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Tesla Holds Gains as Earnings Approaches, Volatility Lowers

by Christopher Larson January 28, 2020

Tesla Holds Gains as Earnings Approaches, Volatility Lowers

 

It would appear that Tesla has finished its rampage of destroying every single automaker by market cap, sans Toyota. In the midst of what has been coined as a "meteoric rise," Tesla has risen by about 150%, topping out last week at an all-time high of $594.50 per share. 

 

As of 2:00pm EST,  Tesla ($TSLA) stock traded at $563.43 per share, up 0.97% today; as compared to the S&P 500, which weighed in at $3279.98, up 1.17% so far today.

 

With good news and optimism also at record levels for Tesla, short sellers have had to resort to conjecture and delusion to justify ludicrously unprofitable positions. One of the most commonly perpetuated of these is that Tesla's recent tear was simply a bubble, and that it would soon "pop," sending shares into a downward freefall. 

 

This idea tends to be the case when a stock becomes trendy, or when a serious economic event suggests a severely negative outlook for a certain stock. Selling off generally tends to have a compounding effect; the more people sell, the lower the price gets, which causes more to sell. 

 

In the past two weeks or so, as Tesla neared its peak, many investors were surprised to see a lack of heavy selling off. In fact, after flirting with stock prices of nearly $600 per share, Tesla's stock is only down less than 5% from the all time high. On the day-to-day, the stock has also seen closes of less than 1% gain or loss from the morning, much to the surprise of long-term investors.

 

Prior to Tesla's skyrocket, the stock rarely ever saw a closing price with a gain or loss of under 3%. Tesla has long since been known for being one of the most volatile high-cap stocks. Recently, though, the tables seem to have turned. 

 

Tomorrow's earnings call will likely set the scene for Tesla's near future. The only major fears Tesla's bulls have are with the unprecedentedly high expectations. Quarter 4's earnings call will not only recap the quarter, but also all of 2019's financial statements and dealings. 

 

Rumors have been spreading about a potential financial sleight of hand that could allow Tesla to declare yearly profitability for 2019. If this happens, Tesla could be considered to be added to the S&P500, forcing certain funds to hold shares of the company. This would no doubt send the stock rallying even further. 

 

Much rests on the results of tomorrow's conference call. Investors can tune in to Tesla's webcast and earnings report tomorrow afternoon at 3:30pm PST. 

 

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Cover image used courtesy of Tesla, Inc.

Legal Disclaimer --

This article is for informational purposes only. You should not construe any such information or other material as an investment, financial, or other advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, or offer by Christopher Larson, Tesmanian, or any third party service provider to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction.

Christopher Larson is not a shareholder in Tesla, Inc., however currently (at the time of this article's publishing) holds options or securities in Tesla Inc. and/or its affiliates.

 

 




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