Abandon Tesla, long and short Wall Street forces bloodthirsty new Chinese cars

Short-selling institutions like bloodthirsty wolves have repeatedly stumbled upon new car-building forces.

On October 7, J Capital Research, an American short-selling agency, issued a short-selling report on Faraday Future, which directly pointed to Faraday Future (FF) factory failures, pre-determined fraud, corporate credit bankruptcy and many other issues, and claimed that ” Faraday will never sell a car in the future.”

The fierce accusation was only exchanged for Jia Yueting’s response of “fried food, nonsense”, and the capital market was also calm. As of the close of October 12, the FF stock price was reported at $8.36, compared with October 7. The closing price of $8.40 remained almost unchanged.

After the new self-built forces entered the open market, short sellers have never given up hunting for them. Tesla (TSLA.US) and NIO (41.27, 2.39, 6.15%) (NIO.US) have all been the subjects of short-selling reports. The number of Tesla’s short positions even reached 20% of the outstanding shares at one time. For this reason, Skr also specially put on a pair of red shorts (shorts), expressing his mockery of short sales.

In this process, the long-short game is repeatedly staged. The most exciting scene occurred after Tesla announced Q3 profitability in 2019, and its stock price doubled in three months. Behind this is a breathtaking air-squeeze battle-based on profitability, Shanghai factory mass production, etc. The good news is that Tesla’s stock price did not fall as the shorts expected. The shorts had to buy Tesla’s stock to cover their positions, which continued to push its stock price higher, and the shorts could only follow up to buy more stocks.

Wall Street hedge funds have been bloodshed in this battle. Data from the financial technology company S3Partners shows that in the first two months of early 2020, Tesla’s short sellers lost $8.3 billion. In addition, Wang Shan, head of community operations and investment research at Tiger Securities (8.86, 0.20, 2.31%), mentioned in an exchange with ‘Capital Detective’ that several of Weilai’s rises in the past year also came from short-selling.

The new car can be called the most dangerous game in the current business world. This is a car-making movement involving almost all the top technological forces in the industry. It is also a fast-changing and bloody battle of long and short in the stock market.

1. Tesla has fallen out of favor, how long will it take to leave?

The controversial Tesla used to be the most intense battlefield between long and short, but it is being “abandoned”.

According to Seeking Alpha data, a total of 33 Wall Street analysts have rated Tesla, of which 14 are bullish and 8 are bearish. Judging from the historical average target price, the target price given to Tesla by Wall Street has been continuously rising and has recently reached a new high of US$697.76. But even so, Tesla’s actual performance still far exceeded Wall Street’s expectations. After more than half a year of decline and adjustment, Tesla’s stock price stood at $800.

After a long period of fierce battle, the bears seemed to be completely disappointed in the face of the continued rebound in Tesla’s stock price. According to Bloomberg News, as of last week, the proportion of shares borrowed by traders in Tesla’s outstanding shares fell to 1.1%, which is the lowest level since Tesla went public. Well-known big shorts such as the founder of Muddy Waters also announced their surrender. In August of this year, they said they would no longer short Tesla and did not intend to resume their short positions.

Tesla’s short retreat is closely related to its stable performance. Q2, Tesla once again created a strong quarter in which its performance rose across the board, and proved its ability to achieve profitability through its auto sales business. Tesla’s Q3 financial report will be released after the market on October 20. According to another record-breaking delivery data previously announced, Tesla’s Q3 results may once again bring surprises.

In the context of the global automotive chip shortage, Tesla’s good results will appear even more commendable. The retreat of the bears at this time is also an affirmation of the stability of Tesla’s development.

Tesla Q3 delivery data source: Tesla Tesla Q3 delivery data source: Tesla
Interestingly, the bears died down, and some of Tesla’s well-known heads were also evacuating the battlefield.

Cathie Wood, the “female stock god” who has been cheering for Tesla for a long time, has reduced Tesla’s holdings for nine times since September 8. More than 910,000 shares have been sold and approximately 719 million US dollars have been cashed in. However, after the sell-off, Tesla remains its single largest position.

Prior to this, Cathie Wood repeatedly reiterated that Tesla’s target price was $3,000. In July, he also attended The B Word Bitcoin Conference with Musk. And now, the majority of Tesla and Bitcoin not only sold some Tesla shares at the $800 mark, but also recently reduced their holdings of Coinbase stock for the first time, selling more than 98,000 shares worth about $25 million.

