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Hi, guys --

I trust the name the name is well known to us all.

I recommend establishing a 1% straight short position with an internal or explicit stop-loss at $8000.

Shorting stocks is difficult. Equity markets tend to rise over time. Gains are limited; potential losses theoretically aren't.

But the Tesla bubble has grown to point where I really don't think your losses are unlimited. Tesla is 1.7% of the US equity market. I think that regulators will step in well before it hits 17%. On what basis, you might ask? They'll make one up. You can't fight the Deep State. A smallish short here might ruin your year but it won't ruin your career.

And that's the thesis. This is a really short write-up about one of the most discussed and ruinous (for the shorts) names of our time. I'm going to speed walk or speed date or speed whatever through some well-known facts & risks:

1: TSLA's market cap is ~ equal to that of the of the rest of the automotive industry ex-China, which has a bubble of its own. TSLA longs make money from here if the company winds up with 100% share. That's not going to happen due to regulators and national champions.

2a: A bunch of bull points that were of some interest at 10% of the current market cap are now moot. In the automotive market: Pick up trucks! Those are made by the rest of the industry TSLA is now worth as much as. Heavy duty trucks! A small market relative to TSLA's market cap, and I haven't checked to see if this has changed recently, but although there are independent truck manufacturers, e.g., Paccar, a good chunk of global heavy duty truck manufacturing is conducted by "car" companies, e.g., Vovlo and Daimler, so those volumes are already accounted for in the market cap comparisons.

2b: Other stuff! There's some risk here. A lot of this is already folded into valuation, though. Like, self-driving! I'm not going to wade into those debates. If TSLA actually cracks self-driving before anyone else, they still won't wind up with 100% market share. Batteries, insurance, solar, whatever! These sources of optionality are no longer relevant, they're just not going to move the needle.

3: M&A. I should probably think about this more. TSLA can hoover up mountains of early stage disrupters of anything and I think such announcements would be well received and some of them might actually work out. I still don't see how the stock is a 10-bagger from here, though.

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Why now? I don't know, it was down yesterday.

What do I think it's worth? Tough to say due to the plausible accusations of accounting fraud counterbalaced by the enormous reflexity from the stock price. A lot less. I used to anchor around BMW for the upside. But the Tesla brand has traction in China and the US and the company has fixed the balance sheet and has (hopefully short-lived) an incredible M&A asset. $100?

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I'm hoping for zero to little response to this. It's not actionable for those who don't short. My only contribution to the debate is that I don't think another momentum driven 10 bagger is possible due to the Deep State not wanting to make the US equity markets even more mockable.

Yours,

Bowd

Catalyst

None.