The guy I used to work with (I’ll call him “Q”) who shorted $TSLA at $600 in Dec called me today:

Q: Why is $TSLA up 6% on no news?

GB: Because it was down 8% yesterday on no news - unless you call a 10 bp rise in treasury yields and $BTC collapsing news. You still short?
2/ Q: Of course I’m still short. It’s up another 30% since we talked two weeks ago. It’s all mo’.

GB: $TSLA MIC Y has a 4 mo wait. It’s entering India. Analysts are playing leapfrog raising PTs. Active mgrs have to own it or get fired. It’s cheap at 80x 2022 EPS vs 55% growth.
3/ Q: Your earnings estimates are like twice consensus.

GB: The Street’s been wrong on $TSLA forever. Why do you listen to them? You really shouldn’t be short going into Biden’s inaugural speech and the FY’21 volume guide at the end of Jan. You’re going to get run over.
4/ Q: Whatever.

GB: Did you rent a Tesla for a week like I told you?

Q: No. You know I don’t drive.

GB: Did you build a $TSLA 5-yr volume, earnings, cash flow model?

Q: No. No one can forecast out 5 years.

GB: Did you talk to any Audi or BMW dealers? Or Tesla owners?
5/ Q: I don’t have time for that.

GB: Q, you haven’t done any real research. $TSLA ‘s up 40% since you shorted it. Maybe you should figure out why it keeps going up.

Q: It keeps going up because people like you are pumping it.

GB: You’re giving people like me too much credit.
6/ Q: How can you even own $TSLA? It’s trading at more than all the other auto companies combined.

GB: You’re using the wrong metric. TSLA’s future competitors are $AAPL, $GOOG, $AMZN, $BIDU, plus Rivian, Lucid and new SPACs launching dedicated EVs. The legacy guys are dead.
7/ Q: CNBC says $TSLA ‘a getting killed in Europe by the legacy mfrs’ new EV launches.

GB: CNBC is looking backward at 2020, when Tesla’s plant was shut for 7 weeks, and capacity was re-purposed to produce Y CUVs, which more than doubled TSLA’s TAM, but none got to Europe.
8/ Q: I still don’t see how you can buy a stock trading at 220x next year’s earnings. $TSLA is a friggin car company.

GB: And $AAPL was a cellphone company that destroyed Blackberry, Nokia, and Motorola. $AMZN was a online bookseller that destroyed the entire retail industry.
9/ Q: You used to be a smart guy.

GB: I’m not the one down 40% on one stock in 2 weeks.

Q: Well I’m not closing my short. A lot of smart people are short $TSLA.

GB: Like you, they’re value investors who know nothing about growth stocks. It’s a whole different world.

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More from @garyblack00

23 Dec 20
The media, as usual, is missing the most intriguing aspect of the story about @elonmusk calling Tim Cook in 2018 about a potential merger. Would $TSLA and $AAPL be interested in a strategic partnership now? I would think they might.
2/ Elon has always welcomed EV competition, because new competitors accelerate EV adoption, which benefits $TSLA most. What’s wrong with picking who you get to compete with, and putting a nail in the coffin of legacy ICE mfrs who will likely use price as a weapon to compete?
3/ $TSLA certainly doesn’t need $AAPL now, but if the Apple iCar was designed just to get people from point A to B, and $TSLA partnered with Apple to build such a productivity vehicle, why is that bad if it knocks everyone else out of the space?
Read 5 tweets
23 Dec 20
I have updated my top 10 reasons investors should buy $TSLA:

1/ Huge EV runway ahead, with global EV penetration now 3% likely to go to 20% by 2025 (6x increase = +46% CGR).

2/ TSLA’s EV share continues to grow - not fall - as TAM expands, even as ICE competitors launch...
their own EVs. New EVs take from ICE vehicles, not other EVs. This is biggest research flaw in short thesis.

