Tesla short-sellers left licking their wounds

Short-sellers of Tesla stock have been caught out by the carmaker's surprise share-price bounce.

Tesla chief Elon Musk  © MARK RALSTON/AFP/Getty Images

Elon Musk

Last week brought some good news for shareholders in electric car maker Tesla finally, says Antony Currie for Breakingviews. The company made "an unexpected, if small, profit of $143m" in its third quarter, driven by a fall in both general costs and those related to sales. The good news was also accompanied by reports of an "all-round improvement" at the "troubled" SolarCity solar-panel franchise. The results led many traders to bet that chief executive Elon Musk (pictured) "is finally getting on track" Tesla's share price surged 20% on the news.

Tesla bulls have "much to celebrate", says Jamie Powell in the Financial Times. As well as the profits, the firm is demonstrating "impressive cost control" and may bring forward the launch of its Model Y car. However, "Tesla cynics" also have a point. Revenues actually fell year-on-year and much of the profit-margin improvement was driven by "aggressive working capital management" it is still heavily dependent on the "regulatory credit gravy train". So while the short-sellers may be licking their wounds,"total capitulation from either side still feels like a long way away".

Persistent problems include "a debt load of around $11bn, sales boosted by government subsidies to buyers and consistently missed production forecasts", says Paul Vigna in The Wall Street Journal. Still, these results suggest that Tesla "is finally ready to stand on its own four wheels" as it moves towards becoming self-funding. Certainly, short-sellers seem to be in retreat the percentage of stock shorted is down to 20%, from 24% in June and a "vicious" 60% seven years ago.

Recommended

Stockmarkets shrug off turbulence
Stockmarkets

Stockmarkets shrug off turbulence

Stockmarkets have hit their first bout of turbulence of the year, but most are clinging onto January’s gains.
4 Feb 2021
Three ways to avoid a big Deliveroo-style flop
UK stockmarkets

Three ways to avoid a big Deliveroo-style flop

Deliveroo's IPO – the most exciting new stockmarket flotation for a generation – turned out to be a big flop. It needn’t have been, says Matthew Lynn.
11 Apr 2021
Investing in luxury goods: a sector set for years of galloping growth
Share tips

Investing in luxury goods: a sector set for years of galloping growth

Rising Chinese consumption and the advent of e-commerce are two long-term trends powering the premium-goods industry, says Stephen Connolly. That impl…
9 Apr 2021
Investors enjoy a stockmarket nirvana as rally remains in one piece
Stockmarkets

Investors enjoy a stockmarket nirvana as rally remains in one piece

Stockmarkets continue their seemingly unstoppable rise, with US stocks up 5.8% in the first quarter of 2021, while German and Japanese stockmarkets bo…
9 Apr 2021

Most Popular

The bitcoin bubble will burst: here’s how to play it
Bitcoin

The bitcoin bubble will burst: here’s how to play it

The cryptocurrency’s price has soared far beyond its fundamentals, says Matthew Partridge. Here, he looks at how to short bitcoin.
12 Apr 2021
Four investment trusts for income investors to buy now
Investment trusts

Four investment trusts for income investors to buy now

Some high-yielding listed lending funds have come through the crisis with flying colours. David Stevenson picks four of the best.
12 Apr 2021
Central banks are rushing to build digital currencies. What are they, and what do they mean for you?
Bitcoin

Central banks are rushing to build digital currencies. What are they, and what do they mean for you?

As bitcoin continues to soar in value, many of the world’s central banks are looking to emulate it by issuing their own digital currencies. But centra…
8 Apr 2021