Tesla: Promoted To A 'Favorite' Short

Feb. 12, 2019 12:20 PM ETTesla, Inc. (TSLA)440 Comments
Amit Ghate profile picture
Amit Ghate


  • Many of the potential challenges to TSLA's market and valuation had previously been merely theoretical predictions.
  • But as time has marched on, the problems and challenges have now become manifest.
  • I survey the most important of these new actualities in some detail and conclude that their existence warrants an overweight short position.
  • Indeed, the timing and fundamentals are now aligned to an extent that I now consider TSLA to be my favorite short.

Today, I'm promoting Tesla (NASDAQ:TSLA) - a stock that I've been short for a while - to "favorite" status. As I'll discuss below, this means that it's now my biggest short position, as timing considerations are now as compelling as the fundamentals underlying the trade.

A Bit of History

Over the past few years, I've designated a total of 5 stocks as "favorite" shorts. The first was on June 3, 2015, Proofpoint (PFPT) which didn't work:

ChartData by YCharts

Since that time I've learned a lot, including not only to have a catalyst in mind but when the play depends on bullish arguments not playing out, the key is to wait until the data is available or will be so imminently. I discussed that in a "lessons learned article" on Radius Health (RDUS) noting:

I had to always keep in mind that the catalyst for this trade was for investors to realize that the rosy assumptions for commercialization were not going to come true - and for that to happen the product had to be launched first.

This point is the key point as to why TSLA is now a favorite short, but before getting to that, here are my other four previous "favorite" shorts for the record:

First, on Feb 1, 2016, I designated Vital Therapies (VTL) as my favorite short for 2016. Here's how that played out:

ChartData by YCharts

Then, on Aug 23, 2018, I explained why VTL was once again a favorite short. My condemnation of the company engaging in post-hoc trial design turned out to be correct and I was able to cover my position for a substantial gain:

ChartData by YCharts

Third, on Aug. 24, 2018, applying my lessons learned, I wrote about my other favorite short, Aerie Pharmaceuticals (AERI). I'm still short

ChartData by YCharts

ChartData by YCharts

ChartData by YCharts

ChartData by YCharts

This article was written by

Amit Ghate profile picture
I'm a private trader interested in both long and short ideas. My training and background are in engineering including several decades of consulting engineering practice. I endeavor to apply my analytical skills to investing/trading, which I've done for 20+ years and to which I bring a contrarian style. I've also recently become interested in writing and have published editorials at Forbes, PJM, and a few legacy newspapers.

Analyst’s Disclosure: I am/we are short TSLA, AERI, TLRY. 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 actively trade around core positions.

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.

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