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Tesla: Pricing Power At A Fair Value
ValueInvestSG
2023-02-02
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(NASDAQ:TSLA) is not just a car company; it is a technology company. This has been a hot topic of debate, especially since it makes 95% of revenue from selling cars. We need to pull Tesla's revenue streams apart a little bit to understand why its core offering is software. The Tesla motor's carbon fiber wrap impresses the mechanical engineer in me, but the software in the Tesla is the game changer.</p><p>I am lucky enough to be a beta tester for Full Self Driving ("FSD"). My Model 3 received FSD Beta in September of 2022, and it is amazing. A few days after I got the upgrade, I let it take me and my son from his soccer game all the way home with no input from me. Although a necessary 3 lane change in 100 meters was less than comfortable, stop lights, signs, and almost everything else was handled well by the system. My background in machine learning and data science gives me a deep appreciation of what the team has accomplished. Still, this is Seeking Alpha, and we should focus on the numbers, more specifically the numbers with dollar signs in front of them.</p><p>Tesla has increased the cost of its Full Self Driving capability from $6,000 in 2019 to $15,000; not bad pricing power for software in beta that isn't really fully self-driving yet. The take rate on the FSD add-on is now around 14%, however, I believe that shows a purposeful reversion caused by Tesla pricing policies. The chart below shows the FSD take rate since late 2016.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/b9011064222279def6ac65015c4e6d2f\" tg-width=\"640\" tg-height=\"374\" referrerpolicy=\"no-referrer\"/><span>Teslike Order Tracker</span></p><p>The company began raising prices on the FSD option in Quarter 3 of 2019 and continued until the most recent price increase to $15k at the end of 2022. The take rate is now back down to the level it started at. I don't believe the increase in price is Tesla giving up, as other authors have argued. I have experienced a massive increase in capabilities and functionality moving from Enhanced Autopilot to FSD. Tesla also has multiple options for leveraging this technology in other products, as can be seen from the application of the FSD algorithms to their humanoid robot, Optimus. The team applied the same Artificial Intelligence techniques used in FSD to create the bot in under a year.</p><p>Tesla products are cool for sure, however, cool products do not make a successful company. Only solid business fundamentals can do that.</p><h2>Long-Term Growth Prospects</h2><p>The following chart shows Tesla compared with the rest of the companies in the S&P 500 (SP500) for context regarding earnings on unleveraged net tangible assets. The blue shaded area here shows the distribution of all other companies in the S&P 500 since 2013. Tesla is way up at the top, above the 85th percentile.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/14e5ca37a57e3c4aba44972d5b22df56\" tg-width=\"640\" tg-height=\"382\" referrerpolicy=\"no-referrer\"/><span>Authors Image from Financial Modeling Prep Data</span></p><p>Warren Buffett uses unleveraged net tangible assets to decide what he calls the long-term economic prospects of a business. His logic is simple, increasing earnings without major capital requirements is a better business to be in. It takes money to make money, but you want it to take as little money as possible.</p><p>At a Return on Unleveraged Net Tangible Assets of 14.7% Tesla is well above the rest of the S&P 500, which is centered around 6.1%. The recent massive increase shown in the chart above demonstrated pricing power during an economic shock. Other SA authors have pointed out the Tesla has the ability to capitalize on more segments of the value chain than other car companies such as Ford (F) or General Motors (GM). I see this as a positive for the overall business model and demonstrates the pricing power of the product lines rather than a negative on margins. GM and Ford were left watching the dealerships soak up most of the increased margins.</p><p>The chart below shows that Tesla does forecast a decrease in margins until at least February of 2024. The decrease in margins expected reaches a level that normalizes back to long-term trends and still maintains a very healthy 14%.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/131986e94678c661b3a9e018da7faf80\" tg-width=\"640\" tg-height=\"213\" referrerpolicy=\"no-referrer\"/><span>Authors Image from Financial Modeling Prep Data</span></p><p>It is important to understand that this margin prediction is not based on my opinion. It is the result of analyst forecasts from major brokerage houses for both earnings and revenue.</p><h2>Risk Reward Forecast</h2><p>Here we explore risk and reward for TSLA stock over the next two annual earnings cycles.