Long Elon and Long Tesla

JC Parets

June 14, 2024

In 2019 Tesla was worth a tiny $30 Billion.

By 2021 Tesla was approaching a market cap of $1.3 Trillion.

The job of a CEO is to increase shareholder value.

Period.

No CEO in history made shareholders more money faster than Elon Musk.

It's just math.

Remember, a CEO is not there to "make employees happy". A CEO is not there to "increase corporate profits".

The CEO works for shareholders.

Shareholders only get paid if line go up.

And boy did it....

In my opinion, the $50 Billion Elon just got paid probably isn't enough.

Yes, I think he's underpaid!

And so after a move from $30 Billion market-cap to $1.3 Trillion, the stock has gone through a very well-deserved correction.

But it's been about 30 months of consolidation, retracing approximately 61.8% of the entire rally, which is standard for structural uptrends in bull markets.

We were selling the 165 puts earlier this week. If you don't have access to our weekly team meetings, get in touch with Mary so you can start to join us.

But from an upside perspective here, a double in price doesn't even get us back to those former highs.

So there is plenty of room to the upside:

Yesterday, Thursday June 13th, the S&P500 closed at a new all-time high.

Do you know how many stocks on the NYSE made a new 52-week high yesterday?

29.

That's out of thousands of stocks that trade on the world's most important stock exchange.

29.

Really?

And it makes sense because with a new all-time high Thursday for the S&P500, the NYSE Advance-Decline line closed at a new 6-week low.

It's not easy to find stocks that are going up.

It's been mean reversion city.

And I think Tesla relative to the S&P500 is setup for exactly that.

Look at this double bottom in TSLA relative strength:

Momentum for Tesla relative has been diverging positively on this second low.

The risk for Tesla shares is very much to the upside.

And where are we wrong?

That's also very well-defined.

Trades don't get simpler than this.

All the details are on the Trade Ideas page, but make sure to ping me if you have any additional questions.

Also, if you don't like this trade because you don't like Elon Musk, then good. You're not alone.

That's part of what will likely drive the price of this stock much higher, because people can't get past their emotions, and Tesla making shareholders so much money makes them feel insecure.

Certain stocks and CEOs do that.

Tesla is one of those.

We love when that happens.