Tesla's shorts are losing their shirts as the electric automaker soars to $725 a share on the back of strong fourth quarter earnings.
Tesla (NASDAQ:TSLA) flies to $725 per share on the back of strong fourth-quarter earnings and optimistic guidance for 2020. The electric automaker now boasts a market cap of over $117 billion with many analysts expecting even more growth.
But despite its surging share price, Tesla still has a massive, double-digit short interest. How many times will the bears get burned before they give up?
Put simply, Tesla’s fourth quarter was a blowout. The automaker reported 112,000 deliveries – with zero advertising spend as Elon Musk pointed out in the conference call. Energy storage battery sales also grow 136%, and total company revenue grew by 2.12% year-over-year to hit $7.38 billion. [Tesla] This was $307 million more than analysts projected.
Telsa also gave investors strong guidance for the full year 2020. The automaker said vehicle deliveries should comfortably exceed 500,000 units, and it is pushing up the start of Model Y deliveries to the end of Q1.
Musk has high hopes for his company’s future. He stated the following at the Q4 earnings call: [Tesla]
It’s hard to think of another company that has a more exciting product and technology roadmap. So super-fired up about where Tesla will be in the next 10 years. If you look back 10 years from today to 2010, we will produce approximately 1,000 times more cars in 2020 then we produced in 2010, 8,000 and we have also Solarglass and solar retrofit, Powerwall and Powerpack other things too.
Tesla’s high valuation has earned it its fair share of critics, with many believing the company represents the type of ‘irrational exuberance’ that typically precedes a stock market crash.
Ralph Nader, a former presidential candidate who now works as a consumer advocate, believes Tesla shares are wildly overvalued. And that was nearly two weeks ago before the earnings beat.
But the Tesla bulls retorted [Twitter] with a point that is hard to argue with:
You’re wrong Ralph…Only Tesla has the chutzpah/magic/sex-appeal to sell premium electrics that can compete. There’s a reason there isn’t a single electric VW model on the road today with any appreciable sales…
Judging by the electric automaker’s surge in valuation, perhaps the bulls are right. It looks like Tesla does have a secret sauce that other automakers can’t match – electric vehicles or not.
Part of the reason why Tesla’s stock tends to soar on good news is because of short-squeezing. According to the latest data, almost 25 million Tesla shares are currently being held short [Nasdaq]. This represents around 18% of the company’s float, and as the stock continues to climb to record highs, the bears are feeling the pain.
According to SE Analytics, Telsa shorts have already lost over $5.6 billion in mark-to-market losses in 2020. [Marketwatch] With this latest move above $700, expect that number to expand even further.
This article was edited by Sam Bourgi.