</p><p>The below chart is a prediction of value at risk and potential return of holding Tesla stock. As shown by the blue intrinsic value region in the chart below, Tesla is in the center of its intrinsic value region. The large drop at the end of the 3erd Quarter of 2022 is the result of the decrease in margins shown in the chart above.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/223c1ae44e6103a8a05ce44c339cb4ad\" tg-width=\"640\" tg-height=\"357\" referrerpolicy=\"no-referrer\"/><span>Authors Image from Financial Modeling Prep Data</span></p><p>Tesla now has a value at risk of 52%, while potential returns are only 8%. This 8% is based on the long-term intrinsic value that Tesla has traded at. Long term, the company has solid fundamentals, so as a buy and hold you can do well. The range of predicted values in 2024 is very large, so over the near term Tesla is a momentum and sentiment play. I can't predict how well a near-term trade will turn out, but the odds are in favor of the long momentum position.</p><p>For an explanation of the risk return forecast, look at this article on <a href=\"https://laohu8.com/S/V\">Visa</a> (V). It also provides a link to a video of the long-term performance of that estimate.</p><p>The algorithms do a pretty good job of predicting long-term price movement, but price will go outside the blue bands. Those bands are only there to show you where the price should be 90% of the time. This forecast, and forecasts for other stocks as well, tend to lag price when it goes down and lead when it goes up. This makes it useful to figure out risk in a stock, but it is less reliable for market timing. I am unaware of any market timing schemes that stand up to robust analysis.</p><h2>Conclusion</h2><p>Tesla, Inc. offers amazing products that have the potential to change the world. The potential and existing value of these products were only briefly explored in this article. The company is using core technologies to explore new markets which may lead to exceptional returns for shareholders. Tesla, Inc. is currently fairly valued based on long-term trading trends and high trading ranges around intrinsic company value. However, Tesla stock is only suitable for those willing to hold on through extreme share price volatility.</p><p><i>This article is written by Alpha Investment Research for reference only. Please note the risks.</i></p></body></html>","source":"seekingalpha_fund","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Tesla: Pricing Power At A Fair Value</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; 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(NASDAQ:TSLA) is not just a car company; it is a technology company. This has been a hot topic of debate, especially since it makes 95% of revenue from selling cars. We need to pull Tesla's revenue streams apart a little bit to understand why its core offering is software. The Tesla motor's carbon fiber wrap impresses the mechanical engineer in me, but the software in the Tesla is the game changer.I am lucky enough to be a beta tester for Full Self Driving (\"FSD\"). My Model 3 received FSD Beta in September of 2022, and it is amazing. A few days after I got the upgrade, I let it take me and my son from his soccer game all the way home with no input from me. Although a necessary 3 lane change in 100 meters was less than comfortable, stop lights, signs, and almost everything else was handled well by the system. My background in machine learning and data science gives me a deep appreciation of what the team has accomplished. Still, this is Seeking Alpha, and we should focus on the numbers, more specifically the numbers with dollar signs in front of them.Tesla has increased the cost of its Full Self Driving capability from $6,000 in 2019 to $15,000; not bad pricing power for software in beta that isn't really fully self-driving yet. The take rate on the FSD add-on is now around 14%, however, I believe that shows a purposeful reversion caused by Tesla pricing policies. The chart below shows the FSD take rate since late 2016.Teslike Order TrackerThe company began raising prices on the FSD option in Quarter 3 of 2019 and continued until the most recent price increase to $15k at the end of 2022. The take rate is now back down to the level it started at. I don't believe the increase in price is Tesla giving up, as other authors have argued. I have experienced a massive increase in capabilities and functionality moving from Enhanced Autopilot to FSD. Tesla also has multiple options for leveraging this technology in other products, as can be seen from the application of the FSD algorithms to their humanoid robot, Optimus. The team applied the same Artificial Intelligence techniques used in FSD to create the bot in under a year.Tesla products are cool for sure, however, cool products do not make a successful company. Only solid business fundamentals can do that.Long-Term Growth ProspectsThe following chart shows Tesla compared with the rest of the companies in the S&P 500 (SP500) for context regarding earnings on unleveraged net tangible assets. The blue