today based on the news. Not higher than yesterday’s close but higher than today’s open. So this is a stock that is under accumulation. If you are a short-term trader I think you can buy it. And I will tell you this; you are going to put your stop right under here, right under today’s intraday low of 288.77. You keep your stop like 288.00, I have it 288.34. I wouldn’t even hang around for back here, just keep your stop right there, you should be good to go.
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