Tesla (TSLA) Stock Off 5 Percent as Short Squeeze Abates

Shares of Tesla Inc. (TSLA) closed down -4.56 or -5.19 percent to $83.24 on Tuesday, after having traded as high as 97.12 inter-day, a new all-time high. Tesla stock had been trading at $56.00 per share on Wednesday, May 8th, before soaring after the company reported its first quarterly profit in its ten-year history. Tesla Motors stock was down an additional -2.34 or -2.81 percent to $80.90 per share in pre-market trading this morning.

Due to the better than expected earnings report and the performance of Tesla stock since Wednesday, Morgan Stanley (MS) released a new report revising its estimate on Tesla stock. The new report raises Morgan's price target on Tesla stock from $47 per share, to $103 per share. Daily Chart
Founded in 2003, Palo Alto, California based Tesla Motors is a leading manufacturer of electric automobiles and electric motor powertrain components. In addition to manufacturing a fully electric sports car, the Tesla Roadster, the company also manufactures a fully electric luxury sedan, the Model S. Tesla's powertrain parts that include lithium ion battery packs are sold to other automobile manufacturers that include Toyota (TM) and Daimler. The Tesla Roadster is currently offered with a base price of $109,000, while the Model S sedan has a base price of $57,000 after a United States federal tax credit. Last Wednesday, Tesla Motors announced its first quarterly profit since its founding in 2003. The company reported net income of +$11.2 million, or +$0.12 per share, versus a loss of -$89.9 million or -$0.76 per share in the same period one year ago. The analyst consensus was for earnings to come in at $0.04 per share. Revenue rose to $561.8 million on record sales of 4,900 of its Model S sedans, 250 units more than the company expected and prompting Tesla to raise its 2013 earnings forecast. In a letter to shareholders, Tesla CEO Elon Musk wrote that, "Obviously, there is a huge amount of work ahead to improve the gross margin of Model S, but we have a clear road map to achieve component cost reductions, as well as achieve additional manufacturing and logistics efficiencies." Tesla stock has been steadily rising, gaining 177 percent in the last year. The stock's one week rise since earnings were released exceeds 50 percent due in part to an enormous short position in the stock. As recently as April 19th, the short interest in Tesla stock was more than eleven times the average of a Russell 1000 stock. With Tesla stock soaring, short interest has decreased by 17 percent since earnings came out. Tesla Motors now has a goal of delivering a total of 21,000 Model S sedans this year, which would put it at the forefront of electric luxury car makers. As the short interest in the stock decreases and the company continues to show improved earnings, Morgan Stanley's new target of $103 per share may even be on the low side. Other News About TSLA Tesla Revenue to Get Boost From Selling "Green" Car Credits -Analyst Tesla could get as much as $188 million in green car credits from the federal government. (TSLA) Morgan Stanley raises target for Tesla stock. Other Stocks in the News Apple Shares are Worth $240: David Trainer Analyst claims Apple profitability unsustainable. Boeing Resumes Deliveries of 787 Dreamliners Airplane manufacturer resumes deliveries after four months. Copyright 2013 by InvestorGuide.com, Inc. InvestorGuide has no control over the sites we link to, is not affiliated with these sites, and cannot take responsibility for their quality or suitability. The news, analysis, commentary and profile information is not meant to be comprehensive, and the data provided is not guaranteed to be accurate. WebFinance Inc., the publisher of this newsletter, is not a registered investment advisor or a broker/dealer. This is not a stock recommendation newsletter but rather a source for investment ideas, and we encourage you to fully research any company before considering investing. The opinions expressed herein are those of the author and do not necessarily represent the views of nor are they endorsed by WebFinance Inc. No employee of WebFinance has owned or currently owns any shares in the company described above. The above is neither an offer nor solicitation to buy or sell any securities. The trading of securities may not be suitable for all potential readers of this newsletter, and the purchase of stocks mentioned in this newsletter may result in the loss of some or all of any investment made. We recommend that you consult a stockbroker or financial advisor before buying or selling securities or making investment decisions. We are not responsible for claims made by advertisers and sponsors. Anyone who makes decisions based on what they read here does so at their own risk and cannot hold WebFinance Inc. (DBA InvestorGuide.com, Inc.) or its employees responsible.

Published on May 15, 2013
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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