Tesla and Amazon drive the shorts crazy
The shorting process is lifting these stocks and making them hard to value.
The answer is simple: You don't. You can't. You can't, because there's a confluence, an actual formula, for what's going on here. You take a service or product that is much loved, you verify constantly that it is loved, whether it be because of the rapid adoption of the online service or a terrific rating in Consumer Reports, and you add in sudden profitability and a chance for long-term dominance and then sprinkle on nonbelievers who short the stock because the usual valuation works are defied, and they can't be defied forever. The result? You get Tesla Motors (TSLA) at $10 billion, and you get Amazon (AMZN) at 220 times earnings.
Now, the mechanics of the stock market are working in favor of these two stocks -- the mechanics meaning the difficulty of the short-selling process. You can't just sell stock when you short; you have to borrow stock to sell it, and that has been very difficult in the case of Tesla, where 41% of the stock is sold short. Anyone who buys this stock is the enemy of the shorts, because the shorts are going to demand that stock. The shorts are frantic to find stock, and when they can't, the brokers just buy the stock in to cover the short.
Amazon is a stock that seasoned professionals think it is their duty to short. They feel it is just very important to bet against a company with that high a price-to-earnings ratio.
The shorts don't care that Amazon might take over the world. They think it is priced as if it will. Which means there is nowhere but down. But the bulls say that the company is spending like crazy to be the biggest and the best, and that means that when it wants to, it will show the profitability that makes the price-to-earnings multiple much lower.
Tesla? What can I say? The simple truth is that it is a really cool car, and my friends who have them love them. I would like to get one. I bet that many who are short the stock would like to get one. In the meantime, the CEO does an equity offering to pay off a despised government loan, and the CEO buys a ton of it! That was supposed to be the chance for the shorts to cover.
No such luck. Not enough stock. So the short-busting continues.
I know when I can value something, and I know when I can't. I can't value either of these companies, so my bottom line is that they are dangerous both ways, for gamblers who gamble without an edge, so count me out. I will let others do the wagering.
Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust and has no positions in stocks mentioned.
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jimmy is the wise sage telling us it's raining after we're all wet.
If you shorted this market the last 4 years you`re on food stamps with the
sewer rats in NY.If you`re lucky you live in a refrigerator box.
And since we are going political today ......
Lt. Danz here today; Miss Lilly is cracking the whip.....Says enough on here...Bye,bye..
Gotta get another Latte...On 3rd. pot.
And my, how fashionable he looks in that blue-and-creme colored dress....
Anyone else thinks he is a :
3) Starved for attention or
4) just plain old mashochist.
Thumbs up for all of the above.
I make our own Lattes at Home for about a quarter; That's why we are rich..
har,har,yuk,yuk, me swabbys.
Bush & Dick .....Kept us Safe! Close to 10 deferrments between these patriots.
2,753 killed on 9/11 WTC
179 killed on 9/11 Pentagon
44 killed on on UA93
4,800 plus troops killed in Iraq
3,305 plus troops killed in Afghanistan
750,000 iraqi & 8000 afghani citizens killed
325 military suicides
11 Embassies attacked 60 Americans killed
0 Tea baggers in congress “outraged”
0 congressional hearings
Republicans -- don't you think it's about time you took your party back from the crazy pukes like puppet boy here and the koch brothers and sheldon adelson ......
Before monica jumps in ....I actually voted for Bob Dole the first time around as for me his WW service was important and clinton seemed to be another "lapel pin flag" patriot .....having said that though BC turned out to be a good Pres, and his wife and in turn his daughter will be as well !!
As far as shorts go, currency and commodities are in and stocks are out. The Euro has been dropping nicely and we're looking for at least another half penny down.
The Republican Party has for years insisted that they were the party of capitalism, of the “.” However, when the opportunity to show this appears, they instead do everything they can to prevent a free market from forming. Tesla Motors is now calling them on it, after North Carolina voted on a bill designed to eliminate their direct sales model, which bypasses the traditional 3rd party dealer system. As , the new law would ban direct sales, forcing auto makers to sell through a dealer even if it is a direct purchase from the manufacturer. This directly injured Tesla’s ability to sell in the state, but even more concerning, it limits future innovation in the auto sales industry.
The is a giveaway to the traditional auto dealer model. It protects them from competition by direct auto sales. This would not just prohibit sales from Tesla motors either, but from specialty auto manufacturers such as , and , who do direct sales of their vehicles. The difference between them and Tesla is that these auto makers are small, typically hand built machines with a niche market, while Tesla is a m****duction, mass marketed vehicle on par with much larger auto makers. And this is what is making the dealers very nervous.
Alias, time to take that extra dose of Thalium...er, I mean valium! yes,
thats it! I meant VAL-ium. ha ha..
Oh how Freudian of me.
Got to go count the cookies now that the DOW closed UP AGAIN...
and say, Dang you Obama! ha ha ha ah....
Oh it does not get any better than this.
And Barry, Fat Cat is on the other site and says to
pick up your litter box when you're done spewing.
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Traders might want to bite on BABA, but long-term investors have reasons to wait.
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