At the end of September, Chamath Palihapitiya, another Tesla majority owner and well-known Silicon Valley venture capitalist, revealed in an interview that he had emptied his Tesla shares when Tesla’s stock price was at a high end of last year. He said that the liquidation of Tesla was to invest funds in other areas. He himself is still bullish on Tesla, but his views on the company have also changed.

After the news of Tesla’s liquidation broke out, Chamath Palihapitiya’s call to the market at the beginning of this year became intriguing. When Tesla’s stock price was at $800 in January this year, Palihapitiya stated that its stock price would rise by 1-2 times, and advised investors to “not sell Tesla a share.”

In addition, there are more old Tesla shareholders who choose to withdraw. According to a report on the Nikkei Chinese website on June 28, Panasonic (12.94, 0.60, 4.82%) sold all shares of Tesla before the end of March 2021, earning approximately 400 billion yen in revenue. A report in March stated that Ron Baron, a long-term Tesla shareholder, had sold 1.8 million Tesla shares to customers in the past six months, but he said that he believes Tesla’s shares will rise to $2,000 in the next 10 years. .

The American economist Knight expounded a principle in “Risk, Uncertainty and Profit”. Without uncertainty, there would be no profit in the economic sense.

From this perspective, it can also be understood why some longs and shorts have joined hands to exit the market when Tesla’s performance continues to hit new highs. After a long struggle, Tesla’s mass production and profitability are on the right track. The gradual maturity of the company’s development also means the elimination of uncertainty and the compression of bubbles-and this is what the bulls and bears think, Take room for huge profits.

2. Institutional attitudes are repeated, and Wall Street sings more

In addition to Tesla, Weilai is another new car star stock that is highly concerned by bulls and bears.

On September 12, 2018, Weilai became the first Chinese car-making force to land on the capital market. Only three days after listing, Weilai received its first bearish report. Analysts from Wall Street investment bank Bernstein gave it a “underperform” rating, with a stock price target of only $4.2.

Dramatically, during the time when Weilai was not seen by US stock investors when Weilai was first listed, Citron released a chanting report, calling Weilai a “brand that disrupted the industry.” At the beginning of 2019, after a significant rise in NIO’s stock price, Citron founder Andrew Left told the media that he had sold all NIO’s shares. “When a stock rises within three months When it reaches 50%, you should make a profit.” After that, it is the story of Weilai crossing the line of life and death, and its stock price once fell below $2.

After NIO launched the skyrocketing mode last year, Citron issued a short comment on NIO, asserting that NIO’s stock price has to fall, and $25 is more reasonable (48% lower than before the short selling report). Citron’s shot made the new domestic car-building forces a collective dive, but it still has not reversed the surge of the new forces.

At present, looking more at Weilai seems to be the unanimous attitude of Wall Street. According to Seeking Alpha, 21 analysts have rated Weilai, 10 of which are very optimistic and 8 are optimistic. The average target price on Wall Street is US$60.58, which still has a lot of room to rise from the current price of around US$35.

Just last week, Goldman Sachs (414.75, 0.43, 0.10%) analyst Fang Fei upgraded Weilai’s stock rating from “Neutral” to “Buy” with a target price of $56. It believes that once the ET7, which is positioned as a high-end electric car, begins to be delivered, the share price of Weilai will rise sharply.

Compared with NIO, the market value of the ideal plate is smaller (34.25, 1.96, 6.07%), and Xiaopeng has received relatively less attention and controversy. According to Seeking Alpha data, 15 and 16 analysts have rated Ideal and Xiaopeng respectively. No one is short, and the current price has a certain amount of space compared with the average target price on Wall Street.

In fact, the trend of “Wei Xiaoli” in the secondary market is still showing great consistency, basically rising and falling. But investors still have their own preferences. For example, at the end of last year, Kelvin Lau, a five-star analyst at Daiwa Capital, suggested using specific matching transactions to invest in the new energy sector: buy Weilai and sell Xiaopeng.

However, in March of this year, after Xiaopeng released its 2020 Q4 and full-year earnings report, Kelvin Lau has upgraded Xiaopeng’s stock rating from sell to buy, with a target price of $34.

