TSLA is nearing my downside target

This is a story of knowing when not to chase something.

It is a message about being careful amidst hype, cult and zealousness

It’s not necessarily something I was interested in shorting.

I find shorting difficult.

I have been calling the price of Tesla lower for a good year or so.

9 months ago, I wrote (in this note), “we’ll look for a visit to $650, then $567 while $519 would represent a good shake-out.”

That was the pricing of Tesla stock before the 3 for 1 stock split.In today’s after-market action, following its latest quarterly release sees TSLA shares trading at $208 (or $624 in pre-split prices)
The 200 week moving average which I continue to reference in stories I tell, sits at $157.That mean should rol up to the $161 region in the next few weeks.$161 is equal to $483.
Which meets and is a little lower than that pre-split target of $519.

8 months earlier, I wrote this note. My timing was off.

3 months ago, this was posted.

October 22, 2022

by Rob Zdravevski


Equity indices will fall further because of the distorting few

While I see rotation in amongst sectors and various buying opportunities in equity markets appear, Tesla is not one of them.

Further risk and declines in Tesla’s stock price and a few other stocks which have distorted indices are the reasons why ‘the market’ could fall further.

Within this ‘market’, continue to pick out the stocks which are cheaper and ripe for some (stock)picking.

February 21, 2022

by Rob Zdravevski


Google’s earnings are a bellwether

If you had to watch only one stock this earnings season, I think it should be Alphabet.

I remember when Cisco Systems was the quarterly earnings bellwether?

They (Google) report earnings on February 1st, 2022.

To coincide with today’s post about picking a bottom in the Nasdaq, in order to keep its current bullish trend intact, GOOGL needs to hold the support line on the chart below, which is around the $2,450 mark.

In other news, Microsoft reported earnings after today’s close and we’ll see how their price action plays out, while Apple reports earnings on January 27th.

All three of these stocks are on or above similar support lines. (MSFT’s is right on the edge).

Meanwhile, the other three of the “FAANGM’s gang, being Netflix, Amazon and Facebook have already broken below their corresponding (or sympathetic) support lines.

Incidentally, Tesla reports quarterly earning on January 26th (U.S. time) and their stock will be interesting to watch too. Not because I consider them anywhere near a bellwether, but rather they are a proxy for cult and sentiment.

To put it simply, if Alphabet (Google) breaks below that support line on a weekly closing basis, then they may be the last straw that broke the camel’s back……….

thus my the probability of my Nasdaq low story is de-bunked and I’ll revise the next wave and targets at lower levels.

January 26, 2022

by Rob Zdravevski


If Tesla breaks below $835….

If Tesla’s stock price breaks below $835, $814 is a minor stopping point, beyond that we’ll look for a visit to $650, then $567 while $519 would represent a good shake-out.

January 25, 2022

by Rob Zdravevski


Tesla should buy them all

Tesla Motors market cap is $659 billion.

The combined market capitalisations of the top 10 automobile manufacturers (in unit volume) is $567 billion.

Perhaps Tesla should use its wonderfully inflated stock price to buy all of these companies??

Or does Tesla barrel forward so that they put them all out business?

What an interesting tussle we are about to see….

Oh, I forgot to say…Tesla will manufacture approx. 430,000 cars in 2020, while the Top 10 will crank out about 65 million vehicles.

(here’s the list of Top 10 manufacturers Market Cap in USD; note: this is not their Enterprise Value)

Renault $13bn

Hyundai/KIA $21bn

Nissan $22bn

Peugeot/Citroen $24bn

Ford $35bn

Fiat/Chrysler $36bn

Honda $52bn

GM $59bn

Volkswagen $95bn

Toyota $210bn

Incidentally, Daimler and BMW have market caps of $63bn and $59bn respectively yet they are ranked 13th & 14th globally in unit production.


December 20, 2020

by Rob Zdravevski


Listen to what is not being said

This year, IPO’s on U.S. exchanges have raised a record $140 billion, exceeding the $107 billion raised in the height of the 1999 dot-com boom.

It has also been a week when we have seen;

✔️ Tesla announce its 3rd (secondary) equity sale this year.
The timing of the previous offerings uncannily occurred at interim market highs;

✔️ the most ridiculous IPO in DoorDash;
(stock doubles on its first day, market cap is $60bn vs. $16bn in early 2020)

✔️ and Airbnb premiered on the bourse with an IPO of its own.

The process of pricing of Airbnb’s IPO began between the $44-$50 per share range which was revised to $56-$60 while the final price struck was at $68.

Unlike Facebook’s IPO pricing debacle in 2012, I think Airbnb’s pricing was spot-on.

