In this video, learn why one trader thinks Tesla is going to tank. See a firm prop trader share his thesis, supported by research and price action, on why Tesla is more likely than not going to tank.
View Video Transcriptin this video learned why one trader at
our firm thinks tesla
is going to tank hi i’m mike bellafiore
co-founder of smb capital
and we’re a proprietary trading firm
located in midtown manhattan
and i’m also the author of the trading
classic one good trade and the playbook
in this video see a firm prop trader
share his thesis supported by research
and price action on why tesla
is more likely than not going to tank
[Music]
we’re back again to talk about another
longer term swing trade
um that that worked pretty well i wanted
to talk about some of the components
that went into it they’re a little
different
um definitely some fundamental elements
but
uh more market understanding than than
understanding an income statement or a
balance sheet i think
so i called it shorting evaluation and
expectations there’s
a lot of components that went into
tesla’s meteoric rise last year
um one of the strongest performing
stocks in the market up
uh seven fold last year uh
and entering into the s p 500 on
december 18th at over 800 bucks
and it’s going higher trey and it’s
going higher
um i mentioned uh in one of the slides
uh where is it right there skepticism
um shorting this i i will confess to
have shorting of this a little bit on
the way up but really didn’t fight it
because the the story was so strong
well you think this is going down right
you think this is overvalued
i think that this is very heavily owned
and yes exceedingly highly valued
i will get into that in a moment and yes
this is a short call
um where i think uh some of the
components that led to a 7x increase are
going away
and there’s real opportunity on the
downside so yes that is correct and i’ll
just share the context which
with you which is so one of our partners
steve spencer
has been really long for a really long
period of time
and has announced that if tesla gets
above a thousand that he’s retiring
so he’s he’s a he’s a huge bull
on tesla and and the trade to the long
side so really interesting
to hear another perspective and perhaps
even your perspective was at the time
you thought it was
time for a pull in or up too much but
look if you think it’s
going to 20 then i’d love to hear that
as well
yes so it’s going to 100 actually 160
will be the
the next stop he’s never going to retire
then he was
he he should have gone it we almost made
900 if he was at 900 instead of a
thousand
but he loves what he does right he
doesn’t want to retire i’ll talk to a
couple of things and i’m curious very
curious to hear if he watches this video
it’s very highly valued um and people
when i when i started talking about this
internally i got some of the exact
feedback that you’re
you’re referencing is you know you know
it’s going higher and it’s been a
mistake to be short the stock for years
um elon is an incredible entrepreneur
and has built an amazing company that is
literally changing the world um but
everything has a value
and i’ll get into that in a little bit
uh in a couple of slides in a little bit
more detail
i’ll just lay out a number of components
that went into the strategy here but
just is evaluation is part of it but
um most people tell you you should know
you never short just valuation you need
something else to get the stock going in
a different direction
so that’s really very much is why now is
is the components of this thing
the the thesis um arc we’ll go into in a
minute
it’s a very large fund with a very
concentrated position that has had
a very dramatic fund flows over the last
year
i’ve seen different numbers but they’re
consistent with something along the
lines of going from three billion
dollars in assets under management at
the beginning of last year
to over 50 right now that is very
difficult to navigate
um if she runs a fairly concentrated
fund and did not increase
her number of holdings so she just
the ten percent of the ar kkk flagship
fund has always been in tesla and that’s
one thing when it’s three billion it’s
another one it’s 50.