shaded area here shows the distribution of all other companies in the S&P 500 since 2013. Tesla is way up at the top, above the 85th percentile.Authors Image from Financial Modeling Prep DataWarren Buffett uses unleveraged net tangible assets to decide what he calls the long-term economic prospects of a business. His logic is simple, increasing earnings without major capital requirements is a better business to be in. It takes money to make money, but you want it to take as little money as possible.At a Return on Unleveraged Net Tangible Assets of 14.7% Tesla is well above the rest of the S&P 500, which is centered around 6.1%. The recent massive increase shown in the chart above demonstrated pricing power during an economic shock. Other SA authors have pointed out the Tesla has the ability to capitalize on more segments of the value chain than other car companies such as Ford (F) or General Motors (GM). I see this as a positive for the overall business model and demonstrates the pricing power of the product lines rather than a negative on margins. GM and Ford were left watching the dealerships soak up most of the increased margins.The chart below shows that Tesla does forecast a decrease in margins until at least February of 2024. The decrease in margins expected reaches a level that normalizes back to long-term trends and still maintains a very healthy 14%.Authors Image from Financial Modeling Prep DataIt is important to understand that this margin prediction is not based on my opinion. It is the result of analyst forecasts from major brokerage houses for both earnings and revenue.Risk Reward ForecastHere we explore risk and reward for TSLA stock over the next two annual earnings cycles.The below chart is a prediction of value at risk and potential return of holding Tesla stock. As shown by the blue intrinsic value region in the chart below, Tesla is in the center of its intrinsic value region. The large drop at the end of the 3erd Quarter of 2022 is the result of the decrease in margins shown in the chart above.Authors Image from Financial Modeling Prep DataTesla now has a value at risk of 52%, while potential returns are only 8%. This 8% is based on the long-term intrinsic value that Tesla has traded at. Long term, the company has solid fundamentals, so as a buy and hold you can do well. The range of predicted values in 2024 is very large, so over the near term Tesla is a momentum and sentiment play. I can't predict how well a near-term trade will turn out, but the odds are in favor of the long momentum position.For an explanation of the risk return forecast, look at this article on Visa (V). It also provides a link to a video of the long-term performance of that estimate.The algorithms do a pretty good job of predicting long-term price movement, but price will go outside the blue bands. Those bands are only there to show you where the price should be 90% of the time. This forecast, and forecasts for other stocks as well, tend to lag price when it goes down and lead when it goes up. This makes it useful to figure out risk in a stock, but it is less reliable for market timing. I am unaware of any market timing schemes that stand up to robust analysis.ConclusionTesla, Inc. offers amazing products that have the potential to change the world. The potential and existing value of these products were only briefly explored in this article. The company is using core technologies to explore new markets which may lead to exceptional returns for shareholders. Tesla, Inc. is currently fairly valued based on long-term trading trends and high trading ranges around intrinsic company value. However, Tesla stock is only suitable for those willing to hold on through extreme share price volatility.This article is written by Alpha Investment Research for reference only. Please note the risks.","news_type":1},"isVote":1,"tweetType":1,"viewCount":328,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9955851109,"gmtCreate":1675349721202,"gmtModify":1676538995598,"author":{"id":"4137101840949172","authorId":"4137101840949172","name":"ValueInvestSG","avatar":"https://community-static.tradeup.com/news/default-avatar.jpg","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4137101840949172","authorIdStr":"4137101840949172"},"themes":[],"htmlText":"👍","listText":"👍","text":"👍","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":7,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9955851109","repostId":"2308204745","repostType":4,"isVote":1,"tweetType":1,"viewCount":564,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"hots":[{"id":9955517680,"gmtCreate":1675557613841,"gmtModify":1676539007419,"author":{"id":"4137101840949172","authorId":"4137101840949172","name":"ValueInvestSG","avatar":"https://community-static.tradeup.com/news/default-avatar.jpg","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4137101840949172","authorIdStr":"4137101840949172"},"themes":[],"htmlText":"Ok","listText":"Ok","text":"Ok","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