Why To Hold Cash And Sell Tesla Short

The Long: Cash

That’s right. My market view tells me that sitting in cash is is the best long idea at the moment. I prefer to allow markets to grope for a bottom, and wait for the Fed to do its thing. Let equity mutual funds sell their losers, which is nearly everything at this point year-to-date. Let’s wait for this terrible tape to play out, and for key technical indicators such as breadth, upside volume and the net advance/decline lines to improve.

The Short: Tesla Motors TSLA +1.19%

12-month target price: $202

A time-revered Wall Street adage to know the difference between a great stock and a great company comes to mind in the case of Tesla. It may seem injudicious to bet against the smartest guy in the world who’s advancing a great and hopeful idea, backed by the biggest investment banks and some heavy governmental support, but the mountain of expectations seems too steep to scale with the stock at current prices.

 Analyst Adam Jonas at Morgan Stanley MS +0.00%, a leading Tesla banker, last month increased his price target on Tesla to $465 from $280. This, of course, was issued almost concurrently with a just-completed $750 billion equity offering. They expect Tesla to need another $15 billion to finance its growth for the next five years.

Source: Why To Hold Cash And Sell Tesla Short – Forbes

Speak Your Mind