totally different business right it
really really really is
um i dealt with that personally and it’s
very
difficult to drive you know i constantly
use the aircraft carrier analogy it’s
difficult
um the tesla is an easy story to short
with the concentrated position there
with the vulnerability and given that
it’s what i call a story stock
meaning that people aren’t buying it for
today’s earnings they’re buying it for
earnings farther in the future
this makes it more vulnerable to the
increase in interest rates that we’ve
seen because you have to discount
those earnings over a longer period at a
higher interest rate
so just think about a zero coupon bond
being
more subjected to changes in interest
rates it’s the same concept
trey when you say it’s an easy story to
short
do you mean because hey we’ve got one of
the big
buyers who really wasn’t prepared
to be able to handle the additional
capital
and is sloppily just throwing some more
capital into
what may have been a smaller idea or do
you mean something else
i mean that that and there’s a number of
components
um there’s a lot of ways that he can go
wrong and it’s basically the
next bullet that i have on here is
expectations are very high
that makes it easy to short how is he
going to exceed expectations at this
point gotcha okay so that’s the reason
why you think this is a short which is
expectations it’s price to perfection
absolutely that’s the best way to put it
is absolutely priced to protect
perfection
um then you also have increasing
competition
both there are a lot of ev stocks when
we were talking about ev stocks a year
ago it would have been
tesla and i can’t even think of any
others now it’s neo
nikola blink um
[Music]
cicdcc or whichever one that’s back that
just bought lucid
there’s a lot more opportunities for
investors to invest in the
theme as well as audi
ford gm everyone is introducing electric
vehicles
so they’re getting competition both for
the stock and for the product
so that that is i saw as a headwind for
the stock to continue your outperform as
well
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years of online education i’m going to
talk a little bit there’s a few big
components here and i’ll this is the
valuation i’ll talk about
um it’s absolutely a market darling
people love musk people love what he’s
doing he’s exceeded expectations for a
long time um but when people start
saying
valuation doesn’t matter um that’s hard
to believe
it eventually it matters um it’s
i would argue this is as stretched as
i’ve seen since the late 90s there’s
other times when similar concepts get
bit up very highly and and they do
eventually return to earth
so i’m going to walk in the specifics on
the valuation on a price revenue basis
at 800 it’s trading at 24 times revenue
that’s i have a number of others in here
below
the only one that’s even close is
shopify which is 47 times revenues
but it has over double the gross margin
i point to gross margin because
a company like shopify or roku or any of
these others i have down here
they can scale their operating margin up
much higher when they have that gross
margin
tesla has a gross margin of 21 already
the highest in the industry
400 basis points above toyota motors
which is arguably the best manufacturing
company in the world
but when you just think about the
product very simply they make
carbs that has a very high variable cost
component and you just cannot scale the
margins that heavily
if you have a netflix or something like
that yes they have infrastructure and
some things like that
but every additional subscriber that
comes on contributes to
growing the growth levering the fixed
costs that you can’t do that the
business model is just fundamentally
different
so to the bottom bullet this is
something else where expectations
it’s priced very highly on outlook and
then i would argue expectations are
considerably too high
so right around the time that this uh
started coming apart kathy wood was on
cnbc and she said that she thought the
ev market share is going to compound at
82 percent
for five years and just a little bit of
math that’s 20 fold it’s currently 1.8
percent of the market evs
that would take it to 36 percent in five
years
that is very difficult tesla’s own
projections which are on the next slide
she’s through 30 percentage points
above their own projections which are
extremely difficult
um understanding how the car is made
it’s you can always get more steel you
can get more leather you can get more
components to build a car but you can’t
get more car driving batteries
that is what looks to me like the
bottleneck and it’s pretty widely
discussed
that this is something that they need to
scale and this
is a slide from article i read which is
talking about how aggressive these
projections are they have to build these
factories they have to
get all the materials there’s rare earth
metals and components that go into there
which are hard to mine
