Tesla (TSLA) stock is all but unbeatable, and even the smart money on Wall Street knows better than to short TSLA after this red-hot run.
With Tesla stock up almost 400% year-to-date in 2013 to almost $170 a share and soaring an amazing 900% in about three years since TSLA debuted in its IPO, you would think the bears would be sharpening their claws. But Jeff Gundlach of DoubleLine Capital isn’t touching TSLA.
“I’m scared to death to short Tesla,” Gundlach said in a recent CNBC interview. “It’s a cultish stock and who knows where it goes?”
TSLA stock admittedly continues to see big short interest, with data from Aug. 15 showing more than 20 million shares held short — over 31% of the float, and up considerably from about 18.5 million shares held short a month prior.
And even if investors aren’t short, they are at least stepping off the gas with Tesla stock. Recently, investment firm Stifel Nicolaus initiated coverage on TSLA stock with a “hold” rating, saying the Tesla Model S sedan faces competition from major automakers Honda (HMC), Toyota (TM), General Motors (GM), Ford (F) and Nissan (NSANY) as they push into both the low end of the electric vehicle space to compete on price and the higher end to compete on flash.
Oh, and silly bulls who expect the stock can keep up this meteoric run forever or claim that a Syrian conflict will boost demand are fooling themselves. Tesla has forecast output of a mere 21,000 of its Model S sedans set for sale in 2013, so it’s bound by manufacturing constraints much more than anything else.
Still, Tesla earnings continue to prove the naysayers wrong and result in short squeezes that push TSLA stock higher — much higher.
Gundlach knows this. And you should know it too.
TSLA Stock Still a Buy
TSLA boasts a strong backlog for its Model S thanks to the highest-ever rating from Consumer Reports and the highest five-star safety rating from U.S. safety regulators; Tesla is hardly a fad from a consumer perspective.
Sure, eventually TSLA will hit the end of the road. But be careful before counting out Tesla just because it’s overvalued on paper. Stocks like Amazon (AMZN) continue to move higher even though they are an anomaly when it comes to valuations or actual profits.
Maybe that’s because stocks like Amazon and Tesla don’t come around every day, and their ability to reshape the business landscape shouldn’t be underestimated.
Related Reading on Tesla Stock
- The Tesla Model S won the highest-ever rating fromConsumer Reports. (Grist)
- TSLA is safe as well as sexy. (The Slant)
- Tesla stock has made “Teslanaires” out of believers. (Mercury News)
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.