This weekend, I will be attending the LA Auto Show, an annual gathering of Southern California car lovers that allows one to get an up close and personal view of the latest models from nearly every top automaker. This year, I am interested in kicking the tires on several new models, and for various reasons. The first vehicle I’ll be checking out is Porsche’s new 911, a revamped version of the iconic sports car, and a vehicle that likely will be the next occupant in my already crowded collection. The other car which I am really anxious to see is Tesla Motors’ (NASDAQ:TSLA) new Model S sedan.
The Model S recently was named Motor Trend’s Car of the Year, an honor bestowed upon some of history’s most legendary vehicles. The all-electric performance sedan is the brainchild of the Tesla’s genius CEO Elon Musk, a most impressive man who I had a chance to interview while doing research for Billion Dollar Green: Profit from the Eco Revolution, a book I co-wrote with Tobin Smith.
Musk is primarily concerned with making a great product which appeals to auto enthusiasts, technology early adopters and the eco-conscious set all at the same time. That blend of appeal has worked with for the company’s Roadster model, a two-seater convertible, but I suspect it will work exceedingly well for the sedan version of the all-electric sports car.
Click to Enlarge Now, aside from the car lover aspect of the Auto Show for me, the other reason I am so interested in Tesla is because the company’s shares have been a great trading vehicle this year. If we take a look at the 52-week chart of TSLA, we see a lot of volatility.
The stock really had a meltdown in December 2011, plunging to multi-year lows in January. That short-lived plunge quickly turned into a hefty buying surge that sent the shares up to all-time highs April. Since then, TSLA shares actually are down, but the path to current levels has been anything but steady.
Part of the reason why TSLA has been so volatile is that it’s been the target of a lot of short sellers. In fact, at one point the short interest was so high that it actually prompted Musk to come out and comment on the situation.
In an interview with Liz Claman of FOX Business Network, Musk made a characteristically measured, yet forceful, statement about the high number of investors who hold short positions in TSLA shares, saying: “I think it’s very unwise to be shorting Tesla. I think there’s a tsunami of hurt coming for those holding a short position, and it’s going to be very unpleasant. I advise people to exit while there is time.”
Those who heeded Musk’s warning were rewarded, as the stock is up nearly 13% since the Tesla CEO made that bold comment.
As more and more car lovers see how advanced the Model S is, I suspect there will continue to be a wave of buying that will electrify both Tesla’s bottom line—and TSLA shares.
I suspect the stock can surge another 13% or more over the next couple of months from its current price at $33.69, and that would put it right at the April high of $38.01.
As of this writing, Jim Woods did not hold a position in any of the aforementioned securities.