Tesla naysayers still betting against Elon Musk despite $11.5B loss
Tesla tug of war between bears and bulls continues
Traders remain committed to their bets against Tesla’s stock despite being saddled with nearly $11.5 billion of losses in just the first few weeks of the year.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| TSLA | TESLA INC. | 180.10 | +0.11 | +0.06% |
Despite the decline on Wednesday, the shares have soared this month.
Tesla short interest finished Tuesday at $20.8 billion, or 17.5 percent of shares available for trading, according to the financial-analytics firm S3 Partners. That’s down just $1.98 billion, or 8.7 percent, over the last 30 days despite shares soaring by 96.5 percent.
On Tuesday, short-sellers, or traders betting shares would fall, covered just 669,000 shares as trading volume exploded to nearly 61 million and Tesla’s stock soared by 13.7 percent.
The gains looked to be due to a “combination of momentum trading and longer-term FOMO investing,” Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners, told FOX Business.
TESLA DUMPED BY SAUDIS COSTING KINGDOM BILLIONS IN GAINS
The short-sellers who have remained steadfast in their belief that Tesla shares are overvalued were granted some relief on Wednesday after an executive said Model 3 deliveries in China would be delayed due to the coronavirus outbreak.
The news, coupled with a downgrade at Canaccord Genuity, pressured the stock interrupting its hot run. Analysts at the Toronto-based investment bank cut their rating to “hold” and left their $750 price target unchanged, citing a “balanced risk-reward” and the coronavirus being a “clear headwind” to the automaker’s Shanghai Gigafactory.
The Canaccord downgrade came as a number of other Wall Street firms sounded the alarm on near-term froth in Tesla shares.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| TM | TOYOTA MOTOR CORP. | 232.56 | +1.76 | +0.76% |
Morgan Stanley analyst Adam Jonas, who has a $360 target and “underweight” rating, said investors appear to be “comparing Tesla’s valuation to tech stocks rather than auto stocks.” He noted that Tesla’s market capitalization is “rapidly approaching” Toyota’s. For comparison, Tesla sold 367,500 vehicles in 2019 while Toyota sold 2.38 million.
On Tuesday, New Street Research’s Pierre Ferragu, who is one of the most optimistic Tesla analysts with a long-term price target of $1,100 to $1,700, cut his rating to “neutral,” pointing to an end to the short squeeze, a possible first-quarter miss on gross margins and the Model Y’s launch potentially disrupting Model 3 momentum as near-term risks.
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Ferragu suggests investors “take partial profits and buy on next weakness.”