Obviously it is because of the bad news that the Financial Times is reporting that Tesla is missing $1.4 billion.
Analysts talk about a stock “finding support”. Basically, a lot of people look back over the history of the stock and - if they think they see a stable line that’s running through it - they’ll start buying. Likewise, you can get the same thing if institutional investors and hedge funds have calculated a true value for the stock, and think that it’s becoming undervalued. I’d venture to guess that this is what you’re seeing.
Of course, some or most of the “support” may be people buying back their short sells, since they looked back and found that stable line, and thought it was time to take their winnings in the short. It’s not necessarily people who are pro-Tesla creating the effect.
Some of the reddit stock talk is very conspiracy oriented, that the market makers are propping up Tesla for “exit liquidity” – meaning giving some of the big buyers a chance to get out of their Tesla stock. I don’t know enough about what moves the market to know if that’s plausible. I could certainly see the big players in the stock market acting in that fashion, unfairly rigging the market in favor of themselves and their friends, but what would the actual mechanism for that be? Someone has to be buying the Tesla stock for the value not to crash, or are they somehow playing around with options and derivatives and pushes and god knows what other techniques to prop up prices?
It’s one of those things that sounds like a conspiracy theory but seems like it could be true – granting that there are market mechanics that would allow them to do such a thing that gained more than they lost.
Why is it irrational? Like objectively irrational? Some people’s time horizons are measured in hours and it would make complete sense to buy a stock that is slightly, or might possibly, trending up over hours, and then other like-minded folks just ride that trend which in turn causes the trend up. It almost has nothing to do with Tesla.
I think people who bought Tesla would give you good reasons that make sense to them, but might not make sense to you (or me to be fair).
The linked article is paywalled for me.
I covered this earlier in the thread, but Tesla is valued more than every car manufacturer in the world combined. They were one of the top 5 stocks by market cap at some point, bigger than Microsoft. It lost half its value and it’s still the #11th biggest market cap in the world. Still bigger than Walmart, visa, a bunch of others. The stock was priced like a tech company that never delivered on its tech promises in 10 years+. The whole thing is a meme stock. A cult of personality. And now that personality is one of the most hated people in the world. Public opinion of him and the company has completely reversed – it’s probably one of the most, if not the most, hated companies in the world. And now their car sales are massively down, their taxi service and FSD are still a long ways away from actually working, their humanoid robot demonstrations have been a fraudulent joke.
It’s priced like a startup tech company with massive growth ahead of it, except it never delivered on that tech in over a century, and it’s not growing. In fact its actual business, selling cars, is massively contracting and there’s no reason to think this trend will reverse.
Even when the hype was at its height like 6 years ago, back when there were promises of achieving big tech breakthroughs and the brand was popular, it was insanely overpriced but you could at least try to justify it as one of those explosive tech companies. But now that it’s hated and shrinking and failed to deliver on all its promises, the already-irrational price just becomes absurd. What are people banking on when they say “yes, I’m going to buy a company with 170 P/E that has started shrinking and is one of the most hated companies in the world”? Even actual tech companies trade at like 1/5th the PE. What’s the realistic payoff for besides hoping a bigger idiot comes along?
Why in the world would someone think “yes, I should pay 25 times what Toyota is worth for this stock”?
A story can be made that the stock is back in the range where it was before its “Trump wins” spike. The future growth of the company that some may be buying into is not necessarily further dominance of the car market but an emerging industry of “robo taxis”. Today California granted permission for Tesla to provide charter driver services on certain routes which some may be seeing as the company building the infrastructure to profit from robo taxi services as the supplier of the vehicles and the service in the future.
Yeah I would not make that bet. But all that it needs to be a rational if poor bet is being convinced that others will start to believe the story in the future when you can get out at a profit.
None of that matters for a short time horizon. They think it will go up just enough to squeeze a profit. Completely rational for stock movement over the course of one day.
Here is a summary. I can’t read the FT article from my tablet, but earlier on my desktop I could.
Very brief summary: how much they spent and how much they own don’t add up. They took out a $6 billion loan, with these high interest rates, despite claiming a whole bunch of cash. Who knows why. Will the SEC or FTC ever investigate? What do you think?
But they’re not the only companies pursuing self driving taxis and I doubt even if they were, would the insane valuation be justified.
Concernig the self driving feature this may be of interest to fans and investors:
A group of Tesla fans and investors has inadvertently exposed Tesla’s shadiness regarding crashes involving Autopilot by attempting to claim that the advanced driver-assist system was not active in a crash test.
It was not only active, but it also disengaged itself less than a second before the crash—a known shady behavior of Tesla’s Autopilot.
And of course, it’s “secret sauce” for magic tech was mostly elmo’s reputation as a genuinely creative and driven, but stable, genius.
Well, he’s exhibiting a lot more instability than genius these days. To the degree TSLA was once a play on elmo’s brave new world techno-utopia, well, it’s turned from Star Trek to Mad Max pretty quickly
I pulled about 80% of my 401k and IRA out of mostly US index funds on March 3/4 and decided to think for a minute about what to do with it. It may or may not have been optimal timing, but watching the market go nuts was stressing me out. I am 56 and was quite heavily weighted in stocks anyway. Normally I wouldn’t be planning to retire for another 10 years or so, and my family is generally quite long-lived (especially the women), so my money will possibly have to last quite a while.
However, recent turns of events have me wondering how to pull off a career change (immigration law has been JUST A TAD stressful), and possibly even getting the hell out of Dodge to retire early somewhere cheap. But now that I am also Canadian, other options present themselves. So we have a decent chunk of change in high-yield savings accounts, in case it’s needed to qualify for long-term visas in places that wouldn’t allow us to work. And if we don’t need it for that, maybe we will need it for a down payment in Canada? Who knows? I hope not to have too sell our house in the U.S. (we have a really low interest rate, and it should rent out for close to the mortgage payment, so even if we are slightly cash flow-negative, it’s a 15-year mortgage on which we are currently paying down over $1k/month so it’s still net worth-positive), because even if we leave, it may not be forever and it would make sense to still have the house if we can swing it.
Anyway, I need to think about what I am/we are doing next. I am not going to leave my entire net worth in essentially cash forever, but there are a lot of moving parts and I wanted to think for a bit before making any major moves. The roughly 20% of my retirement accounts that is still invested is in a target date fund and a couple of socially responsible funds, and those seem to be pretty stable for now.
Ha. I meant decade.
He had a lot of people fooled that he was a real life Tony Stark and that was a big driver behind the insane valuation. Of course he was actually Phoney Stark, ruler of Twitler.
Would it be possible for you to work in immigration law in Canada?
Probably - there are Canadian immigration law firms that also practice U.S. immigration law - but I don’t want to for all of the same reasons that I am considering moving to Canada. Besides, after a very nasty concussion a few years ago, staring at a computer screen all day really exhausts me (I actually have an ADA accommodation for remote work so I can lie down and shut my eyes at lunchtime to reboot my brain), so it may be time for me to do something else. That’s another thing I’ve been trying to figure out. Maybe something related but not doing the hands-on immigration work, like global mobility? I dunno.
Good luck. I’m trying to imagine what else I could do.
Commerce secretary Lutnik went on Fox News to tell people to buy Tesla, that Elon will save everyone and Tesla is the most amazing stock ever. Maybe we can get another Trump Tesla commercial where he’s doing a topless carwash to a model Y. Let’s see how hard our pathetic government can shill for a private corporation.
Yeah, it’s simply amazing that the anti-EV talk of the GOP has suddenly become notably silent.
I saw a “MAGA EV” license plate on a Tesla the other day in Houston, TX.