Shorts are in a really bad spot on TSLA, Short Margin Interest is over 40% per annum. That means you pay 40% interest on the value of the shares you borrow in order to short TSLA right now. There are less than 80k shares free to short TSLA.
Now, fundamentals wise, its WAY overdone. TSLA's market cap is higher than Fiat or Peugot and they produce 10-20x as much. I am skeptical of their ability to actually grow beyond the enthusiast customer base they have been selling to. I recall just how bad of a shape they were in last year and even recall reading about layoffs in between the Roadster and Model S production.
This is a classic short squeeze scenario, be prepared to get out and/or be hedged once the shorts exit as the trade will expire fast when that happens. I suspect it will keep climbing another couple of days, that kind of short margin interest is not sustainable as its impossible to profit unless the company goes BK within 24 months. Especially since the amount you apply that 40%/annum is marked to market every day, meaning if the price of the stock goes up, your interest payments go up.
If it were me and I had profits in TSLA, I would be investigating a Collar to lock in gains. I may actually initiate that trade as I get paid the short margin interest (retail investment accounts generally do not get that, your broker keeps it. That I know of, only IB will share short margin interest on a retail account).
smilingwolf - im also in tsla and thinking that the valuation is getting away from reality, but i actually think that tesla has a very good long-term business model. my rationale is that battery technology is improving the ratio between cost and power output at a rate of about halving each 5 years. the model s is a great car and i think the model x will be even better as a unique SUV/mini-van. lots of international expansion also possible in markets where gas is much more expensive. tesla is building a network of chargers that only tesla vehicles can use, and they are building a direct sales approach that forgoes the dealers (who doesnt hate car dealers?) but i do think the short squeeze will eventually play out and will want to take profits and then get back in at lower valuation. just not sure at what point the stock will peak. unfortunately, my position in tesla is a lot smaller than the one in zagg
SmilingWolf Thank you my friend, great stuff as usual. TSLA opened today at around 69 after bumping up from 55 yesterday in after hours trading. It bottomed out at around 64 at 10:30am this morning and then staedily rose all day to a high of $75.50 at around 3:30pm. It looks like about 3 Miliion Shorts got out today but there are still about 27 Million shares short. Im sure there will be Margin Calls tomorrow also.
Do you think during this Short Squeeze the stock will see a price of 80 or above or do you think 75 is the top? Also do you see the Squeeze lasting past Monday or no?
Do you think it will dip again in morning trading between 930-11am like today or no?? if it does what are your thoughts on grabbing more shares?