Tesla Wears on Short Shorts
Good Monday, dear reader!
Did you have a great Fourth of July celebration? (Otherwise known as national “scare the crap out of your dog” day.)
If the fireworks finally died down in your neighborhood (lucky!) and you’re jonesing for more, Wall Street has you covered. More specifically, Tesla Inc. (Nasdaq: TSLA) has you covered … in short red shorts.
Over the weekend, the ever-effervescent CEO Elon Musk took aim at TSLA short sellers once again.
Musk tweeted out “Who wears short shorts?” followed by a link to buy limited edition Tesla short shorts. The shorts have Tesla’s logo on the front and “S3XY” on the back, a reference to Tesla vehicle models.
The shorts were clearly aimed at Tesla bears, one of which — Stanphyl Capital — laid out extensive reasoning last week why you should sell TSLA right now. But Musk once again had the last laugh.
TSLA shares are up more than 200% this year, riding solid vehicle deliveries and a streak of three consecutive profitable quarters. Profitability has long been Tesla’s biggest drag, especially among short sellers.
But, if second-quarter deliveries — which came in at 90,000 vehicles, above Wall Street’s most bullish estimates — are any indication, Tesla is set to extend that winning streak to four quarters, something the company has never done before.
Will that silence TSLA short sellers? Probably not. Short sellers gotta short, and bears will jump through any number of hoops to do so.
For instance, J.P. Morgan Analyst Ryan Brinkman grudgingly lifted his price target on TSLA from $275 to $295 this morning, citing Tesla’s deliveries report. Yes, you read that right: a price target of $295 on a $1,313-plus stock.
Now, Brinkman and Stanphyl Capital might be right. I’m not saying they are, but it’s possible. However, you can be right and still lose a lot of money. Betting against Telsa right now is a surefire way to do just that.
Luckily for TSLA short sellers, they can now “run like the wind or entertain like Liberace…” in their new Tesla short shorts … for just $69.420. Maybe a little exercise in Tesla shorts will help relieve the chafing from their TSLA shorts.
Editor’s Note: Chafing. Are you tired of chafing? I’m tired of chafing.
With TSLA constantly hitting all-time highs, it’s tough to nail down an entry point. That really smarts, and a pair of little red Tesla shorts won’t change that.
I say it’s time to put an end to chafing over TSLA shares — and find a better way to play the electric vehicle (EV) market!
The real potential for your investment dollar lies in energy technology — specifically, a crucial piece of tech developed by one tiny, pioneering American company. It’s an energy revolution that could create more millionaires than pot stocks, cryptos and Big Tech combined!
So quit chafing over Tesla. Click here to learn more!
Good: Me and My Shadow
Tesla’s Chinese shadow, Nio Inc. (NYSE: NIO) also stole headlines today. DigiTimes reported that Nio sold 3,740 EVs in June, spiking 179% year over year.
What’s more, Nio sold 10,331 EVs in the first half of 2020. That’s up 191% from last year and above the company’s original estimate for sales of 9,500 to 10,000.
The company also announced plans to ramp up production from 4,000 units per month to 4,500 to 5,000 per month.
So far, Tesla’s success in China has proven to be Nio’s success as well.
The smaller Chinese rival continues to ride Tesla’s coattails, albeit with a healthy dose of government support. That said, this serious home-field advantage may be what ultimately gives Nio an edge in China.
Because of this home-field advantage, I’m putting Nio on the Great Stuff watch list. In other words, we’ll look for a reasonable entry price once the current rally hype dies down. Stay tuned for more!
Better: Uber Eats Postmates
It’s no secret that Uber Technologies Inc. (NYSE: UBER) was hungry. Last month, it tried to fill its belly with Grubhub.
Alas, European food delivery company Takeaway.com drank Uber’s milkshake.
But, let’s be honest, the Uber-Grubhub deal never would’ve passed regulators’ noses to begin with — 48% control of the U.S. food delivery market? Nope. Not happening.
But today, Uber finally found a tasty treat in Postmates. The privately held food delivery company was shaping up to be one of the hottest initial public offerings (IPO) of the year. But those IPO dreams came to a halt today after Uber’s board approved a $2.65 billion, all-stock offer for Postmates.
