Covering Tesla

While the Tesla drama is as entertaining as ever, there are cracks in Tesla's story - at least if judged by the share price.

I had listened/watched a good chunk of 'autonomy day' presentation and earnings call. While the 'robotaxis' is a pipe dream, there are certainly good things about Tesla - increased financial discipline (from a low start), improved efficiency in S/X causing large range improvement and seemingly some cost optimizations. Even overhyped autonomy and custom chip could have some real value. I'd especially find it promising if it would be deployed as a shadow mode, where it helps correct human errors (especially inattention) rather than overpromising and inevitably causing people to reduce their concentration and ability to correct machine's behavior.

But in my judgement, all this optionality embedded in Tesla is still overshadowed by liabilities - while the value of the company is positive (thanks to aforementioned optionality) the value of equity, in my view, is zero.

So all of this changed little in my view on Tesla's fundamental value.
But based on my predefined orders and price levels my short position just closed.

I can't rule out a takeover or successful equity raise. It also seems to me that with some more financial discipline and China factory kicking in, the story might be going on even for years to come, with no imminent bankruptcy in sight.

So I can't tell if the price will steadily move towards zero (where it belongs) or will bounce back. In the first case, I will not earn money on Tesla anymore, but I can live with this. Should it bounce higher, I'd be happy to reestablish my short position - but more aggressively this time.

End of quarter update

Not much happened in my portfolio (except from a recovery from end-of-year correction), so this update is going to be short:

GM & TSLA thoughts

I continue to be puzzled about GM's stock performance - it's finding new and new lows and market seems to only look for bad things, while ignoring the good.

It is true that light vehicle sales are plateauing and China might start to be a challenge. There might be no grow in core GM business, but at current valuation it is still a steal and Cruise alone, based on $10B+ valuation, reduces GM P/E to a value close to 5. They continue to be prudent capital allocators and the execution is top-notch. The plant closings is in my opinion forward-looking action.

I'm trying to moderately increase the position on dips and will be slower to sell in an upswing.



I've been bearish with regards to Tesla for a few years now, but my initial approach with buying long-dated, deep out of money puts was costly. After switching to straight shorting and selling the highs and buying back the lows I'm firm in the black for this position, but I'm heavily biased against buying options. I've sold a few calls for TSLA, and might do so again, but lately I was staying away from buying puts, given that for a few years I was thinking that bankruptcy is imminent, but nothing happened.

These days, I'm inclined to predict that severe drop in TSLA stock prices will finally happen in a matter of a few months - at least that the valuation will drop like a rock, due to busted growth story, if not streight insolvency.

I do hope that the delivery numbers will surprise to the upside and I'll be able to substantially increase my short position. On Thursday, chances are that some radical step like large fine or Musk not being CEO will kick off the valuation ball downhill.