Tesla Short Interest Remains High

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About: Tesla, Inc. (TSLA), Includes: BMWYY, F, GM
by: ValueAnalyst
Summary

Nasdaq released the latest data.

The TSLA rope is tight as ever.

The latest on Model 3 supply and demand.

Tesla (TSLA) delivered a record number of vehicles in the second quarter of 2019, but bears have not thrown in the towel, yet:

As of June 14, the latest official data available, 41.5 million shares remain short, or $10 billion at the current share price. Days to Cover, which is calculated by taking the number of shorted shares and dividing that by the average daily trading volume, has risen just above three days.

Even at the historically low stock prices, Tesla still is one of the most shorted companies ever on an absolute dollar value basis. Bears either believe that demand cliff that never was will return or that even the record deliveries will not allow the company to shore up its financial picture. Most bears believe that bankruptcy is unavoidable for Tesla and some even believe that it's imminent.

Imminent for the last five years...

I recently presented to Value Portfolio members how Tesla's record deliveries will translate to the bottom line on its income statement.

Tesla Is Not Standing Still

Even following a record quarter, however, Tesla is not standing still.

In a leaked internal e-mail, the president of Tesla Automotive, Jerome Guillen, said that Tesla is gearing up for a production increase, according to Bloomberg:

The electric-car maker is "making preparations" to raise output at its factory in Fremont, California, Jerome Guillen, Tesla’s automotive president, wrote Tuesday. "While we can’t be too specific in this email, I know you will be delighted with the upcoming developments."

Further, Jerome added that the Shanghai Gigafactory is moving along:

"The Stamping, Body, Paint, and General Assembly lines in China are well underway and hitting records in both line design and fabrication."

What It Means

Tesla just broke its deliveries record and is continuing to push forward.

Why would a company that's facing a demand cliff, as the bears claim, invest more to increase production?

Why wouldn't it, instead, follow in the footsteps of:

  • Ford (F) that just decided to close six European plants as part of global downsizing?
  • General Motors (GM) that's targeting five North America plants for closure and will slash 15 percent of salaried jobs?
  • BMW (OTCPK:BMWYY) that just warned of a significant decrease in 2019 profit and reportedly froze new hires?

You're asking great questions.

One More Thing

Tesla just enabled the use of its CHAdeMO adapter with the Model 3, thanks to a new bit of code in the latest vehicle software update, according to CleanTechnica. This is a major development, because even though Tesla has built a ubiquitous network of Superchargers for long-distance travel, there are 25,300 CHAdEMO charging points across the world, and all of them are now available to Model 3 owners.

I expect this development to boost Model 3 demand further, just as Tesla is gearing up to increase Model 3 production at its Fremont, California, factory.

Bottom Line

Although bears enjoyed the recent months, the TSLA rope is tight as ever due to the high short interest, and I believe the bulls will have the last laugh.

Disclosure: I am/we are long TSLA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.