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

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

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

The top funds to invest in
Funds

The top funds to invest in

Investors continued to the passive preference throughout May, while high-yields were also sought. We look at the top funds, stocks and trusts that inv…
5 Jun 2023
Cheap and cheerful or reassuringly expensive?
Sponsored

Cheap and cheerful or reassuringly expensive?

Many investors aim to pick up “cheap” shares. But cheap does not always mean good value, says Max King. Quality comes at a price.
21 Dec 2022
Profit from patience
Advertisement Feature

Profit from patience

Smart investors will reap the rewards by staying focused on the long-term, research from Alliance Trust shows.
9 Dec 2022
Share tips of the week – 9 December
Share tips

Share tips of the week – 9 December

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
9 Dec 2022

Most Popular

How much will it cost you to retire early?
Pensions

How much will it cost you to retire early?

The pre-state pension income gap means couples may need an extra £136,000 if they want to retire at 60 – can you afford to retire early?
6 Jun 2023
Best debit and credit cards to use while travelling abroad
Personal finance

Best debit and credit cards to use while travelling abroad

If you’re going on holiday or travel abroad regularly, it’s worth knowing what the best card is to avoid hefty fees. We weigh up the charges and any p…
6 Jun 2023
Best easy access savings accounts – June 2023
Savings

Best easy access savings accounts – June 2023

Rising interest rates have boosted the returns on instant-access savings accounts and we're seeing some of the highest rates seen in years. We look at…
8 Jun 2023