Samwise Quick Reference Handbook
To streamline our daily blogs and conserve space, we’ve organized key resources into a convenient, collapsible dropdown menu below. A sort of Quick Reference Handbook if you will -- as our friends in aviation might call it. By clicking the menu below, you’ll have qu...
Please login to view this page.
On Thursday, Morgan Stanley analyst and longtime Tesla bull Adam Jonas lowered his price target on the stock and reduced his sales expectations for the company, citing growing competition, an aging vehicle lineup and a “buyers’ strike from negative brand sentiment.” However, he kept his buy-equivalent rating on the shares, saying the weak near-term expectations are “not particularly narrative changing” for a company whose future depends on robotics and artificial intelligence.
Wedbush analyst Daniel Ives on Friday lauded Musk’s efforts for “hand-holding” employees and investors at a key time, and said that if the CEO continued to lead on his vision, the stock will be on a growth path where 90% of its valuation will be led by autonomous-driving technology and robotics. This bullishness explains at least some of retail traders’ continuing enthusiasm for the shares.
“These kind of investors don’t care about valuations at all,” Colas said. “They just believe in the future of the company and Elon Musk’s abilities.”
Tesla’s Retail Fans Buy the Stock at a Pace Never Seen Before
Tesla Inc.’s stock is in a freefall. Its sales are plunging around the world. Even its most avid Wall Street bulls are turning cautious. But one group is buying the electric-vehicle maker’s shares like never before: CEO Elon Musk’s fans.
The company has long had an ardent fan base of individual investors who hang on Musk’s every word on X, the social-media platform he owns. They analyze Tesla in great detail in online forums and largely function as a hype crew for the stock.
But their current level of enthusiasm is staggeringly high, even by recent historical standards. Individual investors have been net buyers of Tesla shares for 13 straight sessions through Thursday, pumping $8 billion into the stock, retail trading data from JPMorgan Chase’s global equity derivatives strategist Emma Wu shows. That’s the biggest inflow over any buying streak since 2015, which is as far back as the data goes.
What makes the buying notable is Tesla’s share price has sunk 17% over this time, wiping out more than $155 billion from its market value.
“Tesla made some rookie to mid-stage public market investors extremely wealthy, a lot of people became millionaires because of this stock,” said Nicholas Colas, co-founder at DataTrek Research. “People don’t forget that. And they will come back to a stock again and again if they feel it has been beaten up.”
Tesla shares have been on a steep slide since mid-December when it touched an all-time high fueled by optimism from Donald Trump’s election victory. But that euphoria vanished, with the stock retreating more than 50% from its Dec. 17 record, making it the second-biggest decliner in the S&P 500 Index this year. The rout has been so brutal that on Thursday, Musk sought to reassure Tesla employees during an all-hands meeting.
What’s become clear is what Wall Street thought would be a boon for the company — Musk’s prominent role in the Trump administration as the head of the Department of Government Efficiency — has instead become an albatross. His growing political presence and involvement with controversies in Europe have triggered a backlash against the company and its leader, with the cars increasingly seen as political symbols. Protesters have thrown Molotov cocktails at Tesla showrooms and vandalized charging stations.
Sales of the Tesla’s cars have sunk in key European markets, such as France and Germany, as well as in China and Australia. Global numbers won’t be available until the company reports its first-quarter delivery figures early next month, but analysts across Wall Street have been aggressively cutting their estimates for sales and profits, citing the bleak data from around the globe.
Read More: Even Musk Fans Dash for the Sidelines With Tesla in Freefall
With all due respect, what’s the purpose of copy/pasting an entire article into the discussion thread?
Agreed, just a simple link will do if they feel so inclined to share
Hello Sam, Isn’t it too early to get back into Tesla?
We’re waiting for exits out of our TSLA positions, not back in.
So we’re looking to trade out of our Tesla positions on the rally to $300 and then we may buy back positions on the second leg down.
Hello Sam,
So you’re still in line with the fact that the market will likely decline next week, starting with the tariff announcement on April 2nd? The same goes for NVIDIA, after a return to $124-$130, with a drop expected next week? What are the target levels for both?
Sam, fantastic analysis as always. I believe you’ve addressed this concern in prior briefings, but it there any concern about the tariffs resuming in the beginning of April? I wonder if this could stall a rally (assuming it’s already begun by then). Thanks again!
So, historically any form of trade tension like tariffs can create uncertainty in the market. If we see a continuation of the positive momentum leading up to this point, the impact of tariffs might be more muted than expected. In the case of a rally at this point, the focus here should remain on the fundamental factors driving the rally, and we will need to see how the pieces fall into place as we approach that time.
Keep in mind that tariffs would imply that rate cuts would potentially come into play. If tariffs lead to slower economic growth and higher unemployment, the Federal Reserve might consider cutting interest rates as a way to stimulate the economy.
Also, in the short-term and longer-term, the NYMO and NYAD are still looking positive despite a current correction of 13%-14% (compared to a more negative sentiment for the correction of December 2024 or even August 2024).
So as I mentioned a few weeks back, it’s all cyclical for the stock market. It has certain thresholds it needs to reach before peaking. Bad news will be brushed off or delay a response from the market unless the news is horrifically bad.
The same process plays out over and over again over the years. We get a 10-13-15% correction followed by a massive rally that either leads to a second leg down or a continuation back toward the highs.
The market is going to follow that same process even in the face of moderately bad news. That’s because most of the bad news is priced into the correction itself. Supply/demand issues will determine the size of the rally.
Thank you for the update. I am curious how you wait out the process (9 days). Do you set trigger alerts? Do you watch the market all day? Do you watch only certain times of the day? Do you have any recommendations about the best way to monitor this process for the turn?
I watch the market all day long. I don’t set triggers because I’m always there pretty much at all times. I step away every now and then, but have my phone which allows me to watch the market pretty much at all times.
I’d say the best way to keep attuned is to simply remain vigilant during market corrections. Like it’s probably very important to watch the market at all times during market corrections.
How do you interpret the strong close to the week (which also marks the first green week in some time)?
I guess it’s a little too late to answer. But it didn’t change anything. We had a triangle set-up and breakout. It’s that simple. The QQQ triangle didn’t look quite right compared to the other indices and certain stocks. But on the SPY, Nvidia and Tesla, we had very well defined triangles. So a breakout was inevitable tbh.
“We feel confident in our Nvidia July call-spread, however and we’ll likely hold that position until expiration. ”
Hi sam,
Say nvidia go north way pass 135 during may or june.
Wouldn’t the 125-135 july call-spread already appreciate to the max value (1k usd) already before the expiration?
Or it will only achieve the max value when its exercised at expiration date?
Hope you could help me to understand a little bit more about vertical spread. Thanks
It will only achieve maximum value at expiration. Even if Nvidia rallied to $150, that spread would only trade at around $7-$8 maybe. Depending on how much time remains.
We’re going to trade around that spread for sure. There will be point where we sell half or close out and buy back. We’re going to trade around it.