Behind Tesla’s surge: “Short” refuses to cut positions pending valuation bubble burst

As China is actively fighting the outbreak, capital markets across the Pacific are playing a big show of sniping at Tesla’s “shorts”. By the close of U.S. shares on February 4, ET, Tesla’s (TSLA, NASDAQ) shares were trading at $887.06 a share, up more than 110 percent so far this year.

In the eyes of the industry, the recent sharp rise in Tesla’s stock price, on the one hand, Tesla to achieve mass production and performance improvement, attracting a large amount of capital, on the other hand, Tesla stock to attract a large number of Wall Street fund tycoons collective short, but to “floating capital” has brought the opportunity to short profit.

With Tesla’s share price soaring more than 110 percent this year, investors who are shorting Tesla’s stock have lost about $8.3 billion, including about $2.5 billion on February 3, the day Tesla’s stock price soared, according to financial analysis firm S3 Partners.

“Behind this, it’s the Wall Street fund bosses who are entering a white-hot phase of tesla’s multi-empty showdown. Nathan Sheets, strategist PGIM strategist, told 21st Century Economic Stoin that one side was a bulldot led by billionaire Ron Baron, and the other was David Einhorn, head of Greenlight Capital. Mark Spiegel, managing partner of Stanphyl Capital Management, founder of Morgan Creek Capital Management, Wall Street fund bosses such as Jim Chanos, co-founder of Kynikos Associates, the world’s largest short hedge fund, still hold huge short positions in Tesla, convinced that Tesla’s share bubble will burst sooner or later.

Matt Maley, chief market strategist at Miller Tabak, a New York investment firm, said: “Tesla’s share price is now well above its current fundamentals and the stock will collapse at some point in the near future.” “

21st Century Economic Reporter noted that many short-selling Tesla fund bosses have even sent their share prices soaring, “linked” to the previous Bitcoin valuation bubble. Bitcoin plunged more than 65 percent in just one month after sending it soaring to about $20,000 in 2017, and now the fund’s big wigs believe Tesla is likely to repeat the bitcoin mistake.

“But the first thing these short-backed Tesla fund bosses are about at the moment is the pressure on LP accountability. Nathan Sheets thinks. After all, many rich LPs don’t want to see the “stubbornness” of fund bosses, causing the entire portfolio to suffer unnecessary losses as a result of Tesla’s “misoperation”.

Forced Air War

Several Wall Street hedge fund managers have called it “unexpected” as Tesla’s share price soars more than 110 per cent this year.

“Recently, Tesla has not released encouraging earnings growth data or related mass production information, but the money is pushing up share prices at all costs. A Wall Street hedge fund manager who has long tracked the volatility of Tesla’s share price said the capital markets now believe that tesla’s recent surge is largely due to tesla’s share price, which has fallen far behind other technology stocks, so many of the money has poured into the valuable stock. In addition, the profit-taking thinking of sniping at Tesla’s shorts has driven a lot of money to push up Tesla’s share price.

Tesla has long been the most controversial publicly traded company in the U.S., topping the U.S. stock market, and many fund bosses are betting on a sharp drop in Tesla’s share price. The reason is that they have always believed that Tesla is merely a car-making company, not a technology company, and that Tesla’s tech-based technology is sending the company into an endless money-burning operation, and that its share price is naturally in a bubble.

The Wall Street hedge fund manager said Tesla’s capital gains are now dominated by “floating capital” and retail investors. One of the “floating” calculations is to push Tesla’s share price above $900 a share at a time when tesla is in hot demand, forcing fund bosses such as Jim Chanos, who are shorting Tesla, to make up for it, driving Tesla’s share price up further and creating more impressive earnings for itself.

“We’ve calculated that the Wall Street fund giants who are betting on Tesla’s share price decline are currently betting on a position cost of about $300-$350 per share, and if they take three times as much leverage as they can short Tesla stock, as long as Tesla’s share price exceeds $900/share, they’re at risk of exploding and forced to close the position, and we’ll be able to hold the ticket.” “A trader involved in buying Tesla recently revealed.

The reason why the money dared to push up Tesla’s share price has also been strongly supported by a number of bullish Wall Street fund bosses. Ron Baron, for example, says Tesla is on track to generate $1 trillion a year in annual revenue over the next 10 years, a 40-fold increase from the current level. Notably, its Baron Capital holds 1.63 million Shares of Tesla and holds positions at a cost of less than $220 a share.

The big wigs are determined not to “surrender” the bottom line.

Despite the huge losses on Tesla’s short positions, Wall Street fund bosses such as Jim Chanos, David Einhorn and Mark Spiegel, who are betting on Tesla’s share price decline, shownoieus of surrender.

S3 Partners, a data firm that tracks shorting activity, estimated Monday that the number of shorted Tesla shares has fallen 5 percent in the past 30 trading days. Although Tesla remains one of the most shorted stocks on the market, its net short ratio is still above 14 per cent.

“This means that fund bosses such as David Einhorn, Mark Spiegel and Jim Chanos still hold huge short positions in Tesla. Nathan Sheets told 21st Century Economic S. Assuming that all of these 5 per cent short sell-offs come from the fund bosses, their share of Tesla’s short positions in net short positions remains at about 4 percentage points.

A person close to Kynikos Associates, the world’s largest short fund, told 21st Century Economic Reports that it was mainly small and medium-sized investors, large institutional investors, who are still holding a big bearish position on Tesla because their bearish logic toward Tesla has not changed. And the recent surge in share prices has raised concerns among a growing number of investors about the disconnect between Tesla’s share price and the fundamentals of business growth.

In his view, Tesla’s stock turnover over the past two trading days reached 47 million shares and 60.94 million shares, a new record for highvolume, indicating that more and more institutional investors are reducing their holdings of Tesla shares at a high level. And the high-level receiver, may be a computer-driven quantitative investment fund, because the current Wall Street hedge funds have huge performance pressure, most institutions have “prefer to risk investment, can not miss the soaring stock” trading mentality.

“We love Tesla and have promised never to be empty again, ” citron Research, a well-known short-sing agency, said recently. But when computers start to drive the market, we believe musk will short the stock even if he is a fund manager. It has nothing to do with technology, it has become the new Wall Street casino. “

21st century economic reporters learned that in order to win this “game”, many bet on Tesla’s share price decline of well-known fund tycoons are looking for investment banks to seek higher capital leverage and Tesla stock divestment, intended to sell at a high profit. The reason for this is that they find that Tesla’s forward price-to-earnings ratio is more than 98 times, far more than Amazon’s 50-fold price-to-earnings ratio during the dotcom bubble of the 1990s, and that the risk of a valuation bubble is becoming more pronounced.

Despite the unfinished gamble, the biggest winners have surfaced, benefiting from a surge in share prices this year, with Tesla founder Elon Musk’s fortune surging by more than $15 billion, not including the huge bonus he received from Tesla.

Musk, who currently has a number of operational and performance metrics, will receive more than 10 big bonuses in the form of stock options, according to Tesla’s 2018 compensation incentive plan.