":6,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/9955517680","repostId":"2308089266","repostType":4,"isVote":1,"tweetType":1,"viewCount":328,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9955851109,"gmtCreate":1675349721202,"gmtModify":1676538995598,"author":{"id":"4137101840949172","authorId":"4137101840949172","name":"ValueInvestSG","avatar":"https://community-static.tradeup.com/news/default-avatar.jpg","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4137101840949172","authorIdStr":"4137101840949172"},"themes":[],"htmlText":"👍","listText":"👍","text":"👍","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":7,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9955851109","repostId":"2308204745","repostType":4,"repost":{"id":"2308204745","kind":"highlight","pubTimestamp":1675353408,"share":"https://ttm.financial/m/news/2308204745?lang=&edition=fundamental","pubTime":"2023-02-02 23:56","market":"us","language":"en","title":"Are These 3 Companies Next for Short Squeezes?","url":"https://stock-news.laohu8.com/highlight/detail?id=2308204745","media":"Motley Fool","summary":"More than half of the outstanding shares for these stocks are sold short.","content":"<html><head></head><body><p>People love fast action; it's human nature. Perhaps that's why short squeezes get so much attention from investors.</p><p>A short squeeze occurs when short-sellers rush to cover their positions on a stock. The sudden rush of buying can quickly push a stock price higher. Some stocks made headlines two years ago when they quickly soared from squeezes.</p><p>After a tough market year in 2022, some stocks have built up large short-seller followings, potentially priming the pump for a new wave of short squeezes. Remember that chasing short squeezes is risky. With that said, here are three stocks with short squeeze potential to keep your eye on.</p><h2>1. Bed Bath & Beyond</h2><p>Well-known home goods retailer Bed Bath & Beyond has fallen on hard times. The company's having trouble paying its debts and has already closed stores and sought deals with creditors to free up liquidity. However, the company has steadily warned that its efforts to stop bleeding cash haven't succeeded.</p><p>Short-sellers smelled the blood in the water, and have been piling into the stock over the past year. Shorting has picked up recently, with 45% of all outstanding shares sold short. It's been reported that the company is working with liquidators to prepare for a potential bankruptcy filing.</p><p><img src=\"https://static.tigerbbs.com/8b60adc060545fc06e4facbce426615f\" tg-width=\"720\" tg-height=\"449\" referrerpolicy=\"no-referrer\"/></p><p>BBBY data by YCharts</p><p>The high level of short-seller interest could generate volatility in the share price, and any sniff of news that Bed Bath & Beyond will avoid bankruptcy could send shorts rushing to cover their positions. However, as this is a company seemingly on its deathbed, approach cautiously.</p><h2>2. <a href=\"https://laohu8.com/S/SI\">Silvergate Capital</a></h2><p>Cryptocurrency bank Silvergate Capital has been hit hard by the ongoing crypto bear market. Cryptocurrency institutions, including the now-bankrupt FTX exchange, would deposit interest-free funds into Silvergate, which would turn around and invest the deposits into bonds to make money on interest.</p><p>But banking is essentially a confidence play, and collapsing exchanges have plagued the cryptocurrency space as fearful investors have pulled their funds. Silvergate's deposits dried up overnight, causing significant losses in the fourth quarter. In recent months short sellers piled on, shorting 62% of outstanding shares.</p><p><img src=\"https://static.tigerbbs.com/f6460abd51cbcd0b11a730b2919b92e2\" tg-width=\"720\" tg-height=\"449\" referrerpolicy=\"no-referrer\"/></p><p>SI data by YCharts</p><p>The future is a bit cloudy for Silvergate, though the company has survived to this point. Any positive developments, including increased confidence in the crypto market, could send shorts to cover their position. Investors should closely follow management for clues on how Silvergate might proceed.</p><h2>3. <a href=\"https://laohu8.com/S/CVNA\">Carvana</a></h2><p>E-commerce car dealer Carvana was a big winner in 2020 and 2021, but has since plummeted. Low interest rates made debt cheap, which Carvana used to grow its business. However, the company hasn't been able to turn a profit, and now rising rates and slumping used car prices are creating an uphill battle for the company.</p><p>Carvana may have to raise new capital by issuing shares given the company's $7.4 billion in long-term debt and dwindling cash pile of just $316 million. Short sellers have steadily increased their presence, shorting over half of the company's outstanding shares.