and their tesla zone projections are to
grow 52
for a year for eight consecutive years
and that’s
very difficult to accomplish there so
for
the arguably the largest bull in the
street to be 30 percentage points
above what they’re expecting expecting
and then the stock to be expensive on
those metrics it just really really
really looked price to perfection
so trey one thing that struck me was
when you said they are
just a car company there will be
tesla bulls who will say that they are
not just a car company
what say you um
so yes i agree they make the power wall
they make other products um they can do
over-the-air software
but at the end of the day their product
output
is a vehicle um they are going into
different markets i read somewhere that
they’re doing a joint venture where
they’re making
3d printing of i can’t even remember
what it was um
but anything like that is is way too
small and way too far on the horizon to
be factored into the valuation currently
um and what i’m really talking about
yes they’re changing the world that’s
i’ve had these arguments they’re they’re
interesting and i find it kind of funny
i don’t mean to be dismissive when i say
that it’s just at the end of the day
what comes off the assembly line is a
car company you can say it’s software
you can talk about autonomous you can
talk about things like that
but they have to produce a car to get
paid that’s how i respond to it
um and i dell the slide i brought up
right now
is relevant in i had this discussion
back in the late 90s where people said
it was a technology company
in reality with full benefit of
hindsight what it really was is a very
good supply chain company
they made products that were associated
with technology they grew like crazy so
looking at the far right screen
the stock was up 236 percent 30 180
how to pull back then what is that six
or seven years of you know 200 200 240
and was priced to perfection in the late
90s everyone said it was a technology
company
they made a technology product but when
things changed the stock
declined by 66 in 2000 it did rally a
little bit in 2001 and it bounced around
for a couple years but eventually it was
taken private
and came public again but valuation does
matter even in these stocks that go to
the sun
and we have seen this movie before so i
show that just to say it is possible and
a market darling
can decline by a considerable amount
let’s talk about the bigger picture
um it was a huge winner in 2020 up
seven fold i do i will just sort of say
because
you’ve upset plenty people who are
watching this
by saying that they’re just a a uh car
company
and so i will just say to you uh
that there are there are people who
share your opinion there are
lots of other people who would
see a bigger a potential product line
and and company for tesla
they might see it as more of a
uh energy company that
can do a lot more than what it’s doing
right now they they
could see it as a technology company
that can do a lot more
and and i won’t get to i won’t get into
that and and maybe steve will even
follow up with with some thoughts about
this but but even
putting but acknowledging putting that
on the table as a trader
this is super helpful to understand if
you’re
really long tesla like what you’re
saying
is out there and there are hedge funds
out there that
are saying this as well and we we got to
know that and then on the other
side this is the reason why the stock is
up so much which is people see this
as much bigger than just a car company
it certainly couldn’t
hold its its price if
a majority of the people were seeing it
just as a as a car company
so those are i think these
i think these are these are great
conversations but to the people that
we’ve upset who are watching this
i i we’re going through this exercise to
understand
the different players who are positioned
in this stock and so we’ll make
you’ll make a really good uh you’ll do a
good really good explaining
why some people think this is a short or
or or a polling trade
some of the discussions i’ve had is is
that you you have to think a company is
bad or as flawed or
there you know i don’t mean to be
dismissive when i say it’s just a car
company
um i just i’m looking at the components
that are going to drive the margin line
okay gross margin operating margins and
things like that and you mentioned it’s
it’s an energy company it builds
batteries
um it has ai um and and kathy wood loves
to talk about autonomous and the size of
the market
and the components are there that make
it much more than just a car company
totally agree and then my counterpoint
to that as a trader
as an investor would be tell me how that
is going to drive the bottom line
differently
there is no way i have not seen a cogent
argument that says they can achieve
the kind of margins that i had of
companies i had on the other slide oh
google on netflix of facebook
anything like that at the end of the day
they have very high marginal input costs
