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New Developments For Tesla

Mar. 03, 2021 10:41 AM ETTesla, Inc. (TSLA)
Ruerd Heeg profile picture
Ruerd Heeg's Blog
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Remember my blog post of February 11, 2021? In there I wrote about Tesla (TSLA) being criticized by Chinese regulators. Among others about unintended sudden acceleration events. See also here. After that I have not heard about any such events in China. This tweet from March 2, 2021 describes another accident that looks like an unintended sudden acceleration event. Clearly this will not be good for Tesla's discussions with Chinese regulators. If these events continue to happen more frequently with Tesla's than with other brands Tesla is in big trouble in China.

And look what we have here. New Tesla registration numbers in Europe for February. How many cars? Maybe 7000, if UK sales are "strong". Tesla is getting outsold by new EVs from European and Asian manufacturers. Let's face it: this is not impressive in any way. At least not for a company worth $800 billion or so.

Call options

Here is an article about the Tulip Mania in The Netherlands (tweet showing this to me). The Tesla bubble was caused by the addition to the S&P 500 but also by large positions in short-term out of the money call options. According to the article the Tulip Mania was also driven by instruments similar to call options. And while it got the tulip price into bubble mode it did not prevent the tulip price to decline later.

Bottom line

Four days without much news about Tesla. That is a problem because this stock needs lots of news and debate to keep flying high. If there is not enough news naive investors get in doubt and will swap their position for another high flyer. So today the stock price opened slightly lower than 4 days ago. Looking at general US stock market I think more and more investors are realizing corona is going to have a big effect on the world economy. That will not be good Tesla either. So my opinion on the stock is still strong sell.

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Analyst's Disclosure: I am/we are short TSLA.

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