The after-market demand saw the stock close at $145 on its first day of trading. With $602 million shares outstanding, it now has a market cap of $87 billion.

But on a fully diluted basis (including employee stock, options and restricted units) Airbnb has 700m shares, so its Market Cap is $101 billion.

and DoorDash has 385m shares, which adjusts its Market Cap to $71.5 billion, which is a little bit too much when you are losing $150 million and trading on 30 times revenue.

December 11, 2020
by Rob Zdravevski

Using your position of strength

Tesla continues to add chapters to the investment banking playbook. Using the inflated currency of the company’s common stock, it will sell $5 billion worth of shares to fund its spending plans.

And why not…..The stock price has risen 670% this year. It “only” has net debt of $1 billion which is not a stretch against its $4 billion of EBITDA. Its market cap is $616 billion. The secondary offering is barely 1% of its market cap and it’s not dilutive at all.

Valuations on the company aside, they are classically raising money when (figuratively speaking) they don’t need it and it is far better to sell stock, or borrow money, from a position of strength.

Throw in a recent stock split and an upcoming inclusion into the S&P 500 Index, Tesla will be able to sell another $5 billion worth of shares in the next few months again and even re-finance its debt at lower rates than the 5.3% coupon its paying bondholders for its 2025 maturity.

Incidentally, their timing isn’t too bad either.

Circles in the chart below denote when Tesla’s previous secondary offerings were announced. A $5bn raise on September 1, 2020 and a $2bn share sale on February 13, 2020.

December 9, 2020
by Rob Zdravevski

Tesla, ETF’s and Distortion

I can’t help think the return of the stock picker is nigh.

Here are some samples of concern with being invested in passively managed market capitalisation based Exchange Traded Funds (ETF’s)

Tesla’s entry into the S&P 500 Index will force index funds to buy about $73 billion worth of its shares, S&P Dow Jones Indices said.

‘Your’ S&P 500 ETF will be “forced” to acquire Tesla shares and I think many ‘active’ managers may do the same, simply to prevent underperforming against the index.

This means that investors in a S&P 500 ETF will become owners of Tesla shares on December 21, 2020 when the company has a whopping market capitalisation of ~$554 billion.

Furthermore, the market cap of whichever company leaves the S&P 500 (to make room for Tesla) will hardly be comparable.

For example, lowly weighted HollyFrontier and Xerox have market caps of $4 billion.

Adding to the peril, is that the six FAANGM stocks (Facebook, Apple, Amazon, Netflix, Google & Microsoft) already account for 27% of the index’s composition;

while the top 10% weighted stocks in the S&P 500 provide 54% of the index’s concentration and risk;

and lastly, ‘indexing’ now accounts for or controls 45% of the whole market.

Distortion is everywhere.


December 2, 2020

by Rob Zdravevski


Bitcoin – Not A Passing Fad

I love how crypto coins are making governments nervous.

Personally I’m not a user of it, but I can understand its allure to the nonconformists, to those who like to be considered as “early adopters” and those who just don’t want to be traced.

Bitcoin proponents are looking for ways to have their virtual currency legitimised (in terms of acceptance) but at the same time, government will want to regulate it based around protecting the consumer but the real reason will be so that they can tax it.

Ya Gotta Know How To Tax ‘Em

Government knows how to tax petrol (gasoline), cigarettes, ownership of land, income, sales of goods and capital gains realised on the sale of assets.

This is why I think Electric Vehicles (EV’s) don’t stand a chance of real success. Government support of EV’s is a mere sideshow to appease the “Green Lobby” and until government learns how to tax the electricity trickle from the powerpoint in your garage, then EV’s won’t become too popular. Interestingly,  New Jersey, Colorado, Texas, Arizona, and Virginia have all prohibited Tesla from selling cars in their states, mainly because that their direct internet selling model pisses off the incumbent dealership model ( see an older post from 2013, http://wp.me/p1d84Y-mr ) but it probably didn’t help when a couple Tesla’s were bought using Bitcoin.

Battle Is Just Beginning

U.S. tax authorities have classified Bitcoin as property, which the “crypto industry” doesn’t like.

The Aust. Taxation Office is now trying to figure out taxation guidelines surrounding Bitcoin and other crypto currencies.

An Aussie tax partner has said that under Aust. GST laws, Bitcoin wouldn’t be classified as money as it is not backed by a government. That must be annoying for the government.

Nervousness exists because Bitcoin and other crypto currencies have become a money supply which is not controlled by the state in its currently acceptable fiat format.

It cuts out the middle man!

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