Investor's Corner

Tesla (TSLA) short interest slides to 2017 low despite Model 3 “bottlenecks”

Tesla (TSLA) short sellers are finally hopping onboard the Tesla train as it would seem after short interest in the stock continues to slide and reach its lowest point this year. The short interest decline comes despite recent news that production of Tesla’s mass market Model 3 was facing manufacturing bottlenecks and failed to meet the company’s third-quarter guidance.

Looking at TSLA’s historical short interest chart and one can see that the negative investor sentiment or volume of shares sold short continues to decline, a far departure from June when Tesla was named the largest shortest stock in the U.S. equity market. “These guys [Tesla short sellers] want us to die so bad they can taste it” said CEO Elon Musk at the time.

But the tide has seemingly turned for Tesla investors in spite of admitted production challenges faced by the company. But why might Tesla bears be coming around?

For one, Tesla stock has seen a series of upgrades on Wall St. with the most recent being Morgan Stanley’s revised price target of $379 from $317, a near 20 percent boost. Looking at the Nasdaq’s short interest data for Tesla (TSLA) and we can see a roughly 7 million share short interest difference in this year alone. Tesla short sellers covered over 3 millions shares in September, representing a 10% drop from the end of August and the lowest short interest level in 2017.

 

Another reason for the more bullish outlook on Tesla could be due to the fact that the company has proven that any previous Model X hurdles have been addressed, and vehicles are being purchased and delivered. Tesla announced in its most recent Q3 2017 Vehicle Deliveries and Production report that it had delivered 11,865 Model X units in the quarter for a total of 26,150 vehicles, which represents a near 18% increase over the previous quarter. Tesla also noted that it was on track to deliver approximately 100,000 Model S and X in 2017, and exceed its first half deliveries by several thousand vehicles.

Combined with the announcement that Tesla will be unveiling its semi-truck on November 16 – yet another product poised to disrupt a multi-billion dollar industry – on top of its continued expansion into the solar market and ability to provide grid-scale energy solutions, and it becomes more clear why Tesla short sellers might be changing their tune.

Tesla (TSLA) short interest slides to 2017 low despite Model 3 “bottlenecks”

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