A Derivative Play On Tesla
When Tesla reported their first quarter earnings back in May, the company surprised Wall Street by making a profit. The company reported first quarter earnings of $1.24 per share on revenue of $5.99 billion. Analysts were expecting a loss of 28 cents per share on revenue of $6.1 billion. Total revenue increased 32% to $5.99 billion year-on-year, beating analysts’ estimates by $140 million.
David M. Einhorn, hedge fund manager and founder and president of Greenlight Capital, which focuses on shorting companies claimed that Tesla used dubious accounting practices in their financial filings. At the beginning of the year m David had a negative view on Tesla and shorted the company thought put options. Yesterday, David went onto Twitter expressing his thoughts once again about Tesla.
Yesterday, Tesla has become the world's most valuable carmaker, $4 billion more than Toyota, after its stock hit a record high. Because trading and investing is a zero sum game, for every winner, there is a loser.
David Einhorn’s hedge funds fell 5% in June increaseing his Greenlight Capital’s loss for the year to 20.7%. Mind you he’s still recovering from losses that started in 2015, when his main fund fell 20%, and deepened with a record 34% decline three years later.
But this post isn't about Tesla or Elon vs Einhorn, this post is about Tesla derivative plays.
Workhorse Group Inc. designs, manufactures, builds, sells, and leases battery-electric vehicles and aircraft in the United States. Its products include electric cargo vans, and medium and light-duty pickup trucks, as well as HorseFly delivery drones systems.
A week ago, Workhouse announced today that it has successfully completed Federal Motor Vehicle Safety Standards (FMVSS) testing for its C650 and C1000 all-electric delivery vans. This is a big deal because the company could be awarded the Next Generation Delivery Vehicle contract by the U.S. Postal Service before the year is up. We are talking as many as 180,000 vehicles.
Workhorse is a technology company focused on providing drone-integrated electric vehicles to the last-mile delivery sector.
Shares of Workhorse Group Inc., a maker of electric delivery vehicles, are surging as investors bet the Trump administration will want the company and a fellow Ohio-based affiliate to succeed.
Workhorse’s stock soared as much as 38% on Tuesday after the company announced it had secured $70 million in financing from an institutional investor. After a nine-day streak of gains, its market capitalization is now more than $1 billion.
While Workhorse has humble ambitions to produce and sell just 400 vehicles this year, it has friends in high places. The company has a 10% stake in Lordstown Motors Corp., which hosted Vice President Mike Pence last week for a factory visit. Lordstown Motors is named after the Ohio plant it’s trying to revive after General Motors Co. ceased production and sold the facility last year.
But probably the biggest speculation taking place is whether Amazon will buy the company or not. This past Friday, Amazon announced a deal to buy self-driving technology company Zoox, with analysts estimating a purchase price of over $1 billion.
Yesterday, This past Friday, Amazon announced a deal to buy self-driving technology company Zoox, with analysts estimating a purchase price of over $1 billion. Yesterday, the number of shares traded was 125,895,680, which is 11X the average traded volume.
I looked at the options last night and they are liquid enough for me to get involved. I'm going in using a Call Synthetic Long Stock option strategy. Sounds complicated, but it's not...just buying a call option and funding it by selling naked put options.
Now honestly, when I looked at the month chart, I started to just buy naked puts, but what if the stock keeps going up or what if the company is bought by a bigger play...the potential upside outweighed the downside risk to me. Lets see how things go over the next 1-2 months...I may or may not have to make an adjustment to manage the risk.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
Posted Using LeoFinance