and they have to lever very
high fixed costs with lower variable
cost i phrase that wrong
with lower variable revenue because it
costs a lot to build a car
if they develop autonomous and all the
capabilities and some things like that
they can’t distribute it among other
vehicles and get licensing fees the way
that
a model that can really scale so perhaps
instead of saying it’s just a car
company
it it they just have a different margin
structure that i don’t see how they’re
going to change
um and and that’s the key component um
that’s the most important thing
so and the fact that there’s still a
long way to go i’m trying to pull back
to the slide right now
everything has a price right um it was
up seven
fold on not dramatically different
expectations in the market they didn’t
you know yes they announced a new
factory yes they beat production in a
couple of quarters yes they’re doing
extremely well but nothing that i could
see would justify a 7x
increase in the price of the stock what
did justify that
is every growth in a mutual fund in the
world went out and had to own at least
market weight because it was performing
well
it did go into the s p 500 at 1.8
percent
and retail loves the story and bought it
up so a lot of
market factors drove the appreciation
that are not expected to continue
and interest rates started to pick up
which makes a stock like this very
vulnerable
that’s really what it comes down to i’m
not saying anything bad about the
company the product anything i enjoy
those discussions but that’s not the
point of the the presentation
so um talk a little bit about this this
is some detail about kathy
and 740 increase and how much
her assets went up and she also
disagrees this is a
an important component as well the fast
money aspect
she says that they’re not fast money
they’re retail investors she’s doing
things differently and people are
understanding how she’s doing it and
recognize it and appreciate it
great um when you get what is that math
i can’t do that
40 46 billion dollars in under a year
by definition that is fast money um
and it will turn around and go as
quickly as it came in
not necessarily you know she has to
underperform she has been out performing
i think she was up 180
like last year but they are chasing
performance when that performance goes
away they’ll chase it elsewhere
um so that is a vulnerability that could
lead to a lot
a i think was a lot of the marginal
demand for the for tesla over the past
year
and it absolutely if it just doesn’t
continue to grow
forget become supply then tesla is
vulnerable
and that’s that’s the only real point to
it
um she positions herself very heavily in
some very highly
high growth high valuation names
which is fine it’s worked for her
extremely well but
it seems that people have sniffed out of
vulnerability and this is one of the
things i was referring to
is you can short teledoc square roku
tesla
with very reasonable evaluation
expectations it just has to return to
normal and to have this kind of a
vulnerability exist on the street
that alone could become its own catalyst
that being that you’ve got a big player
that’s
over long over concentrated momentum
names
yes and when she becomes a seller
there are a lot of hedge funds that will
try and front runner on the way down
they did you say oh here’s a
vulnerability and it’s nothing personal
it’s just an opportunity in the market
just like us they’re just looking for a
trade this is a chart of
the arc etf and you can see so that i
have february 12th highlighted this is
when it came
out to my attention and you and i talked
about it i wasn’t getting confirmation
of the thesis that i had but it
obviously played out in the next few
days
um and you can see it declined from 156
to 108
in just a couple of weeks and this is
with only fairly modest fund outflows
and this supports what i’ll the
assertion i’ll make at the end but front
run is
i don’t think we’re done on the downside
yet this vulnerability still exists we
just saw the first
chapter of that book and this is more
okay
why why now when did i get involved in
this and this is february 12th
this was a very significant element in
that
um you can see i have highlighted in the
box there that the
equity fund inflows were 26 billion
dollars the second
highest in 20 years and tesla was down
that week so that was the week of
february 10th and the stock declined
despite
the highest essentially one of some of
the highest funding flows ever
that simply says okay we’ve got net
sellers now
um and that was a big component of okay
now it seems
safer to get involved there were other
components that came in uh
technical some elements like that but
that to me was a very significant
variable
yeah that’s that stands out to me as
well um this is the long-term chart and
what i’m really just highlighting here
is
the size of the game this is 72 at the
march low here
and this was 892 i think we just missed
900.
