Well, that was interesting, too. Robert De Niro's Jack Byrnes says that to Ben Stiller's Gaylord M. Focker in Meet the Parents, and that's how I felt watching Tesla's (TSLA) stock price in the past week. The ride from mid-$500s before the company's earnings release to an inexplicable high of $968.99 on Tuesday was followed by a loud crash Thursday.
Even louder than the price was the volume with TSLA trading an astounding 48 million shares after printing 60.8 million Tuesday and 47.2 million Monday. Excluding Elon Musk's ~33mm shares that means that by the end of Wednesday's trading, in aggregate, every TSLA share that could be freely traded (without an SEC filing) will have changed hands at least once this week.
It's lunacy, it's the worst of animal spirits, and, frankly, it is the reason why many people hate Wall Street. It's a joke.
So, while others were making these ridiculous, utterly ignorant justifications for Tesla's valuation at $170 billion, your friendly neighborhood Portfolio Guru was putting in the shoe leather and doing real research.
The time to make profits over and above the systemic returns expected from normal market activity is when fundamentals diverge from share prices.
Yes, that happens both ways. Hindsight shows that exaggerated fears of the phony trade war put companies like Apple (AAPL) and Disney (DIS) solidly in the "buy" category in early-2019. Personally, I think the market is currently underreacting to the grim realities of the nCoV-2019 outbreak and its impact on the Chinese economy.
So, that would mean the fundamental impact from this horrible pandemic is not fully reflected in the share prices of Apple, Disney, Starbucks (SBUX) and Nike (NKE) . But none of those stocks doubled in January, nor tripled since early October.
No, only Tesla shares did that.
So, I have no idea what weird, cyberfuture (including Tesla's Cybertruck) these self-styled futurists are predicting for Tesla in 10 years, and, frankly, I don't care.
Tesla can only get to 500,000 units delivered (management's guidance was to "comfortably exceed" that figure) in 2020 with a huge year from China. The coronavirus just made that an impossibility. I believe the realization that Tesla China sales will be pressured by nCoV-2019 was the driver for Thursday's huge pullback, but I am not really sure of anything regarding Tesla's stock these days.
But instead of shaking my fist at the market Gods, my trading venture, Excelsior Capital Partners, allows me to do something about market inefficiencies. I bought as many mid-term TSLA puts as I could Tuesday -- ignoring the ridiculously high implied volatilities in those contracts -- and that trade worked quite well Wednesday.
I keep reading these incredible figures put out by a one-man research shop noting that Tesla's sales fell 99% sequentially in The Netherlands in January and that Tesla sold only 367 cars in that month in Germany. Yes, it is my firm discovering those numbers. I use this amazing tool called the Internet to do so.
Musk has made Tesla's distribution team into masters of stuffing delivery channels at the end of each quarter, but you can't stuff an entire country. The head of the Chinese Passenger Car Association predicted that final figures will show a 25% decline in car sales in China in January, and I think February's figures will be much worse.
Sell-side auto analysts -- yes, as I have mentioned many times, I was one for 11 years -- are falling all over themselves to make wildly bullish forecasts for Tesla sales in China while people in Wuhan are falling all over themselves just trying to be seen by a doctor.
So, Tesla shares remain wildly overvalued at $735 and you should not buy them. Also, if you have the means to do so, you should be using derivatives to profit from a return to sanity among TSLA investors.