Tesla shares slid hard this week.
While Puts would’ve been an easy enough trade, I didn’t take them because we’ve been here before with this stock. Quite literally.
I’ve ridden this stock up a few times now for some major gains. But the turn-around points tend to be harsh and immediate, so the loss of value on Puts can be quick.
The year is 2013…
In October of 2013, a $TSLA Model S was involved in a fire. The stock promptly dropped. Elon did some damage control on TV and online….and the stock didn’t drop off the moon.
So what happens to $TSLA this time?
This time the stock caught some bad news when a driver crashed and blamed the car’s auto-pilot as the cause. A similar story came out a few months ago when a Tesla vehicle crashed into a truck with the auto-pilot once again coming into blame.
But here’s a few things to keep in mind.
- When TSLA autopilot’s vulnerability for hacking was in the news last year, the company patched it overnight.
- It has yet to be confirmed
- TSLA announced a recall after market hours today. Last time they recalled a vehicle it was quick and the stock snapped back up nearly immediately.
- TSLA had modified its’ autopilot system to not be completely hands-off and owners are responsible for agreeing to this when they purchase their vehicle.
- On Tuesday, I made this point in my trading room and on StockTwits. Roughly 100 fatal car accidents occur every day; so aren’t other car stocks battered whenever these happen? If they did $F and $GM shares (amongst others) would take a battering every single day.
- The official investigation has yet to determine whether or not autopilot was actually engaged at the time of this accident.
- As much as this might label me as a fanboy…$TSLA is more than a car company. Their current trajectory to centralize the solar grid in the U.S. (with solar grids being decentralized always having been a major pitch for advocates) is huge. Their Giga-Factories have huge upside potential once fully functional.
- Elon has enamored a great deal of the population. He’s a smart guy, certainly, but he’s a great salesman. He’ll know how to handle this in the media going forward.
Ok, so those are some points, but what about this time?
Well, I can’t ever say for sure about any stock. It went up $8.35 today. But I think it’s going to see a little more downside from there, namely with the recall news hitting after the market closed today and pulled the stock down nearly $9. Here’s a look at the monthly chart leading up to today and through the post-market.
Some of you might know I’m not a huge fan of technical analysis for moves like this…and I’m not. The heaviest options activity today was in Calls, most notably an opening May bullish Call Spread. With those things said, I think after more brief drawdown it’ll spike up once it finds a bottom.
I’ll keep you guys posted on my various posting outlets…my main point with this article was to exaggerate to not fall heavily into all the news the mainstream finance outlets are throwing at you. Buy some puts if you want but by no means assume this stock is dead….yet.
P.S. – If you’ve noticed I’ve being adding “today in history” pictures and notes to my recent posts.
The most fitting for today would’ve been in 2013 when the government ordered the step-down of General Motors’ CEO as the government intervened in the company before an inevitable decline.