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I have, much to my dismay, learned enough about stock trading to explain how to bet against Tesla as an individual, with your own money. Doing this can put downward pressure on Tesla’s stock price and hurt the company. (And if, like me, you’re betting that Tesla is grossly overvalued and #TeslaTakedown will hit it hard, then this might actually make you money — but don’t count on that!)
I’ll share what I’ve learned in a thread here. I hope it helps others, and I hope people with actual expertise will correct me if I say anything wrong.
1/
Here’s the brief version:
- You can buy something called an “inverse ETF” to bet against a company.
- You can lose this way, but not more money than you put in.
- The inverse ETFs for Tesla are TSLS, TSLQ, and TSLZ.
- Holding on to them hurts Tesla.
- To buy them, you need a brokerage account, and it needs to let you buy inverse ETFs.
- Anyone can open a brokerage account. It’s a nuisance and it takes 3+ days, but it’s ~free.
And:
- A large number of people doing this each with a small amount of money would have a real effect on Tesla.
2/
@inthehands Just keep in mind they are not meant to be held long term: https://www.fool.com/terms/i/inverse-etf/
Which folks may not care about in this case but important to know.
They may also not be very tax efficient. I don't understand all the details here but worth keeping in mind. Again, folks may not care.
@shafik Yeah, I hear that “not to be held long term” a lot. Per downthread, AFAICT there are only two reasons for this: (1) ETFs have very high overhead, so the stock has to go down a •lot• for them to pay off, and (2) who expects a stock to keep going down long term??
But, again AFAICT, if you are willing to bet on steep long-term decline, then there’s nothing wrong with holding them long term. It’s usually a losing bet, but it’s not illegal or something.
(Oh, and good article, thanks!)
@inthehands I would prefer giving folks more details and then at least there is full disclosure.
I don't think you did it purposely but I felt like you glanced over some details that were worth pointing out.
Especially the tax side of things b/c that may not become apparent till next year and it could be an unpleasant surprise for some folks who have not traded much.
Again, it all depends on your goals, so it may not matter to many folks.