I’ve been on the bearish bandwagon with tech juggernaut Tesla Inc. (NASDAQ:TSLA) for quite some time, and thankfully, I’ve remained on the sidelines with respect to shorting this company or buying puts on the options markets. Tesla has continued to soar, now approaching $600 a share and the second most valuable auto manufacturer in the world, next to Toyota Motor Corporation (NYSE:TM). The rapid rise in the share price of Tesla has encourage a number of Tesla bears to get back on the attack, with valuations reaching near-obscene levels.
As of mid-January, Tesla has once again captured the title of the most shorted stock from Apple Inc. (NASDAQ:APPL), with nearly $15 billion of Tesla stock borrowed as of a couple weeks ago.
The reasons for this increase in short interest in Tesla are many, but most investors point to valuation concerns at this point in time as one of the key drivers. Any company, no matter how revered or how much potential said company has, can be overvalued at a given point in time.
Likewise, any company which has been beaten up by bad news with no relief seemingly in sight, can be a gem for an enterprising value investor.
While it may seem that all the tailwinds are behind Tesla right now, the reality remains that this company is one which can be difficult to value, given its lack of earnings, meaning most investors are investing their money in future potential, something which is dangerous for long term investors. For those like myself who believe in a long term approach, I would continue to recommend staying on the sidelines with this one.
Invest wisely, my friends.
Tech Insider
