Written by Finbox
Tesla Inc. (Nasdaq:TSLA) is currently one of the most heavily shorted stocks, with a total short interest of $10.4 billion. Most of the short sellers are looking for any clue that can justify their position given the fact that TSLA has seen 70% growth YTD. Short sellers are now down a staggering $5.1 billion year to date whereas in June alone they lost over $1 billion. However, there may be more pain in store for short sellers due to a number of reasons.
Difference in Tesla’s Bears and Bulls
When taking a closer look at the analysts covering Tesla we find that most who are advocating short positions in Tesla come from an automotive background. Comparatively, analysts favoring long positions come from a tech background.
The automotive background analysts highlight that expanding production levels carries a big risk and takes significant time. On the other hand, those coming from the tech space see Tesla as more than just an auto company. They point to autonomous driving, electric transportation, storage options and other future frontiers which Tesla can develop.
There is also a clear difference in the timeline which bulls and bears point to for Tesla. Most of the bearish arguments state their reasons for 2017 and 2018 whereas the bullish arguments are based on what Tesla can achieve by 2020 or even 2025.
What Can Pull Tesla Down?
There have been a number of recent developments which should have had a negative impact on the stock. This includes downgrade from major firms like Morgan Stanley, a management change in Ford (NYSE:F) hinting at a greater focus on future growth areas, Toyota’s (NYSE:TM) stake sale and the decision by the Trump administration to pull the U.S. out of the Paris climate change accord. However, none of these events have led to any significant slide in the stock price.
Even missing the production guidance might not be sufficient to dent the long term growth story in the stock. In 2016, the company delivered 76,230 vehicles, below its projections of 80,000 units for the year. (The company missed the target after already reducing its earlier projection of delivering in the range of 80,000 to 90,000.) Tesla has also missed its quarterly target in three out of the last four quarters. Still the market eagerly looks forward to the future. One where Musk predicts that Tesla will sell half a million cars in 2018.
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