that’s a very large gain um right in
here is where it went into the s p
500 and then there was some a derivative
follow on trade that drove it
you know fairly substantially what is
that 30 percent
um just from retail and especially
another version of the gamestop trade
i was hearing some discussion on
february 12th that that it essentially
reversed
but i could not get any confirmation of
that i was looking into put call ratios
and talking to some options specialist
and i was not getting any confirmation
of it
so we held off until the following uh
tuesday it was uh
monday was off but we really got
involved on february 16th
so and this is so this is just the short
term technical
analysis showing a pretty defined
support level here at 800 and this is
where we’re starting to get involved
this is february 12th
constant uh consolidating the low end of
a trading range looking vulnerable
and here is how i manage the trade as i
say i did i was more active with with
puts and jumping around a little bit
but this was the common trade that i put
on as i mentioned
here we had the first push below 800
there’s some rumors about some of the
things going on
discussion of kathy’s vulnerability it
but it
closed really strong on a friday closed
up went up over that
and then first thing monday morning was
pushing down i got
really lucky and was filled at 805
and just sat with it for a little while
it consolidated below this range
i think my stop was 820 it was right
above this level uh but never tested
and then we really started to break down
a few days later short 805
short 805 correct stop above 8.25
uh yes so an 800 stock that was
you know i was very comfortable with 20
points of risk
especially this one this as we saw
yesterday this thing can move
um we had a nice push down and went
right through 700 where i thought which
i thought was going to be some support
i did not cover here i probably should
have it certainly would have been
tradable but i sat with it
this um was my first ad and what it did
is it
um failed a back test of the 20 day
moving average um i was watching that
managing it on a daily time frame but
this is a shorter term chart for some of
the detail
push down and then i watched it fill out
this wedge
which i thought was a great
consolidation i was talking about i was
like okay
and hit it again this is an increase in
momentum and the story was gaining
traction
so i shorted the breakdown again i got
680 um when that went through
and you can see it really accelerated
down so this is uh 600 was my first
target
i think i mentioned that a couple of
times and we went into a strong sell-off
i had a bid in at 611. i wanted to be in
front of it and got filled there
and that was half the position and the
next day quite frankly i thought i was
gonna be able to reload at a back test
here or something
we got this very powerful flush down and
i had a
another bit in 575. i left some on the
table but was very very happy with the
trade
um i’d say that’s a
yes um now we’re going to talk about
so a lot of pieces came together and
this is going to be a longer term trade
exactly the skepticism that people said
when i said hey you know i think we need
to be short tesla here
um the technicals were very clean i just
showed you the chart it was it trades
very technically very clean
um the 216
uh bounce excuse me the bounce on
february 12th i’m just speaking up a
little bit here
uh did give me some pause but when it
couldn’t hold up there and then rolled
over very quickly on the morning of the
16th
i was very happy to get involved i’ve
been looking for it and then
i did have to be patient for a few days
it just consolidated around 790 780 for
a few days
but then it really accelerated and you
know went moving
moved to the downside bullet 5 is an
important question
we had a very very strong move off of a
very elevated level
and i need to start thinking about is
this a short
i rarely try to really make money on the
short side especially in a bull market
which
i think we’re very much still in we’re
seeing very healthy rotation
or should i just use this as a source of
funds to kind of balance out
my market risk and how to proceed going
forward
i’m i’m somewhat of the mindset that
this is still an alpha short because my
price targets are so much lower
but i need to be careful with that and
yesterday is is clear evidence of why
um it was up 20 for people who don’t
know the date today is march 10th
but the last bullet to me is the most
important
i don’t think we’re done i really don’t
um
we’re going to talk about here i wish i
knew who said this
i’ve read the 5080 rule um i don’t know
where it came from i don’t know how
valid it is but i do know it passes the
sniff test
and it just simply says once a market
leader puts in a major top
there’s a 50 chance it’s going to
decline by 80 percent
and in 80 chance it will decline by 50
percent
again don’t know how hard and fast i
have not tested that
but it does pass the sniff test for me
and when you think about some of the
stocks that i saw do this
amazon i have there is the first one
obviously up a lot but
