Should one go short on Tesla stock? But this time for real? Is it finally “The Big Short” this time? You might know the movie “The Big Short” about the real estate bubble that finally resulted in the financial crisis starting in 2008? The whole world believed in the endless heavenly times in the US housing market. Only a few crazy fools bet against it, and made billions from the crash. The entire banking industry was wrong, and lost billions.
The stock market is cheering Tesla stock to heaven
Well, at Tesla the short sellers have been brutally off track for the last years and especially months. They lost a lot of money due to constantly rising prices and often had to deposit collateral with their banks and brokers to keep the short open, to borrow shares to pay interest, etc. What a disaster with such an exploding share price. Whoever bets short can lose an unlimited amount of money! Tesla boss Elon Musk regularly makes fun of the shorts. But now that the stock had risen from under 500 Dollars at the end of 2019 to 1,793 Dollars on July 13 (currently 1,546 Dollars), which of the Shorties survived?
Hardly anyone. Most of them have probably given up, smoothed out their shorts. With these buy orders, they have probably only fanned the flames of the recent price rises in the Tesla stock. But now that the stock has climbed so high, now that Tesla has a market value of 286 billion Dollars, is it “The Big Short”? The higher the stock, the higher the short chance? The more everyone really believes in the endless, total Tesla hype, the more you can earn as the only sad, laughed at shortie by betting on falling prices in the Tesla stock from now on? We don’t know either. Of course you have to decide that all by yourself in this gambler’s stock. Because let’s be honest: Is Tesla really worth so much in fundamental terms?
Massive sales problems in California
If you are currently seriously considering a short in the Tesla share, the following news could give you courage. For as reports show (see here at investing.com), registrations for Tesla cars in California fell by 48 percent to 9,774 in the second quarter compared to the previous year. Registrations for the Model 3 in California, which accounted for more than half of all Tesla registrations, are said to have fallen by as much as 63.6 percent to 5,951 vehicles.
The total number of Tesla vehicle registrations in the 23 states where the data was collected fell by almost 49 percent to 18,702 vehicles. And Tesla is reported to have temporarily closed its main plant in California. Allegedly, it was due to modernization work. But is it really more about consumer demand for Tesla cars being too low? If so, can the company somehow hide this in its financial report for the second quarter, and the rude awakening will not come until the third quarter? Is the Tesla share now ready for “The Big Short”? One may well ask!