Uber stock rose roughly 7% on the news. Investors clearly cheer Uber’s support of its rising food delivery service — especially with the pandemic crippling the ride-sharing front. Last quarter, Uber lost $3 billion despite Uber Eats growing revenue at a 52% clip.
More on earnings Armageddon in a second, because first…
Best: Spot the Triple-Digit Winner
Congratulations are in order, dear reader!
Today, Great Stuff Picks is closing out our fourth triple-digit winner of the year! We recommended music streaming giant Spotify Technology S.A. (NYSE: SPOT) back in June 2019, when the stock traded around $127. Today, SPOT hovers around $265.
That’s a 108% gain in about a year’s time!
Spotify has come on big in 2020, fueled by podcast deals like those with popular podcasters Bill Simmons and Joe Rogan. Analysts at RiskHedge believe that the company is “rapidly becoming something of a monopoly in the audio industry,” while others believe that Spotify’s “blue-sky growth” is over.
There are still bullish parameters in play for Spotify. There really isn’t a competitor that stands up to Spotify in terms of price, content and user base growth. It’s quickly becoming a household name for streaming music.
However, I believe that the hype behind Spotify will settle down over the next month or so as investors take profits. Keeping with our mantra of “don’t be greedy,” Great Stuff is taking our 100% gain and going home.
If SPOT revisits the $200 area in a pullback, we’ll reevaluate buying back in. But for now: Sell SPOT.
Would you look at the time! It’s almost earnings season again.
This time around, analysts and masochists alike expect a rude awakening, like firecrackers in your cornflakes.
Today’s Chart of the Week comes from a Yahoo Finance article that wasn’t quite the Monday morning pep talk I was looking for: “Get Ready for the Ugliest Earnings Season Since the Financial Crisis.”
Aren’t you ready?! I’m chomping at the bit, myself. Here’s what analysts predict about the nigh-approaching earnings season:
Here we can see bottom-up earnings projected to run off a cliff like Wile E. Coyote, followed by a prim-and-proper rebound to whisk away the unpleasantries.
But Mr. Great Stuff, you’ve seen the numbers, what earnings didn’t go bottom-up this season?
You jest … but here’s a little market lingo to stick in your quiver.
Bottom-up simply refers to earnings. A lot of different factors affect earnings, including the coronavirus prep and cleaning costs. Earnings results more directly affect shareholders, or at least they’re supposed to — I’m looking at you, 2020.
Top-down, meanwhile, refers to a company’s revenue, which typically excludes pesky things like taxes and costs that aren’t from straight-up sales. Top-down investing looks at these figures as a better reflection of actual economic activity — a company’s big-picture growth, if you will.
Now our Chart of the Week has some context … or does it?
You see, it’s not the highlighted second-quarter dip that worries me — that’s already priced into the market. No, it’s the rosy rebound in the third and fourth quarters that doesn’t jive with rising COVID-19 cases.
Those projections were laid out while expecting the Great Reopening to go off without a hitch. That the U.S. economy would come roaring back once nationwide lockdowns were lifted.
They were made without the prospect of a second wave of COVID-19 infections … or economic blackouts rolling across the country as counties and states reclose their economies to deal with the pandemic (again).
Just like we said months ago … nobody’s timing this. I’d love for earnings to roar back to life like a round trip to the Pet Sematary, but the only timeline that matters here is the virus’s timeline.
On that note, from Bank of America’s Savita Subramanian: “At this point, exactly 400 companies within the S&P 500 have failed to guide over the last three months … suggesting that corporate sentiment is neither positive nor negative, but simply a big question mark.”
Here’s my point: We can basically throw out those early earnings and economic projections. What does that leave us with? A big ol’ question mark. And we all know how Wall Street loves uncertainty.
One thing’s for certain: We’re headed for an explosive tell-all earnings season. As always, Great Stuff will keep you in the loop!
Great Stuff: Keep It Loopy
What a Monday! Did you have a fun and festive weekend? Are you ready for another round of earnings season showdowns? Do you need an outlet for your stock ideas and rambling rants?
GreatStuffToday@BanyanHill.com is the most happening inbox around. Why not send us a quick memo?
Remember, if you got into our Spotify trade, we’d love to hear from you too! And if you’re still scratching around for a Great Stuff Pick, keep your eye out. We’re always on the prowl for new Picks and what’s shaking on Shakedown Street.
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Until next time, stay Great!
Editor, Great Stuff