i don’t know if people know it declined
95
in the bear market of 2000 2001. a lot
of these others you
probably don’t even remember jdsu aol
dell hpq some of these they were very
high growth very highly valued stocks
that declined by 80
plus and i already talked about the
gross margin element
and that’s what i mean when i say it
makes cars it’s just very hard to grow
that bottom line
so everything they have to get is
through revenue growth so
the slide here or the chart here is my
long-term price targets
i don’t find the i
and i don’t mean to be critical but i’m
just
just sharing with you my my observation
i don’t find the argument persuasive to
say tesla is just a car company
okay uh i think you are better served
saying okay they’re more than a car
company
you’re welcome to disagree with me on
this i i just don’t find that to be
persuasive
i think a better argument and and more
time
uh in development could be all right
guys you think they’re more than a car
company fine
and okay they’re going to be able to
sell xyz new products and okay
that’s going to be able to net them one
two three
even if they do that which is a big
f you know what can this company really
be worth
so when you start to say
hey they’re not going to be google
they’re not going to be amazon they’re
not going to be apple
and they’re not scalable for for certain
reasons
that that is a good way to at a very
minimum mitigate
your your short risk on this particular
at least it mitigates the
upside potentially that that’s that’s my
feedback there
no and i appreciate it now what i really
am trying to do is just
zero in on the gross margin um and
exactly as you said it’s like okay
they’re going to make battery packs
they’re going to make
they have all these other factors that
go in and i do just return it’s not
about the fact that it’s a car
have you ever been in a tesla by the way
i have okay and it’s beautiful
i do and i’ve actually thought about
buying one but not at this not at this
point
um i have nothing against the cars i
think he’s doing very important things
that that are changing the world and
it’s certainly generating discussion and
i’m actually a fan of that
um i am more skeptical of the cult
following and the valuation doesn’t
matter discussion
and i bring it back to gross margin i
haven’t hit it as hard in my discussion
as i have in the slides but every time
someone says okay but this
the only response i have is like okay
howard how is that going to change their
margin structure
okay it’s true they you know they’re
going to have autonomous vehicles how
does that change the gross margin
structure
they so basically what that means is
they are going to grow revenues
they’re going to have to grow top lines
and sell more units but how are they
going to make more money per unit
i don’t really want this to be a point
counterpoint for me
yes but but i will say that the the way
that that will enable them to make more
money is well what happens if they get
into the trucking business
that that enables them to expand what
happens if they get into the uber
business
that enables them to expand them just
being
a company that sells cars to consumers
yes
and so the uber business is an
interesting one um
at the end of the day and i i
agree i don’t i don’t think it helps the
viewers to for us to go back and forth
on the point counterpoint
um i just i and i don’t know the answer
to this question
but how does that change the margin
structure it may change it dramatically
okay if it does what percent of the
revenues or is it going to be because
they still have to produce all those
vehicles to be into that
um so maybe let’s make up a scenario
here
20 of their production in 2030 goes into
the uber business and they make five
times as much money in that
okay they just basically doubled their
earnings projections
from what i have in 2030. okay that’s
interesting
but maybe it goes you know i’m making
all this up i have no projections for 20
30 or anything like that
but if their gross margin was 20-ish
percent which would be
300 basis points better than any other
company in the world
maybe it goes to 25 in that scenario
um and that’s my only real point is yes
i i hear all these arguments
it’s very compelling and it just doesn’t
change
how they’re going to generate profits
that’s that’s where i’m hung up
and for a stock to be trading at 24
times revenues
you have very very significant
expectations for profit growth
so um anyway this isn’t about them right
it’s just it’s vulnerable and
a lot of those arguments are priced in
okay good
well i like how you’re thinking through
[Music]
uh this trade not just based on your
thesis
but other factors as well other and
that’s a
so we don’t talk a lot about this but
this a super important
point that i want to share is so there’s
different sources of edge
in trading so one of the sources of edge
and trading is you find certain setups
that you trade well
so you know in our world we might say
let’s take momentum trades and somebody
might become a really good momentum
trader measure those results get good at
it
get bigger at it do it more often build
