When will the Tesla bubble burst?

December 11, 2024

When will the Tesla bubble burst? 

We don't know Fools rush in. It's impossible to know exactly when the Tesla bubble will finally burst. Unfortunately for us at Creatix, we began shorting Tesla too soon. We are down almost 40% on our position as of today. We are not fooling ourselves thinking that we were ever make money on the short position. We truly doubt that Tesla can go down 40% any time soon. 

We would love to add to the short position, but it would exceed our $3,000 limit on the stupid bets that we do for fun. We're not Mr. Beast. We have a very limited budget for ridiculousness. We would love to short Tesla tomorrow morning at the ridiculous share price of $424. Tesla is trading at an incredible 116 times earnings, which gives Tesla a market capitalization of $1.32 Trillion. Elon Musk added today $13.4 billion to his fortune. Yes, $13 billion in one day. Yesterday, he had added $11 billion. Yes, that's $24 billion in 2 days. 

Six months ago, Tesla was trading at about $170 per share. Two months ago, Tesla was trading at about $212 per share. Today, Tesla closed at $424. That's right. Tesla doubled its value in two months. Tesla's market capitalization increased by $660 billion in two months. That's $330 billion per month, about $11 billion every day in the past two months, counting saturdays and sundays, or about $17 billion a day counting only trading days. 

What are the chances of Tesla sustaining a $17 billion a day valuation increase daily for the next two months? Zero to nil? Of course, there's still room for Tesla's share price to continue going up. There's an endless sea of gamblers and speculators out there. The more and the faster Tesla's stock continues rising, the better for us holding the shorts. The faster the bubblelicious rise, the faster the gravitational fall. We all have seen this movie before. We know how it ends. Tesla is not going to go away or out of business anytime soon, but it is virtually impossible for the stock to continue its irrationally exuberant performance for ever. The Tesla party will end. 

We see at least 50% chances of the party beginning to wrap up as early as tomorrow. Many will wake up to the realization that Tesla's rise in the past semester lacks any fundamental basis and it's all snake oil salesmanship about nothing new and nothing justifying the current valuation. 

The Tesla bubble has a name and it's not Elon Musk. It's Elon Trump. The historic bromance between the president-elect and the South African immigrant somehow blew up the Tesla bubble out of proportion. These imbalances happen every now and then and it's really how fortunes are made. Everyone holding a 401k with investments tracking the S&P 500 has made good money in the past months thanks to Tesla and the other bubble beneficiaries like NVIDIA and Meta. The whole technology sector is currently overvalued and is due for a correction. Tesla's imminent implosion may be the first domino piece on that long due correction. 

The future has not been created yet. No one knows what will happen. The movie is unscripted and writes itself as we watch it on real time. Isn't that phenomenal entertainment? Isn't life the best freaking thing in this universe?

Find us on the web at www.creatix.one. 

We're Creatix. We describe this venture and adventure as a commercial information matrix. A matrix is a place where things are created. To create is to transform. We transform general commercial information into actionable business intelligence.