Tesla shares might have room to run - but investors shouldn't get overconfident
Much of the gains has been notched since early this year, when Tesla rallied based on pretty much nothing. Some analysts have pointed to first-quarter deliveries that came in at about 25,000 vehicles, putting Tesla on a path to sell roughly 15,000 more cars in 2017 than in 2018. But of course, Ford builds and sells far more than that of just one vehicle, its F-150 pickup truck.
Short sellers are likely to be furiously covering their positions, and that could be why Tesla shares have moved higher: fully a fifth of the company's available share float is shorted.
Obviously, Tesla isn't rallying on anything that resembles fundamentals, and if history is a guide, shares will decline at some point. The question is: How far will they slide?
In the past, after major rallies, Tesla has slid quite far. Here's a chart of the past three years:
As you can see, near-$300-a-share threats haven't been uncommon. But when shares have retreated, they've sometimes dropped below $200.
What we're wondering this time around is whether Tesla will somehow consolidate above $300, which seems improbable given that the company will file first-quarter 2017 earnings at the beginning of May and they could show the usual massive Tesla loss.
From there we turn to the fall. If Tesla can't settle around $200, it really will be an epic plunge - more epic than past declines.
If that scares you as a Tesla investor, then take heart: the company looks to be on schedule to launch its $35,000 Model 3 vehicle in the third or fourth quarter. That catalyst will be real news and could set the stage for a proper rally later in the year.
But over the next few month, investing in Tesla is going to be anything but comfortable.