{"id":50645,"date":"2021-03-12T11:16:30","date_gmt":"2021-03-12T16:16:30","guid":{"rendered":"https:\/\/www.smbtraining.com\/blog\/?p=50645"},"modified":"2021-03-12T11:16:30","modified_gmt":"2021-03-12T16:16:30","slug":"is-tesla-going-to-tank","status":"publish","type":"post","link":"https:\/\/www.smbtraining.com\/blog\/is-tesla-going-to-tank","title":{"rendered":"Is Tesla Going to Tank?"},"content":{"rendered":"

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.<\/p>\nView Video Transcript<\/strong><\/span>

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

* no relevant positions<\/p>\n","protected":false},"excerpt":{"rendered":"

In this video, learn why one trader thinks Tesla is going to tank. 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