Tesla (TSLA:NSD) Rally is a Massive Short Squeeze? Ask Bill Gates?

Telsa Stock Rally Doubles Price

The recent rally in Tesla’s stock (TSLA) has been attributed to a combination of factors, including increased demand and a short squeeze. According to Wedbush tech analyst Dan Ives, the demand outlook for 2023 has surpassed even the most optimistic expectations, leading to a short covering rally in the stock. Dan Ives has a “Outperform” rating on the stock with a 12 month price target of $200 per share.

Tesla’s recent price cuts, which saw reductions in the cost of the Model 3, Model Y, and other models, have driven renewed demand for the company’s vehicles. CEO Elon Musk hinted at this in the company’s latest earnings call, and long-time Tesla bull and Ark Invest founder Cathie Wood believes that the price cuts stem from Tesla’s cost leadership in battery technology. This cost advantage, Wood says, could allow Tesla to continue to bring down prices and stoke even more demand.

However, not everyone on Wall Street shares the bullish sentiment about Tesla. Some analysts believe that the price cuts will be damaging to the brand over the long term and could hurt profit margins, which was mentioned by Bank of America’s analyst John Murphy. He stated that cutting prices would eat into profitability and not achieve any more incremental volume in the near term.

Overall, the Tesla stock rally appears to be driven by a combination of factors, including increased demand, a short squeeze, and the company’s cost leadership in battery technology. The stock has doubled in price since stock’s January 3rd low point, in which the stock double bottomed, and from there and began the massive rally.

TSLA Short Positions

Short-sellers apparently made $15 billion in 2022  by betting/shorting Tesla’s stock believing  that its shares would fall considerable in which they certainly did. Approximately $800 billion was wiped off the value of Tesla’s shares, and which made the “Short Trade” the most profitable short of 2022, with Amazon’s shorted shares coming in second place with a return of $6.2 billion.

Interest in betting against Tesla began to surface in April as the stock started to decline. Interest in addiing or opening new short positions emerged and  ramped up again in September as Elon Musk’s acquisition of Twitter entered its final stages. Around 3% of Tesla’s shares were being shorted, making it the second-largest US short after Apple.

Microsoft founder Bill Gates is reportedly among those betting against the company, with Musk claiming earlier this year that Gates had a short of up to $2 billion against Tesla. Tesla’s value has fallen by more than $800 billion this year, and Musk’s holding in Tesla means his wealth has fallen by $132 billion in 2022.

Tesla has not been immune to a wider market selloff amid high inflation and rising interest rates, which has seen the S&P 500 sink by nearly a fifth this year. Musk has refused to draw a link between his work at Twitter and Tesla’s declining fortunes and instead sought to blame the Federal Reserve’s interest rate hikes. He has sold $3.6 billion worth of Tesla shares this year to fund operations at Twitter, but state that he wouldn’t sell any more Tesla stock for at least 18 months.

TSLA Stock Price Forecast

According to the stock forecasts of 44 analysts, the average target price for Tesla Inc (TSLA) over the next 12 months is USD 246.06. The average analyst rating for the company is “Strong Buy,” indicating a high level of confidence in the company’s future performance.

Stock Target Advisor’s own analysis of Tesla Inc is slightly bullish, which is based on a combination of 11 positive signals and 5 negative signals. The positive signals include factors such as earnings growth, revenue growth, and a solid dividend history. The negative signals, on the other hand, include factors such as a low P/E ratio and high debt levels.

As of the last closing, Tesla Inc’s stock price was USD 207.32. The stock price has seen a significant increase in recent times, rising by 10.12% over the past week, 73.10% over the past month, and declining by 33.27% over the past year. Despite the decline over the last year, the recent rally in the stock price, driven by factors such as increased demand and the company’s cost advantage in battery technology, has made many analysts bullish on the future performance of Tesla Inc.

 

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