Welcome to Momentum Monday. Today take a deeper look into the price action around LinkedIn, Tesla Motors and a few other StockTwits 50 stocks including $MENT and $EFII (blasts rom the past in technology).
$LNKD is a magical product, disliked by the media and hedge funds for being expensive by all fundamental measures. Instead of leaving it alone for ideas that they can grasp, the analysts build models for their bosses that allow them to short the stock with fancy words.
Tesla is already a $4 Billion company and the analysts are hard at work shorting the stock on metrics that don’t matter at the moment. All big trends need disbelievers. Elon Musk is thinking well beyond 400 cars per week and $4 billon in market cap. This could be a $100 billion platform opportunity in the auto, energy and retail space. For 20 times upside i can risk the 40-50 percent downside (though I would likely cut my losses much sooner). My risk tolerance will change along the way as well, but I am long for now. I delve deeper in the show.
We also dive into the Stocktwits 50 weekly list of stocks where $DDD has been on the list 44 week straight. The next huge stocks winners are on the list today. Start spending some time on the list and finding some interesting signal and trends of your own.
Disclosure: long $LNKD and $TSLA
I don’t think you can say Tesla is being shorted only on the basis of metrics that don’t matter long term. Last week’s NYT review of a road trip from DC to New England was a real horror story–and it was not lost on investors or potential customers. The cold climate issue is a real limiting factor for electric only vehicles. It’s a problem that only the hybrids (including the mostly electric Volt) have overcome. Tesla could correct this, but it had better do so quickly or it risks deflating like a punctured balloon. I suspect most of those deposits are refundable so this could not come at a worse time. Tesla cannot succeed as a warm climate only car. This is the reason for the recent stock pull back–not some esoteric ratio or earnings measure.
Tesla’s doing just fine. There are just a lot of folks who don’t realize that an EV is inherently different than a gas powered car, and the EV comes with it’s own pros and cons. As cool as it is, it’s not for everyone, nor is it likely to be for quite some time. That’s why we have hybrids.
The EV ownership experience will be different than the ownership experience for gas
powered cars. Accept that you will have to re-learn things you’ve known about
owning and maintaining cars. You take many of the things you learned about gas
powered cars for granted. Oil & filter change every 5,000 miles, or bad
things happen. Radiator flush, check hoses, and belts. Let the car warm up on
an extremely cold day. If the car requires premium, don’t use regular gas, or
bad things will happen, etc. If you are low on oil or coolant, stop driving immediately, or your engine might seize up.
You won’t have to worry about any of those things with an EV, but an EV has it’s own set of Do’s and Don’ts, or else bad things will happen. However, you immediately start saving on fuel costs with an EV. I’m enjoying my first 2 months and 2,400 (gas-free) Tesla Model S miles, and I ain’t going back to gasoline!