to try and talk the stocks down so they can cover.
Ive seen a lot of stocks go MANY times any reasonable valuation and STAY there for longer than you can imagine.
And the big money folks that read IBD & the canslimers couldn't give a #$%$ about underlying valuation, they buy because its going up.
Yeah, eventually it will have a pullback but how much and from what high ?
Id argue its impossible to know.
Ive bought value stocks that stayed down for years longer than I thought possible. Similarly, stocks can stay overvalued for long periods too.
Shorting TUES is a lot like visiting a casino. It shows a need for action and a tendency to flat out gamble.
Ive shown how the stock could see $25 within 2 years, If you discount at 20% a year you get a present value of $17.36.
If you discount at 15%, you get a present value of $18.90.
So its very possible this stock goes & stays higher than current prices.
That's the gamble you sign up for by going short.
Shorting a fundamentally over-valued stock is no different than going long a fundamentally under-valued stock. The extent of your rightness or wrongness in either case is a direct function of your ability to judge fair value.