Entering text into the input field will update the search result below

Tesla: Who Got It Right

Aug. 03, 2018 3:02 PM ETTesla, Inc. (TSLA)71 Comments
David Pinsen profile picture
David Pinsen


  • Amid the bearishness on Tesla ahead of its earnings release, social data miners LikeFolio offered a bullish take, noting Tesla's purchase intent was at an all-time high.
  • I elaborate, present my site's current take on Tesla, and show ways longs can limit their risk in case the bears are right.
  • I close with suggestions for both bulls and bears.
  • Members of my private investing community, Bulletproof Investing, receive real-time trade alerts on this idea and many more. Learn more today >>

Image via Evobsession.

Who Got Tesla Right Before Earnings

Ahead of Tesla's (NASDAQ:TSLA) earnings release this week, two prominent Tesla owners announcing they were getting rid of their cars exemplified the seemingly widespread bearishness: hedge fund manager David Einhorn (the subject of my recent article, Einhorn Agonistes) and NYU marketing professor Scott Galloway (at about 7:30 in this Bloomberg TV video). One observer bucking the bearishness was social data mining company LikeFolio, which told TD Ameritrade (AMTD) customers that Tesla's purchase intent on Twitter (TWTR) was at an all-time high.

I'll elaborate on that below, present my site's take on the stock, and close with suggestions for both Tesla longs and shorts from a neutral perspective. First though, for Tesla shareholders who want to limit their risk over the next several months in the event the bears end up being right, here are two ways of doing that.

Safety First: Adding Downside Protection To Tesla

Let's assume, for these examples, that you have 200 shares of Tesla and can tolerate a 20% drawdown, but not one larger than that. Here are two ways to protect against that (the screen captures here are from the Portfolio iPhone app).

Uncapped Upside, Positive Cost

As of Thursday's close, these were the optimal, or least expensive, puts to hedge 200 shares of Tesla against a >20% drop by mid-March.

Image via PA.

The cost of this protection wasn't cheap: $8,910, or 12.75% of position value, calculated conservatively, using the ask price of the puts (in practice, you can often buy options at some point between the bid and ask).

Capped Upside, Negative Cost

If you were willing to cap your upside at 18% over the same time frame, you could have used the optimal collar below to get the same level of downside protection.

Image via PA.

After an iterative

To be transparent and accountable, I post a performance update for my Bulletproof Investing service every week. Here is the latest one: Performance Update: Week 36.

This article was written by

David Pinsen profile picture
I developed the hedged portfolio method of investing at Portfolio Armor, and I run a Marketplace service at Seeking Alpha based on it called Bulletproof Investing.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I'm friends with LikeFolio co-founder Andy Swan, but I have no business relationship with him or with LikeFolio.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.