$TSLA Earnings: Why I Haven’t Shorted Yet Despite the Overvaluation

As we approach Tesla’s upcoming earnings report, I wanted to share my thoughts on why I haven’t pulled the trigger on a short position yet, despite believing $TSLA is the most overvalued stock I’ve ever seen. Here’s a breakdown of what matters, what doesn’t, and why I’m still on the sidelines.

What Doesn’t Matter:

1. The 50% Drop: A stock’s past performance has no correlation with its future. Random Walk Theory and the Efficient Market Hypothesis (EMH) confirm this. Don’t let the recent fall influence your decision.

2. Technical Analysis: Charts and Wyckoff methods are largely irrelevant in liquid markets like $TSLA. Empirical research shows technical analysis doesn’t work in these conditions.

3. Systematic Risk: Focus on Tesla’s idiosyncratic risk, not the broader market. If you’re bearish on the economy, short the S&P 500, not $TSLA.

4. Macro Factors: Retail investors should avoid macro bets. The data is too complex, and institutions have the upper hand.

5. Elon’s Pleas: Musk’s calls to not sell the stock are meaningless. CEOs are legally obligated to promote their company’s stock.

6. Bitcoin Gains: Tesla’s Q4 Bitcoin gains were non-recurring and already stripped out by analysts. It’s a non-issue.

What Does Matter:

1. China Sales: China is the largest EV market, and Tesla’s performance there is critical. A strong showing in China could offset declines elsewhere.

2. Energy Generation & Storage: This segment is Tesla’s golden child, growing at 60% YoY with 25% margins. It’s the AWS of Tesla—outsized growth here will move the stock.

3. The Three Key Numbers: Vehicle deliveries, price per vehicle, and energy generation numbers will dictate the stock’s reaction to earnings. Analysts have revised delivery estimates down to 350k, so a miss might not hurt as much as expected.

4. Forward-Looking Statements: Any retraction from previous guidance, especially on Full Self-Driving (FSD) timelines, could tank the stock.

Why I’m Still a Coward:

Despite my bearish stance, I’m not shorting $TSLA yet. Here’s why:

1. Elon’s Aura: Musk’s ability to rally the stock with bold claims is unmatched. A single statement about a new breakthrough could send $TSLA soaring.

2. Market Sentiment: The market has consistently rewarded Tesla’s long-term potential, even when short-term numbers disappoint.

3. Gambling, Not Investing: Shorting $TSLA feels more like gambling than investing. The odds are against me, even if the fundamentals support my view.

In conclusion, while I believe $TSLA is overvalued, I’m waiting for a clearer signal before taking a short position. The upcoming earnings could provide that, but until then, I’m staying on the sidelines. What’s your take on $TSLA’s earnings? Are you bullish, bearish, or staying neutral? Let’s discuss!