Is Tesla The Greatest Short In History?

I have no idea if Tesla is a short but we are clearly living real-time in a meaningful mania where the stock has skyrocketed, more than doubled year to date and up more than 60% in five days. I've had CNBC on today (I usually watch Bloomberg but the sound went out so I've been on CNBC) and all they are talking about is Tesla. Ron Baron earlier laid out a case for $1 trillion in revenue (these things always bring out the extrapolators), they talked about where the stock would have to go for Elon Musk to become the wealthiest person in the world, they had one analyst on just now for what seemed like a 15-minute segment, Robinhood which rightly or wrongly has become a proxy for dumb money reported a large number of new shareholders who bought above $700 and there's more.

You've probably seen the numbers that it's market cap is bigger than the big three US auto manufacturers combined. I saw one Tweet that said Tesla sold 367,000 cars last year versus several million for Ford yet Ford's market cap is about 1/5 that of Tesla. Before this surge, the market cap of Tesla essentially priced the cars at over $300,000 a piece and so now it might be double that.

Twitter shorts are pervasive on Twitter so I've seen some of their arguments and sleuthing, one short pointed out that in its last earnings report the company said it sold more cars than it made for the quarter but somehow the inventory did not go down. There are plenty of people short because they believe the company is a fraud and that part of the parabolic move we are now in is due to a short squeeze.

I have no skin in this game and don't know how this will play out but the behavior of the stock and the people on both sides of the trade are things we have seen before (and of course will see again). Part of long term investment success is recognizing these for what they are; manias. A few in my time that come to mind include Andrea Electronics, Comparator Systems, Iomega, the entire internet bubble, Enron and of course Bitcoin.

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