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Monday, August 27, 2018

Tesla Stock Had A Great Day Today

For any other day you wouldn't think the stock being down 1% was such an accomplishment. But following Tesla's (NASDAQ:TSLA) announcement that they were canceling their go-private plans, down 1% was a very strong performance.

What Are Shorts Expecting?

Shorts were licking their chops pre-market but again came up empty.

One thing I'm personally excited about is one simple thought process. The shorts and bears have been licking their chops for a long time now thinking this is a zero because of all the losses. But the stock has only gone up.

But what's next? Think for a second. Profits.

After all those losses-stock-up-anyway, we're going to get profits. What's going to happen to the stock then? We think the simple logic-math says it's going to go higher still.

Here's the complex proprietary formula we came up with.

IF LOSSES = UP THEN PROFITS = AT LEAST UP

Not so hard, right?

And Musk's Friday night blog comments said,

"...and we now need to show that we can be sustainably profitable. With all the progress we've made on Model 3, we're positioned to do this, and that's what the team and I are going to be putting all of our efforts toward."

Nobody read that? Shorts? Bears? Anybody?

They are "positioned to do this." What's this? To be "sustainably profitable" based on the "progress we've made." They are not one-quarter profitable. They are positioned to be sustainably profitable based on where they are right now.

So remember; losses = up stock then profits = at least up stock = rocket ship?

The stock's action today being down only 1% on confirmation of no transaction was great action. Action, watching what the stock does versus what you would have expected, was amazing today.

The stock action today was saying many many investors are relieved that they get to share in the upside. We had said Musk wanted to keep that upside for himself by going private. In the end he felt bad but also didn't understand the complicated web of taking a stock back from the public.

Conclusion

The simple fact that Musk wanted to go private meant that he saw incredible value in his company and wanted to lever that for himself. Investors smell that. Bears are too bearish and emotional and can't see that going profitable is something huge. How long can they hold on as this earnings rocket ship takes off.

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All investments have many risks and can lose principal in the short and long term. The information provided is for information purposes only and can be wrong. By reading this you agree, understand and accept that you take upon yourself all responsibility for all of your investment decisions and to do your own work and hold Elazar Advisors, LLC, and their related parties harmless.

We have no holdings in the stocks mentioned unless otherwise noted.

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