Update: Tesla's Nevada Gigafactory Announcement Squeezes The Shorts With New Highs

Sep. 4.14 | About: Tesla Motors (TSLA)


Tesla announced it will build the gigafactory in the state of Nevada near Reno.

This confirms my opinion that Tesla shorts are gluttons for punishment.

The gigafactory announcement was one of the catalysts I expected that could squeeze Tesla shorts.

California failed again to attract a high job creating project. It's official: Tesla's (NASDAQ:TSLA) gigafactory will be in Nevada near Reno. Other possible states in the running were Arizona, New Mexico, and Texas. In the end, the low tax rates among other things including logistics made Nevada the winner. Lithium deposits are extracted nearby and the site will be just a couple of hours away from the factory in Fremont, California. The factory is expected to add 6,500 jobs with a $5 billion investment and be completed by the year 2017.

There is a lot of excitement and hype over the announcement, as expected. Tesla continues to punch new all-time highs. Why are people still trying to short Tesla now, I keep asking myself. I agree that Tesla is fundamentally overvalued but there are easier battles in the stock market to be won.

In my last Tesla article entitled Tesla: The Short Squeeze, Rather Than Short, Of The Decade?, I mentioned under the catalyst section for reason to possibly expect a short squeeze,

"Then there is the dangling carrot of the Gigafactory. This isn't a failing company with upset pessimistic investors. They have a lot to look forward to, valuation be damned."

Again from my bullet points:

  • Tesla shorts are gluttons for punishment despite what I agree is a stock that is fundamentally overvalued.
  • Short squeezes rarely happen because a stock is overvalued but rather they tend to ironically be more common exactly when a hot stock in a hot market is overvalued.
  • The voting machine, rather than the weighing machine, rules Tesla's stock price and there is plenty of reasons that more positive "votes" will continue to pour in rather than negative.

The short squeeze continues despite the fundamental overvalue. The voting machine is in charge right now. Why fight it? Wait on the sidelines like I'm doing. We can short in the future when it's our turn. Now it's not our turn.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.