3/ $TSLA has several positive Jan catalysts to propel it higher: 4Q vols (181K vs 172K Street, 1/4), FSD MRR (1/15), MIC Y production (1/15), CyTruck update (1/15).
4/ FY’21 vol guide of 840K+ will beat Street ests of 777K (1/27), driven by 1M installed capacity today, and spark new round of 2021 $TSLA EPS & PT increases.

5/ Biden’s 1/21 inaugural address will feature clean energy plan, incl restoration of $7.5K credit on all EVs incl TSLA.
Read 8 tweets
15 Dec 20
Open letter to all S&P 500 benchmarked managers:

On Friday 12/18 at market close, $TSLA will enter the S&P 500 Index at an approximate 1.5% weight - the sixth largest weight in the S&P 500 index after $AAPL, $MSFT, $AMZN, $GOOGL, and $FB.
2/Goldman says 90% of you don’t own $TSLA, and you probably never had much interest in owning it, since it trades at 169x consensus 2021 EPS, and is +665% YTD. Surely you can ignore it for a little longer, and wait for it to come back down to Earth.

That would be a huge mistake.
3/ CNBC talking heads who know nothing about $TSLA have long proclaimed it to be overvalued. Celebrity shorts and sell side analysts who blindly compare it to other auto companies have been wrong about TSLA for years. Investors who I think are smart sound like empty suits...
Read 10 tweets
14 Dec 20
Normally smart investors say the dumbest things when talking about $TSLA:

“Tesla has a P/E ratio of 1,220 times trailing earnings, when 10 to 20 is more typical for profitable automakers.”

First, no sophisticated investor would value TSLA, growing volumes at 40-50% per yr...
2/ at P/E ratios of legacy auto makers, which aren’t growing. Comparing $TSLA to legacy auto makers isn’t the issue. Putting the same P/E on TSLA with 40-50% growth as companies growing at zero makes no sense.

Second, using backward looking P/E ratios to value a company with..
3/ a long growth runway, expanding TAM, and unlevered brand is at odds with theory, since $TSLA value is in the tail. That short-term mindset caused investors to miss $AMZN, $FB, and other fast growers. The proper way to value growth stocks: Discount the value of future earnings.
Read 4 tweets
13 Dec 20
I found this WSJ article about $YHOO’s entry to the S&P 500 from 12/8/99. Parallels vs $TSLA are striking: YHOO was a new entry to S&P 500 (not a step up), institutions’ widespread skepticism to YHOO given 1,000x+ P/E, very loyal retail investor base, first internet entry to S&P. Image
2/ Yahoo soared 63% betw 11/30/99 announcement and 12/8/99 inclusion, including stunning 24% on 12/7, the last day before inclusion. +63% would put $TSLA at $665. YHOO kept increasing after inclusion and only collapsed with other tech stocks in 2000 as the internet bubble burst. ImageImageImageImage
3/ What’s changed vs 1999:
1) S&P index funds/ETFs were only 3% of S&P mkt cap of $12.0T.
2) YHOO went into S&P at ~0.5% float-adj wt vs $TSLA 1.5% wt.
3) Hedge funds were $200B total AUM in 1999 vs $3.3T today.
4) Trading commissions have collapsed from $.05/sh to zero today. ImageImageImageImage
Read 4 tweets
12 Dec 20
Next week will be volatile. I’m sticking with my previous expectation of a $650-$690 $TSLA top and then a 10-20% correction, but those ests could be too high or too low. No one knows how many shares are in the hands of speculators waiting to sell to indexers who need 130M shares.
2/ Friday’s action was not a good indicator, with $TSLA getting slammed repeatedly, most likely from institutional sellers of the 8M ATM shares bought at a discount last week. Index shops will likely give PMs lots of flexibility to buy TSLA shares earlier than the usual 2-3 days.
3/ Speculators have been buying $TSLA since 11/16 in the hope of exploiting the indexers who need to buy 130M shares. TSLA is up 50% since 11/16, but indexers need just 17% of TSLA float. Hopefully, some of the buying was by $8T in active mgrs, who would likely hold their shares.
Read 4 tweets

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