140 degrees
Well-Known Member
- Joined
- Mar 14, 2022
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- Auburn, CA
- Vehicles
- BMW i3, Rivian R1T
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- #1
As I have stated in my 'Glass is Actually Half Full' thread, I'm not a finance professional, and I'm not comfortable recommending individual stocks to friends. There are always too many unknowns for me to have that kind of confidence. It doesn't mean I can't have an opinion.
So, in my opinion, anyone short Rivian today should be concerned about a short squeeze.
1) Before today, sentiment was awful. The trolls were hammering anyone who stuck their head up. Sentiment has gone from depression to fairly positive in one day. Sentiment doesn't drive stock price so much as change in sentiment. We now have that.
2) The stock hit a new low on high volume after the production estimate badly missed analysts expectations. Price action was pretty interesting after the low. After the drop, we had several consecutive days of increasing price at low volatility and above average volume. Somebody was hoovering up shares that were leaving weak hands. There is now a very strong base around $11.
3) The short case was partly based on the impossibility of borrowing $5B without showing positive cash flow. The story was that the R2 couldn't be built until this hurdle was cleared. This pillar was substantially weakened by these statements from today's press release:
"Improved cash visibility: Cash, cash equivalents, and short-term investments expected to be sufficient to fund operations through the start of R2 production."
"Total expected Normal capacity following R2 launch and plant changes: 215,000 units of total annual capacity across R1T, R1S, EDV, RCV, and R2."
4) The short percentage of float was 22% on 2/15. High, but not extremely dangerous. I'm guessing it has gotten much higher in the 11 days since the quarterly results. Notice how the stock rose last Friday before the close, than dropped at Monday's open. That could have been short sellers who didn't want to be exposed to an open position over the weekend.
I don't short stocks. I do know that during a squeeze, the first to close their positions take a haircut. The later ones can lose more important (virtual) body parts. If you are short today, it might be time to re-evaluate your situation.
Have fun out there!
So, in my opinion, anyone short Rivian today should be concerned about a short squeeze.
1) Before today, sentiment was awful. The trolls were hammering anyone who stuck their head up. Sentiment has gone from depression to fairly positive in one day. Sentiment doesn't drive stock price so much as change in sentiment. We now have that.
2) The stock hit a new low on high volume after the production estimate badly missed analysts expectations. Price action was pretty interesting after the low. After the drop, we had several consecutive days of increasing price at low volatility and above average volume. Somebody was hoovering up shares that were leaving weak hands. There is now a very strong base around $11.
3) The short case was partly based on the impossibility of borrowing $5B without showing positive cash flow. The story was that the R2 couldn't be built until this hurdle was cleared. This pillar was substantially weakened by these statements from today's press release:
"Improved cash visibility: Cash, cash equivalents, and short-term investments expected to be sufficient to fund operations through the start of R2 production."
"Total expected Normal capacity following R2 launch and plant changes: 215,000 units of total annual capacity across R1T, R1S, EDV, RCV, and R2."
4) The short percentage of float was 22% on 2/15. High, but not extremely dangerous. I'm guessing it has gotten much higher in the 11 days since the quarterly results. Notice how the stock rose last Friday before the close, than dropped at Monday's open. That could have been short sellers who didn't want to be exposed to an open position over the weekend.
I don't short stocks. I do know that during a squeeze, the first to close their positions take a haircut. The later ones can lose more important (virtual) body parts. If you are short today, it might be time to re-evaluate your situation.
Have fun out there!
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