If you're a hedge fund analyst looking over a public company's numbers and you see a troubling financial trend making itself evident in the data (like a company burning through cash while booking revenue for a product that is seems perhaps incapable of delivering in the volume promised in the timeframe laid out), you will feel the natural urge to short that company's stock and wait quietly for the money and praise to roll in.
But we want you to pause for a moment and look at the top of that file. Does it say "Tesla Motors, Inc. (TSLA)"?
Yeah, you're going to want to rethink that short, homie, because you have not factored "Blind Elon-ic Faith" into your Alpha.
But you wouldn't be alone.
Tesla reported yesterday, and from a purely logical perspective it was a mixed bag:
Tesla's reported a net loss of $336 million, or $2.04 per share, compared to a loss of $293 million, or $2.09 a share, a year ago.
Excluding stock based compensation, Tesla lost $1.33 a share, which was narrower than expected, according to a consensus estimate from Thomson Reuters.
Revenue climbed to $2.79 billion from $1.27 billion in the year-ago period, and outpacing Wall Street's estimates of $2.51 billion.
Yeah, we said "mixed":
Heading into the earnings report, analysts expressed concerns about whether Tesla would ramp up production of its Model 3, a more affordable electric car with a base cost of $35,000, quick enough. In the past, Tesla has struggled with production issues.
Musk also said that he hasn't ruled out dipping a toe back into the debt market.
See, Tesla is currently promising that it can make 1,500 of these things in the entire third quarter of this year, but Elon is also telling anyone who will listen that he will be able to make 10,000 in a week by the end of 2018. That kind of ramp-up has led a lot of people in the asset management game to doubt Tesla's long-term strength, what with logic dictating that cash will burn at the altar of Elon's ambition, and that the fire might rage out of control while he's busy glancing over at his rockets, his Hyperloop tunnels or putting the finishing touches on his dope-ass new solar roof. All those factors are causing David Einhorn and a legion of his fellow traders to go short on TSLA.
So yesterday's earnings call was big for everyone's favorite Bond villain come-to-life, a concrete opportunity for Elon to lay out a convincing, data-driven argument for why Tesla will reach its ludicrously ambitious production numbers:
"What people should absolutely have zero concern about, zero, is that Tesla will achieve a 10,000 unit production week by the end of next year" said Tesla CEO Elon Musk on a conference call following the release.
Who can you argue with reasoning like that? Not Wall Street!
After the announcement, TSLA surged. So you know what that means...
Hedge fund managers lost more than half a billion dollars Thursday because of their bet against Tesla, according to estimates from financial technology firm S3 Partners.
With Tesla up 6 percent at the opening of trading Thursday, investors who sold the stock short are down a collective $607 million in a single day, estimates S3.
This is what happens when you short a cult. At this point, R Kelly has nothing on Elon Musk. And the notion that a short squeeze might put a shudder in Tesla's rise seems - like all other rational ideas that come in contact with Tesla - to be neutered by whatever Tesla investors think of Tesla.
So, here's our last word of caution to you hedgie analysts out there crunching numbers on TSLA: You're wasting your time. Tesla isn't about facts and figures, it's about belief in the divinity of Elon fucking Musk. You'll never understand what is happening because the Kool-Aid is the stock and a lot of people can't stop drinking it.