Did Elon Musk Set A Trap For Tesla Shortsellers?
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Elon Musk does not like Tesla short-sellers at all, and can you blame him? He constantly says his company is going to go out of business every year. He consistently places bets that his company will fail. They consistently try to put out negative news about him or tesla in general. If you were in his shoes you may not like short-sellers at all either. The question is did Elon Musk set a trap for short-sellers? Let us discuss that.
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Well good day subscribers Hope you guys are having a great day out there as always today we’re gonna do a viewer requested video I received an email this weekend from an individual named Bernard okay Bernard, you know who you are out there that said this Okay, did Ilan set up a trap for short sellers short seller squeeze again Hello Jeremy. First of all I love your channel, especially the Tesla related ones.
Thank you there was a short seller squeeze trap in 2018 which was kind of set up by Ilan, do you think this can now be the case? Again? He says okay, and he starts going into four different points which I’m going to draw out here on why maybe Ilan has set up a short seller trap and when you start putting the pieces together, it kind of almost makes sense.
Now you might ask yourself, does Ilan really hate short sellers and why would he hates short sellers? And the truth of it is Yes, absolutely. Elan musk does not like short sellers at all. He’s even had to get restraining orders on short sellers in the past who are harassing and stalking employees of Tesla.
Some of these short sellers were go to any lengths to basically trying to make money on their positions or whatnot. So needless to say, Ilan musk does not like shorts. Oh, it’s like imagine you have this company like Tesla, you know, this is Ilan must be right. And imagine every single year you constantly have these short sellers attacking your company saying your company’s gonna go bankrupt, blah, blah, blah.
That’s what Ilan Musk has had to deal with year after year since basically started Tesla. And if Tesla fails, that obviously, the move to electric vehicles doesn’t happen as fast like the move to autonomous driving doesn’t happen as fast right? It honestly would hurt like Ilan musk credibility in the business community.
Because then you know, ventures like SpaceX wouldn’t get as much funding and things like that, like, it would just be a really bad thing. So imagine this, like put your put your shoes on, like Ilan must be for a minute. And just imagine you’re Elan musk and imagine your company is consistently attacked by short sellers. Like, you’re probably gonna start to hate short sellers after a little while, right.
And so that’s kind of the situation there with Ilan musk. Now we have seen recently, Tesla stock bounced back quite a bit, it bottomed out about $180, just about a week or so ago. And now it’s all the way back up to 215. That’s a very quick move in a very short amount of time. Needless to say, okay, big move in a very short amount of time.
So let’s start going through this as obviously some motive that Elan musk could potentially, you know, help set a trap here for short sellers. Okay. He says step one, stocks are going down drastically due to different reasons. Bad news, poor analyst recommendations.
Obviously, we’ve seen you know, a lot of analysts come out and downgrade Tesla or put these ridiculous bear cases of Oh, it’s going to $10 $36 like just say $0. Like, if that’s where you want to go with it, just say zero, okay? The China trade war and so on shorties can smell some good business for them.
And obviously, in situation like that’s going to excite a lot of short sellers, right? Like, Oh, my gosh, markets gonna move down the trade war is gonna get a lot worse. Let me jump on. Let me start shorting whatever stocks I can. And if you’re going to short stocks, maybe test is the first one you want to attack, right?
Because they just had an awful, you know, first quarter of the year. So it’s like, oh, they just had a really bad first quarter. Let’s go ahead and jump on that. It’s an easy, short candidate, you have all these analysts jumping on, you know, putting out these ridiculous bear cases of $10.30 $6 and things like that.
So it’s kind of a perfect scenario. If you’re a short seller, you want to jump on that bandwagon. And that’s exactly what they’ve done. Okay. Step two, Ilan spreads out an email about cash burn money only last for 10 months, in addition of bad news from analysts, journalists, stocks moving down even further, obviously, that did happen, right?
