Did Elon Musk, Founder of Tesla, Get the Last Laugh? Maybe! The Short Squeeze

Elon Musk, Tesla founder and SpaceX Explorer garnered our attention with several interesting charts which we highlighted here and here on how he brought the electric car to fruition.

Musk, so controversial, not only in his endeavors, but in his life, went against the grain with his Tesla Automotive, giving rise to the first all electric vehicle (also in very lofty production goals, which were at first not met) and a unique against the grain sale system that bypassed much of the standard mandatory current automobile industry taxes tariffs and payments.

Musk, during a Twitter barrage about a year ago, got himself into trouble resulting in his removal from several important roles at his firm Tesla.

Much of the Twitter trouble came from an attempt to chase short sellers – those investors that actually sell your company stock short (in advance) with the expectation that it will go down there by purchasing it back at a profit. Musk taking issue with the vast community of shorts in a Twitter storm created interest from the regulators.

Five Years of Short Interest

Fast forward to just last week,  neat chart from our new test service, shows exactly what happens when too many people get on one side of the trade and what it can do to the stock.

As, the graph rises, more shorts are piling on … but what happens if they all need to hit the exits at the same time?

2-7-20 Tesla Short Interest

This is What happens, AKA Short Squeeze

While the stock has come back down to earth a bit at the end of last week, there were certainly many investment bodies left behind on the short squeeze roller!

2-7-20 Tesla Graph

We are not recommending Tesla as an investment, or as a purchase for your next car, only somewhat humored by the Lemming like pilings on and off, and what it has ultimately done to Tesla stock.

Did Elon Musk Win? Time will tell!

Have a Happy “No Lemming” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.

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