We all know how volatile the electric vehicle market has been lately. Serving as an exemplar of that volatility is none other than Tesla (NASDAQ:TSLA). New products, a price war in the making, new competitors emerging from out of nowhere…it’s an environment where big swings are par for the course. Yet with Tesla nearly doubled from its lows of early January, some are wondering about the true cause…and they may have found it.
Enter Daniel Ives with Wedbush Securities. Ives detailed that, right now, Tesla is in the midst of “…a short covering for the ages.” Prices started to climb as things were, especially after Tesla kicked off the EV price war by cutting prices on the Model 3. That prompted not only a flurry of price cuts from other makers but also a lot of interest in Tesla shares. The current rally is thus a combination of short covering and the fear of missing out (FOMO) on “the latest Tesla rally” already in progress. That’s especially the case with an upcoming Investor Day for Tesla afoot.
Short sellers have historically been pasted by Tesla. At last report, short sellers lost about $6.75 billion since this time last year. This also isn’t the first time we’ve heard about Tesla short sellers ending up holding the bag, either. Back in 2020, Tesla short sellers lost a whopping $40 billion. While last year was a good year for Tesla short sellers—they made around $11.5 billion—it doesn’t come close to matching their losses so far.
Meanwhile, Wall Street is still sticking with Tesla, if on a more cautious basis. Analyst consensus declares Tesla stock a Moderate Buy with 1.27% upside potential thanks to its average price target of $199.78.
