The shorts are getting burned on
. . . again!
The current momentum stock king is zooming higher on Thursday
after a very upbeat earnings report.
On Wednesday after the market closed, the upstart car company
reported a loss of $16 million, but revenues jumped 43% over the
In addition, Tesla said it plans to deliver 35,000 Model S
vehicles in 2014.
Morgan Stanley, noting Tesla's success, basically called
the company the most innovative in the sector.
is more than that. It is an innovator in both manufacturing and
technology and as such, it can be a transformative
The hyperbole around Tesla's success gives the story enough
legitimacy to make investors giddy.
Until the company stumbles, the stock will only go higher.
Comparisons to other auto manufacturers do little to help
assess the validity of Tesla's market valuation.
Today's move in Tesla brings the market cap of the company to
nearly $26 billion. By comparison,
General Motors (
have market caps of $58 billion and $60 billion respectively.
Tesla is gaining ground, and if the current pace continues it
will surpass those companies before you know it.
Fundamental valuation metrics just don't work on Tesla.
Doug Kass of Seabreeze Partners pronounced that he was short
Tesla shares in advance of earnings.
The company had hit a speed bump in the form of highly
publicized fires in its vehicles, but had recovered any lost
value - and then some - heading into the operating report.
Kass is losing big time on that bet on Thursday, and yet the
shorts are likely not going away any time soon.
Flat-out the stock is expensive. The problem is the story has
just enough probability that buyers dominate the stock. Hot money
keeps pouring in with every piece of good news.
, for example. Tesla CEO Elon Musk noted that demand for the
Model S in China may go unmet. In other words, the company cannot
make the cars fast enough.
And what about recent stories about Tesla joining forces with
? One can conjure images of electric cars powered and run by
computers built by Apple.
These stories are not too dissimilar to what took place with
. Amazon was a game-changing business and it, too, faced
competition from existing players in its original business of
Eventually the company became so much more, leaving those
companies in the dust.
The same is likely to happen with Tesla. As such, you cannot
be short this stock, now or the foreseeable future.
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