Pretty much everybody wrote off this dinosaur of a company ages ago (especially during 2018 when new management tried to figure out how bad everything was before they started administering the foul-tasting medicine of structural changes and cost controls), and as a result, there is hardly anybody left that wants to send their supply into the market.
The risk of insolvency has been abated with a very aggressive debt paydown. It’s all about cash generation at this point – revenues are declining, but there will be a point where things will stabilize. When that will be is anybody’s guess, but it seems at present to be more likely than not at a cash generating level. Inevitably, you will have the computer traders and other passive vehicles jumping on board, and then it’s off to the races again. There will be some backing-and-filling of the stock price as you will have people waking up and hitting the sell button, but something to keep in mind is the extremely small float of 7.3 million shares outstanding will likely mean that the volatility will be upwards (demand-driven) rather than down. Today, for instance, somebody at around 10:30 (pacific) really wanted 2,000 shares of stock and it was enough to take it from 10.15 to 10.45 in a hurry.
A bit surprised the debentures go all the way up to 104 considering they can be called at par on May 31, 2021. Obviously you are bullish on it, what’s your time horizon?
Btw, in terms of charts & panic – TSLA moves like bitcoin these days.
YPG.DB has the most odd-lot trading for any debenture series I have ever seen which has trades that are clearly out of the ordinary range. The actual number of days where it trades > $100k is a handful a year.
At 104 an investor gets around 4.8% assuming a May 31, 2021 call at 100, while at maturity it’s 6.3%. If the common goes higher there should be some more call option premium built into the stock. Right now that’s about 17bps using cookie cutter Black Scholes at 40% IV.
My time horizon is in 2020 the stock should continue rising. I don’t have a specific time horizon other than holding for now.
As for TSLA, amazing. Really amazing.
Maybe TSLA is like Volkswagen – the mother of all short squeeze
That was totally a different story – Porsche sneakily bought call options on VW to the point where it controlled more than 100% of shares outstanding and extracted an insane concession out of short sellers (this was in the middle of the economic crisis as well). It was one of the best feats of financial engineering since Soros busting up the GBP ages ago.
But TSLA, yeah, those short sellers have got to be hurting. At least the borrow is cheap!