Tesla soars another 16% a day after recording its biggest spike since 2013

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It’s record-after-record for Tesla’s stock price, and analysts are struggling to keep up.

Tesla shares jumped as much as 16% in early Tuesday trading, extending the company’s gains after a 19.9% surge on Monday. The increase brings Tesla to a new all-time high and pushes its share price above $US900 for the first time.

Monday’s leap was partially fuelled by Argus Research analyst Bill Selesky, who raised his price target to a Wall Street-high of $US808 from $US556 and maintained his “buy” rating on strong demand for the Model 3 sedan. The analyst also expects Tesla to profit from its strong position in the electric-vehicle sector.

Selesky’s price target implied a 24% gain from Friday’s close, yet Tesla shares are trading well above the $US808 level early Tuesday. The company’s stock traded at $US901.64 per share as of 8:20 a.m. ET.

Monday’s jump marked Tesla’s biggest single-day increase in six years.

The early Tuesday spike follows a blockbuster fourth-quarter report from January 29, which saw the automaker boast a second consecutive quarter of profitability and accelerate the rollout for its Model Y crossover. Tesla also beat expectations for both profit and revenue, and projected 2020 sales would “comfortably exceed” 500,000 vehicles.

While Tesla bulls have enjoyed the seemingly endless run-up in 2020, short-sellers are facing intense pressure to cover their positions. Traders betting against the automaker were down $US2.5 billion in mark-to-market losses on Monday, according to a note from financial-analytics firm S3 Partners. The Monday surge brought shorts’ year-to-date losses to a $US8.31 billion.

Short-sellers often exit their positions when a soaring stock drives massive losses, a move commonly known as a “short-squeeze.” A mass exodus of Tesla bears could drive the stock even higher in the near term, but S3 managing director Ihor Dusaniwsky thinks short-sellers won’t be so quick to turn away.

“While we are seeing some momentum short sellers increasing their positions in anticipation of a short-term pullback, we should see an increase of short covering due to this $US700/share level squeeze,” Dusaniwsky said.

Tesla closed at $US780 per share on Monday, up 88% year-to-date.

The company has nine “buy” ratings, 10 “hold” ratings, and 18 “sell” ratings, with a consensus price target of $US466.78, according to Bloomberg data.


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