Ilan, sent out that email and was like, you know, short sellers wouldn’t ran with that and said, Oh, my gosh, tests only has 10 months to live, when that really wasn’t the case at all. He was just putting it basically, at that time, whatever cash they had in the balance sheet, based upon what they did first quarter, which was an absolute disaster quarter, which this should be by far and away their worst quarter of the year for many different reasons.
Right. He was basically just stating that if we lost that much money, we would basically have no money left at the end of the pie, right. But that’s not taking into account the fact that the company can raise money whenever they want, issue, new shares and things like that. So the fact that short sellers would jump all in, like fall into that trap of oh my gosh, they’re tough.
They got 10 months to live in there. If they don’t do they might not make it like it’s just ridiculous that they would fall for that. Okay. And we saw obviously, the stock just moved down and moved down from a two for basically a two month span.
It went from 280 bucks a share to $180 a share and basically two months span on the back of basically the bad quarter compounded with the analysts all coming out and saying you know, the putting out these bear cases around Tesla stock you have the journalists are just like people writing negative articles around.
Tesla, which is scared people even more scares, a lot of the Long’s of the shares right gives the shorts even more power than you have Ilan Musk, send out that email. And it’s just like a full onslaught on to Tesla at that particular time. And that’s how you get a stock to go from $200 to $180 in Google’s $100 per share in literally two months time. Like there’s just like a compounding Have that news all at one time.
Okay, tip three stocks are going down even more dramatically more and more shorties come into the bubble, short trading volume going up like crazy. Some sources indicate about $9 billion or short and we got to ask yourself, Is that accurate? Well, let’s look at some short numbers around Tesla.
And these numbers are startling. Okay, if we looked at the short interest on Tesla shares, this was the last one that was reported on May 15. I wish they’d have the June 1 ones out, but short interest on Tesla, over 37 million shares, okay. And just a few months ago, you go back to February, it was at about 24 million shares, which 24 million out of Tesla’s flow is a ridiculous amount of short shares.
But when you talk about 37 38 million like that is absolutely insane. You look at a stock like Apple, Apple only has about 49 million shares short. Okay? And keep in mind, Apple has a massive amount of shares outstanding. It’s not even close between apple and Tesla, who has Porsche shares outstanding, okay, Apple shares outstanding are around 5 billion or just under 5 billion shares outstanding for Apple while Tesla has under 200 million shares outstanding.
Okay. So you know, it’s a ridiculous amount. Needless to say, as far as the percentage of float that is short, we’re looking at 28%, all the way up to maybe 30%. What Tessa and you look at a stock like apple, for instance, only about 1% of the flow is short shares. Okay, so needless to say, like, obviously, there’s a ridiculous amount of people that are short shares in Tesla right now.
And when you had that type of scenario, it means you know, just so many people are negative on the company, that if you start getting some good news, it could get really, really bad really, really fast for the short sellers, because they’re all piled into this trade, which is obvious they are okay, step four.
Tessa harvest, possibly a historic record quarter by sales, and defense against shorty stocks are up shorties in a trap, since they need to buy again, at even a higher price. an upward spiral starts to boost stock price as it had been a downward spiral since Okay, so basically, if you don’t understand like.
Like how a short squeeze works, or how like these situations work, sometimes you’re gonna see a stock go up like a ridiculous amount like a in a very short amount of time, you’ll see a stock make a ridiculous move up, like in a few days span, or a few weeks span, you’re like, how is how is that stock going up that much?
Or you might see a stock in a given day go up like 20%? And it’s like, how is that stock going up? 20% in one given day? That’s ridiculous, right? Well, what ends up happening with a lot of these stocks is you get a massive amount of short sellers and a stock.
Okay, basically, when a short seller has to cover their position, at some point in time, they have to buy back shares. Okay, so this is what a lot of, you know, newer people in the stock market don’t understand is when a short seller goes to short shares out there, okay? They’re basically like borrowing against shares in they’re promising to buy back those shares at some point in time in the future.