NIO, Ideal, and Xiaopeng stock price trend comparison chart this year Source: Xueqiu NIO, ideal, Xiaopeng stock price trend comparison chart this year Source: Xueqiu
3, looking for new targets

After Tesla, Weilai, Ideal, and Xiaopeng have experienced explosive growth in the past year and several crazy and fierce air-squeeze battles, these old faces in steady development are no longer able to arouse bulls and bears. Strong interest.

Capital is looking for the next battlefield.

J Capital Research, a short-selling agency, took the lead in launching an attack on Faraday Future, but this short-selling does not seem to have been fermented. Even so, Faraday Future’s share price performance is not good. After the first day of the break, Faraday’s share price has fallen by nearly 40% in less than three months after its listing. The current total market value is less than US$2.7 billion.

Facing the short-selling report, Jia Yueting mocked “J Capital Research is not the first time to be slapped in the face”. In the eyes of FF supporters, the platform of the head fund is a powerful weapon to refute short-sellers. Just last month, Vanguard, the world’s largest public offering fund, established a position in FF, and bought a total of 539,000 shares of the company to become the fifth largest shareholder. At the same time, Vanguard is still Microsoft (308.13, -1.03, -0.33%) and Apple (148.64, -0.05). , -0.03%) is the largest shareholder of Tesla and the second largest shareholder of Tesla.

For a mass-produced car company that has been on the market for less than three months and has not yet realized, the meaning of either singing too much or singing empty is limited. In September of this year, Faraday Future said that it has made progress in production, and that it can start mass production within 7 months at only US$90 million. In other words, April next year will become the most concerned time for longs and shorts. Regardless of whether Faraday’s mass production is successful or not, it will endure a fierce impact from capital.

Another new face that has attracted much attention is Lucid, a new American car-making power. The company was founded by Bernard Tse, former vice president and director of Tesla, and Sam Weng, a former executive of Oracle (97.89, -0.36, -0.37%). A large number of engineers on the team are from Tesla, which is regarded as Tesla in the new car movement. One of its rivals.

One more thing to mention is that Lucid and Jia Yueting also have some connections. Lucid was formerly known as Atieva, a high-tech company that develops and produces core power systems for electric vehicles. In 2014, Atieva accepted BAIC and LeTV’s shares in the financial crisis. However, BAIC quickly withdrew from the capital. LeTV had to sell Lucid due to its own difficulties. The stock is sold.

In September 2018, Saudi Arabia’s sovereign fund “Public Investment Fund” invested more than US$1 billion in Lucid. Backed by strong capital, Lucid successfully landed on the capital market in July this year, and according to its plan, it will be able to deliver its first mass-produced model Lucid Air by the end of October.

There are still not many analysts covering Lucid, but their attitudes are quite clear. Citigroup gave Lucid a buy rating and a target price of $28 per share. Bank of America (47.51, -0.06, -0.13%) analysts gave a buy rating and a target price of $30 per share, and said that “it will be the industry Next Tesla or Ferrari (231.01, 8.01, 3.59%)”.

However, Morgan Stanley (101.91, 0.11, 0.11%) analyst Adam Jonas, who is bullish on Tesla for a long time, rated Lucid’s stock as “underweight” with a target price of only $12. More mature electric car giants go hand in hand and realize their valuations, and there are still many obstacles to face.”

Following Lucid, Rivian, another new American car maker that is considered to be Tesla’s strong rival, is also rushing to the capital market. The car company was founded in 2009, and has not received attention until the release of R1T and R1S at the Los Angeles Auto Show in 2018. Since 2018, it has already received from Ford, Amazon (3320.37, -15.18, -0.46%), Cox Motors and T . Rowe Price’s cumulative US$11 billion financing.

According to rumours, Rivian’s IPO is valued at more than US$80 billion, far exceeding Weilai’s current market value of US$576. Its IPO documents disclosed that as of the end of September, Rivian had nearly 50,000 R1T and R1S pre-orders, and 100,000 EDV orders from Amazon, and that Rivian R1T’s first-volume production vehicle had begun to be delivered to employees in September. This is undoubtedly a safety plug for Rivian’s future development.

It is foreseeable that with Rivian’s high-profile listing, the capital market will usher in a controversial and temptation subject. The bulls and bears who have heard the wind will continue to stage a wonderful game.