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TSLA Stock: Technicals Show Trouble for Short Sellers


Apr. 14 2020, Updated 7:51 a.m. ET

  • Tesla (NASDAQ:TSLA) stock has risen sharply from its March lows. On Monday, the stock moved above the 50-day moving average, which is considered to be a bullish sign.
  • Meanwhile, short sellers increased their bearish bets on the stock in the two weeks ending March 31. Tesla’s short interest increased for the first time since October.
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TSLA stock technicals

Tesla stock rose by 13% during trading on Monday. The stock gained almost 80% between March 18 and April 13. On a year-to-date basis, Tesla stock has risen 55% and outperformed the S&P 500 (NYSEARCA:SPY) by a wide margin. On Monday, Tesla’s stock price moved above its 50-day simple moving average. Traders see the stock rising above the 50-day simple moving average as a bullish sign. If TSLA stock continues its uptrend, it would be bad news for short sellers. Notably, Tesla’s short interest fell gradually between October 15 and March 15. However, in the two weeks ending on March 31, the short interest rose for the first time since October.

David Einhorn and Jim Chanos

David Einhorn and Jim Chanos are among the most prominent Tesla stock short sellers. Earlier this month, Chanos said that he squared off some short positions in Tesla stock when it rose in January and February. However, Chanos said that he’s “maximum short” on TSLA stock. Some of the other short sellers also bet on a fall in Tesla’s stock price, which is evident in the higher short interest. However, the rise in Tesla’s stock price could lead to losses for short sellers. Notably, the short sellers incurred billions of dollars in losses as the stock doubled between January and February.

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What’s driving the rally in TSLA stock?

Tesla’s first-quarter deliveries were better than expected. The stock soared after the company’s impressive first-quarter delivery numbers. Tesla managed to grow its sales in China despite the COVID-19 pandemic and falling electric vehicle sales in the country. According to the China Passenger Car Association, Tesla sold 10,160 electric vehicles in China last month and captured 30% of the electric vehicle market. Tesla guided to produce 150,000 vehicles at its China Gigafactory in 2020. The company expects to sell more than half a million electric cars globally. So far, Tesla hasn’t revised its guidance. However, we should get more updates during the company’s first-quarter earnings call.

COVID-19 and electric vehicles

The COVID-19 pandemic might lead to more calls for sustainable living. Tesla has been at the forefront of sustainable energy with its electric cars and other renewable energy products. However, with energy prices still quite low and governments globally starved for funds, we’ll have to see how much support electric vehicles get from governments.


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