Okay. So example, if you want to short, let’s say, 100 Tesla shares, all right, you must buy back those 100 shares at some point in time in the future. And keep in mind, the brokerage could force you to buy back those shares at some point in time in the future.
So if your trade starts to go really bad, and your account starts to go really bad, the brokers could go ahead and say, Hey, we’re gonna force you to buy back those shares. It’s no different than when let’s say you margin out money. So margin out money, that’s basically if you go long shares.
So let’s say you were going long Tesla shares, you were margining out all your money on you basically taking out debt to go ahead and you know, through your brokerage account to go ahead and invest in more Tesla shares, Tesla stock kept to go lower, right, the brokerage can say, hey, you need to sell off shares or deposit more money.
Same thing with shorts. But on the flip side, if the stock price starts to go up really rapidly in their, their accounts being destroyed by this, a brokerage can say, Hey, you got to cover those shares, or you need to deposit more money into your account.
But still, it puts a short seller in a really tough position there because like, Okay, now we’re gonna cover it like $275 versus, you know, I could have covered like, at 180, a few weeks ago, or something like that, like, it could be a massive move up. And when you have all those short sellers, you know, buying back shares, on top of maybe buying pressure from folks in general.
Who maybe have saw a quarter or something like that, or are kind of like understanding, well, things are actually a lot better than they seem, do you have Long’s piling into it, you have short buying back shares left and right to cover their position, and all sudden you get a massive massive skirt short squeeze. And that’s what you see, sometimes some of the stocks move up in a ridiculous amount of time, and they just, you know, go up.
That’s why Tesla is one of those stocks. I it’s one of those stocks like I can I can imagine like Tesla a month from now, I can imagine it being back down at $180. I could imagine Tesla Vina to 80 to 80 in a month from now, it’s one of those stocks because the short squeeze can happen so fast that you don’t know what to expect with the stock at least in a short term manner.
And it could be at 180 it could be at 280 and just a snap of fingers and it can happen that fast guys, and the question is okay, let’s say shorts, you know, get squeezed out of this. Let’s say stocks back to At $300 a month or two from now do shorts go ahead and then quit on top so do they finally say you know what i’m done with Tesla I’m holding my hand in this one.
I’m not gonna mess with Tesla anymore probably not okay the thing about short sellers are that I would test specifically they always are going to find a reason why they should short Tesla shares okay and we’ve seen this has been a losing trade for years and years and years and the shorts have lost literally billions of dollars in this trade you know.
And it’s just it’s a tough situation because you’re playing with literal fire when you’re trying to short Tesla shares like you were playing with fire because they have so much growth potential in front of this company and they have so much demand for their products as we’ve seen over the years with their numbers and as we’ll probably see in the future quarters and wait till.
Shanghai gets up and running and wait till the model y comes out and then really start to see the crazy demand and so the shorts are just playing with absolute fire and you’re dealing with Ilan musk who I would not try to bet against Okay, I would not try to bet against Ilan musk that man could raise money in the middle of probably the Great Depression, okay.
Elan Musk is a person that gets people to believe in Him and you know, if you’re betting on Tesla going to zero, man you’re betting against Elan musk and that’s a really really tough bet to make so you know even even if shorts get squeezed out of this one it goes back to 300 plus dollars a share over the next few months.
Yeah, I don’t think all shorts are leaving the stock though. They’ll be back and they’ll have something in the future to point out and be like oh no now demand is gonna fall off or oh there was some fire there was a test slacks in or something like that.
There’ll always be something they’ll point out to like in their mind give them like this bearish thesis on the stock and why it’s going to zero guys so that’s just what it is. So anyways, I hope you guys enjoyed this. Let me know your opinion in the comment section.
I love reading through the comments not just for future video ideas just to kind of see what your opinion is on a subject like this guys, I would love to hear from you in that comment section. As always, thank you for watching and have a great day.