Tesla Stock Crosses $420, Musk Gets His Revenge

  • Tesla stock (TSLA) crossed the $420 price level during Monday’s trade. In an infamous tweet last year, CEO Elon Musk claimed that he planned to take the company private at $420 per share.
  • Musk earned the SEC’s ire due to the tweet. Finally, he had to quit as Tesla’s chairman in a settlement. As Tesla stock soars to record highs, Musk seems to have sweet revenge.

Tesla stock

So far, Tesla stock has been on a fire in the fourth quarter. The stock has risen almost 75% in the fourth quarter. The rally, which started with the company’s third-quarter earnings beat, continued into December as well. Tesla rose past the $420 price level on Monday. Last year, Musk claimed in a tweet that he planned to take Tesla private at $420 per share. The claim and his tweet about Tesla’s production forecasts got him into trouble with the SEC. Finally, he had to quit as the company’s chairman.

Musk gets his revenge

Overall, 2019 has been a good year for Tesla stock and Musk. With the stock soaring to record highs, Tesla short-sellers are having a hard time. Some of the short-sellers have been cutting their open positions. The company’s short interest has fallen gradually since October. Musk is known for his tirade against Tesla stock short-sellers. Earlier this quarter, he engaged in a Twitter battle with David Einhorn, a well-known Tesla short-seller. Einhorn’s performance suffered in October, while Tesla stock soared.

Tesla stock at $420

On Monday, as Tesla stock rose above $420, Musk tweeted, “Whoa … the stock is so high lol.” Musk seems to be settling scores with a lot of people. First, the tweet looks within the scope of Musk’s settlement with the SEC. Apart from the SEC and those who criticized the taking Tesla private tweet, Musk has taken potshots at short-sellers. The “so high” can also be seen in the context of another one of Musk’s controversies. He was criticized for smoking cannabis during an interview. So, Musk hit multiple targets with one arrow.

Musk and Twitter

Musk’s use of Twitter could actually offer some lessons to aspirants in digital marketing. From promoting Tesla cars to building an aura around himself and the company, Twitter has been a good avenue for Musk. There have been some controversies like the Unsworth case. However, Musk has played the Twitter game well. Until now, Musk had an almost free hand in taking potshots at rivals. However, peers have also raised their game. Read Tesla and Musk Face Peers in Video and Twitter Wars to learn more.

Even the “dean of valuation” got it wrong

Even Ashwath Damodaran, who’s popularly known as the “dean of valuation,” also got it wrong and assigned Tesla a much lower target price. To value Tesla stock, you have to think beyond traditional valuation mechanisms. In 2019, the third-quarter profit and a flurry of positive news helped Tesla stock. As we enter 2020, the company needs to execute a lot of its announcements. Previously, Tesla faced teething troubles in ramping up Model 3 production. However, Tesla made progress—the China Gigafactory is a testimony. Execution risk and higher competition are two potential risks for Tesla next year. Read How Is Tesla Stock Positioned for 2020? to learn more.