</p><p><img src=\"https://static.tigerbbs.com/0f37a4940347c887b0078af57e3c449f\" tg-width=\"720\" tg-height=\"449\" referrerpolicy=\"no-referrer\"/></p><p>CVNA data by YCharts</p><p>The stock has nearly tripled from its lows, so Carvana has seemingly felt the squeeze already. But given the stock's remaining high short interest, there could be more volatility ahead. Investors would likely be severely diluted if the company issued shares to raise funds, which would only further play into the hands of short sellers. Hence, the stock remains very risky despite its recent momentum.</p></body></html>","source":"fool_stock","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Are These 3 Companies Next for Short Squeezes?</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nAre These 3 Companies Next for Short Squeezes?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2023-02-02 23:56 GMT+8 <a href=https://www.fool.com/investing/2023/02/02/are-these-3-companies-next-for-short-squeezes/><strong>Motley Fool</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>People love fast action; it's human nature. Perhaps that's why short squeezes get so much attention from investors.A short squeeze occurs when short-sellers rush to cover their positions on a stock. ...</p>\n\n<a href=\"https://www.fool.com/investing/2023/02/02/are-these-3-companies-next-for-short-squeezes/\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"BBBY":"3B家居"},"source_url":"https://www.fool.com/investing/2023/02/02/are-these-3-companies-next-for-short-squeezes/","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"2308204745","content_text":"People love fast action; it's human nature. Perhaps that's why short squeezes get so much attention from investors.A short squeeze occurs when short-sellers rush to cover their positions on a stock. The sudden rush of buying can quickly push a stock price higher. Some stocks made headlines two years ago when they quickly soared from squeezes.After a tough market year in 2022, some stocks have built up large short-seller followings, potentially priming the pump for a new wave of short squeezes. Remember that chasing short squeezes is risky. With that said, here are three stocks with short squeeze potential to keep your eye on.1. Bed Bath & BeyondWell-known home goods retailer Bed Bath & Beyond has fallen on hard times. The company's having trouble paying its debts and has already closed stores and sought deals with creditors to free up liquidity. However, the company has steadily warned that its efforts to stop bleeding cash haven't succeeded.Short-sellers smelled the blood in the water, and have been piling into the stock over the past year. Shorting has picked up recently, with 45% of all outstanding shares sold short. It's been reported that the company is working with liquidators to prepare for a potential bankruptcy filing.BBBY data by YChartsThe high level of short-seller interest could generate volatility in the share price, and any sniff of news that Bed Bath & Beyond will avoid bankruptcy could send shorts rushing to cover their positions. However, as this is a company seemingly on its deathbed, approach cautiously.2. Silvergate CapitalCryptocurrency bank Silvergate Capital has been hit hard by the ongoing crypto bear market. Cryptocurrency institutions, including the now-bankrupt FTX exchange, would deposit interest-free funds into Silvergate, which would turn around and invest the deposits into bonds to make money on interest.But banking is essentially a confidence play, and collapsing exchanges have plagued the cryptocurrency space as fearful investors have pulled their funds. Silvergate's deposits dried up overnight, causing significant losses in the fourth quarter. In recent months short sellers piled on, shorting 62% of outstanding shares.SI data by YChartsThe future is a bit cloudy for Silvergate, though the company has survived to this point. Any positive developments, including increased confidence in the crypto market, could send shorts to cover their position. Investors should closely follow management for clues on how Silvergate might proceed.3. CarvanaE-commerce car dealer Carvana was a big winner in 2020 and 2021, but has since plummeted. Low interest rates made debt cheap, which Carvana used to grow its business. However, the company hasn't been able to turn a profit, and now rising rates and slumping used car prices are creating an uphill battle for the company.Carvana may have to raise new capital by issuing shares given the company's $7.4 billion in long-term debt and dwindling cash pile of just $316 million. Short sellers have steadily increased their presence, shorting over half of the company's outstanding shares.CVNA data by YChartsThe stock has nearly tripled from its lows, so Carvana has seemingly felt the squeeze already. But given the stock's remaining high short interest, there could be more volatility ahead. Investors would likely be severely diluted if the company issued shares to raise funds, which would only further play into the hands of short sellers. Hence, the stock remains very risky despite its recent momentum.","news_type":1},"isVote":1,"tweetType":1,"viewCount":564,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"lives":[]}
