If you want to learn how to make money with stocks, the best way is to watch how professional traders do. So for demonstration purposes, we started 2020 with a real money depot.
Why I Will Short Tesla? In this post – Real Money Depot Part 3 – I will answer this question.
What is the current situation in Tesla (TSLA)?
In January 2020, Tesla went crazy and doubled. Look at this hourly chart:
Now Tesla has a market capitalization of 164 Billion Dollars. That is more than Volkswagen and BMW together.
And why I am looking for short signals in Tesla?
First, the PE Ratio is negative, and the forward PE Ratio is above 100. The company delivered 367,500 cars in 2019 and recorded a full-year net loss of $775 million. Tesla is a bubble and is clearly overvalued.
Second, the short squeeze may over. Tesla has been boosted by short squeeze recently. Look at this article: Tesla short sellers lose $2.5 billion in one day as stock spikes most since 2013. In October, there were 36 million shares of Tesla short, representing a high six days to cover. Now the Short Interest Ratio is only two days to cover. The rule is: avoid shorts when the outstanding short interest exceeds five days.
Third, the bulls in Tesla are sitting on big wins. They a willing to take profit if Tesla goes down. And if it goes down it will be fast. The Rule of a bubble: if you’ve bought in and have unrealized gains, the best time to sell is during the euphoria.
Fourth, I was born in Wolfsburg, Germany, the city of Volkswagen. And I am a patriot. Tesla has so many competitors. I like NIO.
So I will wait for short signals in Tesla, and I will post my trades on stocktwits.