Well.
Source: wolfstreet.com
Well, well, well.
We mentioned yesterday that Tesla ($TSLA) was going parabolic. Turns out that buying the share when the price was already vertical was actually a good idea. “If it keeps going, it will pierce the afterlife” writes a colleague – it went up another $100 yesterday.
The rocketing price for the share seems to be the result of a brutal short squeeze. Those who’ve bet against the company using leverage, have had to rapidly buy it back to cover their losses, resulting in the extreme outperformance of the stock.
Funnily enough, this happened to its almost polar opposite, Volkswagen, back in 2008:
Comparison courtesy of @MacroTechnicals on Twitter
Despite the hundreds of millions of dollars $TSLA burns annually… and its perennial lack of a profit… there have still been enough buyers who believe in Elon Musk to carry the day, and it has brutally punished those who do not.
Many of those buying, including on Monday when the price of the stock was already looking absurd, are millennial investors buying the share using the commission-free trading app Robinhood.
The app will be coming to the UK shortly – if you’re not familiar with it, a screenshot of its forum has been doing the rounds which may give you an idea of the level of investing experience associated with it:
But credit where it’s due, investing experience clearly hasn’t been required for those who bought on Monday – I just hope they know when to sell.
The explosion of such a speculative share has come at a good time for me – it further strengthens my “melt-up” thesis, and it just so happens to coincide with the announcement of the winner to that riddle I gave you on Monday…
And the winner is…
Well done to all those who clocked that it was Nikola Tesla who connected all of the dots in Monday’s riddle.
There’s a monument to his work in the Czech Republic…
Source: WikiCommons
He was played by David Bowie in Christopher Nolan’s sublime film The Prestige…
Notoriously eccentric, he fell in love with a pigeon…
He designed and built a radio-controlled boat, an ancestor to the “Marine Lizard” drones developed by the Chinese navy for use in the South China Sea…
I’d photoshopped him out of this image:
But he was present here at the back at this dinner for radio engineers:
(Anyone else left wondering what that black powder strewn across the table is? Or just me?)
Most importantly, he convinced JP Morgan himself to invest $150,000 (millions in today’s money) to build a device that was ultimately turned into scrap metal… but to this day is still well ahead of its time: Wardenclyffe Tower.
Source: WikiCommons
Tesla’s unfinished work, through which he wanted to not only broadcast wireless information, but wireless energy.
While plenty of you clocked that it was Tesla that brought the pieces together, the first person to tell me how all the dots connected and what device was scrapped, was Mark N – congratulations! A bottle of Baltic Trader will be on its way to you shortly.
Thanks to all who wrote in. You provided some interesting guesses, including that “Blue Blue Electric Blue” was the Bowie connection! Close, but no cigar I’m afraid.
Until next time…
Boaz Shoshan
Editor, Capital & Conflict
PS If you do get a chance to watch The Prestige, I highly recommend it – it’s my all-time favourite film. And if you’d like to know why so many people were shorting $TSLA (which led to the short squeeze), I suggest you have a gander at this website: elonmusk.today.
Category: Market updates