technology do more of it and they build
a career
out of a strategy which they have an
engine they personally have an edge in
this type of trading
and then there’s something called a
structural edge
and this is a super important type of
edge that
we really don’t talk too much about and
i don’t think a lot of people talk about
which you are alluding to which is just
that
this can be a good trade because we’ve
got some people that are just too long
and we’ve got some people who can get
leaned on
and we’ve got some people who can get
front run and if that starts to happen
then you’re you are going to develop a
structural edge
in the marketplace from this type of
edge
that is a separate edge then any sort of
momentum change which you point out at
800 which there is a momentum change to
the downside
those structural edges are super
powerful
super powerful and so good to to
recognize them
and i think that’s a very important
point that i didn’t talk about enough i
didn’t want to get into the kathy wood
and arc and some of those things in too
much detail
it’s just an opportunity there but
you’re you’re exactly correct
it there and i’m far from the only
person talking about this i heard about
it from other investors
and it’s just being seen as a
vulnerability and
how does this not play out in a rising
interest rate market
with a very highly valued company with a
very highly
um concentrated position with a lot of
very
fast money flows there’s just way too
many ways for this to
unwind and if players
who need to put money to work on the
short side
hedge funds who need to be market
neutral or want to offset some of their
risk
and had a really tough time on the short
side last year
this looks like a fat pitch and the more
that people talk about and say look all
we have to do is lean on it and how am i
wrong
you know they sell more cars in 2025
it feels like a and this is
one of the things i i want to be very
careful on how i characterize it here
but it just feels like a safer short
all the risks normally apply but there’s
just a lot of opportunity and tell me
how i go wrong
in 2021 with tesla yes they can sell
more this quarter or next quarter
but that doesn’t really change the
thesis that i have that there’s too much
money that piled into it
and one of the bullets in the slides was
who’s the marginal buyer
and let me spend just a moment on that
um i know that saudi aramco
which is the saudi oil company bought
shares in tesla as a hedge against
evs growing international players own it
for various reasons
growth funds i’ve seen the data it is
extremely heavily weighted in just about
every growth fund out there wasn’t in
the s p 500 but it was a large
weighting and a lot of the gross in
growth indexes and the way
that players generate alpha is they have
to own more than the index
before this is for a mutual fund they
have to have an overweight rating
so it’s a heavily overweighted over
owned stock
and then went into the s p 500 that was
obviously the largest source of marginal
buyers just the s p 500 index funds
which have trillions of dollars in
assets under management
had to buy in a 1.9 weighting
even some value funds on this and retail
of course
owns it a lot so when you think about
okay it pulled back from
800 to 700 who’s on the sideline waiting
to rush oh and the last thing would be
short interest short interest which had
run around 20 percent had dropped to 3
at the time of the trade there wasn’t
even kind of short interest on the bot
on the sidelines to
rush in and cover and take advantage of
it to hold the stock up
so that was very much a part of the
thought process too potential large
short seller
no real demand sitting on the sidelines
and i haven’t talked about valuation in
that
that little bit but then you have the
valuation cushion it’s like okay it
could come back
50 and still be a very highly valued
company
so um a little bit of a tie right there
i want to just wrap up with the price
targets and
pointing to the the 80 50 rule i did
notice that this consolidation which
looked really healthy and went through
most of the fourth quarter
um is right at 440 which is almost
exactly
50 off of the the high there’s a high
volume node a lot of
trading elements that can draw here and
if things get really crazy
it wouldn’t shock me to see it pull back
to 160.
but my first targets were 600 which we
we saw
last week second target was just the
200-day moving average that’s how far we
were stretched on some trading metrics
we were
30 above the 200-day moving average
that’s it we hit that already and then
the 50
pullback is uh my longer term target
that’s i’ll really take a lot of weight
off here but that’s what i’m looking for
and i think that could happen within the
next month or two all right trey i
really appreciate putting this together
very interesting research here
and obviously a battleground stock and
we will see
how it goes i’m going to uh i’m going to
try and stick to the rule of don’t read
the comments when this one goes in
true i do expect some controversy hey go
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