Turn Out The Lights, The Party's Over - TSLA is Dead Money
This idea has to do with TSLA's recent earnings report, which was highly sobering to the market.
Heightened expectations were not met with what amounts to a fairly bang-average earnings report, and following a quick gap up, the stock has been met with 3 solid days of selling, one of which coincided with a massively negative market day (today). This selling is not a dip buying opportunity, but rather a characteristic of TSLA's new stock paradigm.
Following a massive breakout earnings report about a year ago, the stock has climbed as the company has continued its march up the adoption S curve while introducing a sustained positive net income for the first time. While this was an enormous achievement, the stock has been MORE than adequately bid up in response. Since then, further inspection of the valuation metrics of TSLA, and a HARD look at the gross margins has revealed what is an extremely generous 'innovator premium' in the stock. While the company is a growth machine in the hottest sector, the valuations simply don't make any sense here, and produce some wildly long payback periods relative to other companies, even assuming generous top line growth rates.
Thus, we are at a point now where several years of natural valuation growth has been sucked into just a few quarters of stock performance, and the risks in this stock are now to the downside. Buying the stock here risks you having dead invested money for years, as TSLA buyers in late 2014 found out. The stock will likely remain rangebound for the foreseeable future (at least 1 year), and be choppy / hard to trade. The right trade here is no trade, and the only thing that would get me re-interested in this thing would be a break of highs, which I don't see happening any time soon.
Think about what you're buying if you're a new buyer up here.
Cheers!
Heightened expectations were not met with what amounts to a fairly bang-average earnings report, and following a quick gap up, the stock has been met with 3 solid days of selling, one of which coincided with a massively negative market day (today). This selling is not a dip buying opportunity, but rather a characteristic of TSLA's new stock paradigm.
Following a massive breakout earnings report about a year ago, the stock has climbed as the company has continued its march up the adoption S curve while introducing a sustained positive net income for the first time. While this was an enormous achievement, the stock has been MORE than adequately bid up in response. Since then, further inspection of the valuation metrics of TSLA, and a HARD look at the gross margins has revealed what is an extremely generous 'innovator premium' in the stock. While the company is a growth machine in the hottest sector, the valuations simply don't make any sense here, and produce some wildly long payback periods relative to other companies, even assuming generous top line growth rates.
Thus, we are at a point now where several years of natural valuation growth has been sucked into just a few quarters of stock performance, and the risks in this stock are now to the downside. Buying the stock here risks you having dead invested money for years, as TSLA buyers in late 2014 found out. The stock will likely remain rangebound for the foreseeable future (at least 1 year), and be choppy / hard to trade. The right trade here is no trade, and the only thing that would get me re-interested in this thing would be a break of highs, which I don't see happening any time soon.
Think about what you're buying if you're a new buyer up here.
Cheers!
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