December 26th, 2019

If you’ve been following TSLA for the last year you have seen a company incrementally breaking their own records.

But for the better part of the year, the stock was down. Why? To sum it up, sentiment. There was strong bullish sentiment all along, but announcing quarterly losses, raising capital, paying off huge loans due, came with negative sentiment as the most shorted stock had plenty betting against it.

Q3 the sentiment changed. Quarterly profit. The unveil of the Cybertruck. The Solar ramp. Gigafactory China going online. And so on.

Now put yourself in a wealthy Chinese persons position. A high up position at a bank, or major investor. Obviously investing in something outside of your line of sight, is quite difficult. But what does get noticed? How about a company approaching a bank looking for 1.5B in loans. Clearly this is a decision that would raise some eyebrows in China. Money that has to back this loan would be wise to research the company and their products requesting such investment. And what do those people find? A field turned in to factory built in 10 months by some very talented workers whom should be very proud of their massive accomplishment.

Does this company look like they will be able to succeed? Does this company look like they could sustain demand? Does this company offer a valuable product? Does this company offer any tech advantages? Are they the best of breed? These are all questions a bank would want to answer before risking huge capital.

But beyond that, investors will take this line of sight opportunity to consider whether this company is a good investment for themselves. What is the probability of such a company doubling their investment? What is the expected time frame for this to occur? Could it go beyond that? Does it have any R&D that hasn’t paid off yet? Is the stock currently overvalued?

From the Chinese Investors perspective, you have a stock that has been pumbled for the last year, and even really the last few years. Never being able to break out beyond $380/share. But now it has build another factory and will increase production significantly.

And they have another plan for another factory in Germany. And they are raising 1.5B to scale even more in China.

If I was a Chinese Investor, I think that TSLA might just look like the opportunity of a lifetime.

The Gigafactory producing and selling cars in China is real. If it isn’t real, I’m fucked. But it is real. And this is still a relatively new idea. Chinese investors likely see huge growth potential in Tesla and the timing of all of this makes this moment essentially an IPO moment for TSLA in China.

So what happens when money flows into a stock that cannot be influenced by reckless tweets, Pedo Guy lawsuits and mainstream FUD? The sentiment doesn’t sway.

And if the very people who are buying in are not reachable to the negative sentiments, then this is a very big problem for people who have invested in those negative sentiments.

People will make their own decisions on what is best for them. When you threaten peoples ability to breathe clean air, they will favour companies who provide solutions out of self preservation. Look at where the air quality is the worst in North America and where Tesla produces cars and you will find the biggest adoption of Tesla vehicles.

The exact same thing is about to happen in China.

This is the position Tesla is in. This is why the stock will rally to $800 have a large pull back to $600 before going to $1200/share.

Prediction: TSLA will reach $1200/share before they deliver a single Cybertruck.

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ABOUT THE AUTHOR:
I am TSLA Long. Model 3 Owner. Brother of a Model 3 owner. Son of a Model S owner. I have reservations for Slate Roof and Cybertruck. I am a Tesla speculator and fanboy. I am not a financial advisor. Investing in anything comes with inherent risk. Short NKLA (Aug 4 2020)