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Tesla’s Stock Price Whipsaws, Bull and Bears Fight It Out

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Mar. 5 2020, Updated 6:05 p.m. ET

  • Tesla’s (NASDAQ:TSLA) stock price has whipsawed this year as bulls and bears fight it out over the company’s outlook. Over the last few days, JMP Securities gave the high target if $1,060 for TSLA stock. However, Stanphyl Capital said that it doesn’t see any worth in the company.
  • Meanwhile, Tesla has been very volatile this year. The stock has seen wild price movements. Now, bulls and bears might like their chances.
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Tesla’s stock price

Tesla’s stock price has been volatile this year. The stock has seen a price action of more than 10% on six trading days in 2020, which is very unusual for large-cap companies like Tesla. Overall, 2020 has been a good year for the stock. So far, the stock has risen 78% this year. In contrast, NIO (NYSE:NIO), another Chinese electric vehicle maker, is battling to survive. The rise in Tesla’s stock price left a big hole for short-sellers. They had to cover their positions to cut their losses.

Tesla bulls versus bears

Meanwhile, bulls and bears have a strong opinion when it comes to Tesla. The target price varies from zero and runs into four digits. Over the last week, Stanphyl Capital said that Tesla could be worth zero. Last year, Ed McCabe, the head of equity trading at Highbridge Capital Management, also put the company’s stock target price at $0. Not to be left behind, Tesla bulls have also provided target prices. JMP Securities has set a $1,060 target price on Tesla, which happens to be the highest price.

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Where to draw the line on the stock price?

While both bulls and bears have some valid points in their arsenal, I don’t think that Tesla’s stock price will fall to zero as some bears say. For example, Stanphyl Capital said that Tesla doesn’t have any “moat” and is a “busted growth story.” However, the company has a strong moat in the electric vehicle industry.

Electric cars

Competitors like Volkswagen have also admired Tesla’s software abilities. The company’s vast network of supercharges and advanced battery technologies provide an additional lead over other automakers. There’s visible growth over at least the next three to four years. The China Gigafactory, Model Y, and Cybertruck will likely continue to boost Tesla’s top line in the near future. Meanwhile, the demand for some of the company’s other models might stagnate in key markets. Does the growth justify the spike in the company’s stock price? Maybe not. Read Tesla Stock: Are You Bullish, Bearish, or Just Neutral? to learn more.

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