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Tesla shares are at it again, rising for the ninth straight day. The stock rose 2.1% to more than $745 Thursday.<\/p>\n
The shares (ticker: TSLA) have been on a seemingly unstoppable run. They are up roughly 65% since April 2, when the stock had the audacity to drop 5.6% to just $454 a share. The stock is now up about 80% year to date, crushing the comparable double-digit drops of the S&P 500 and Dow Jones Industrial Average. Whats more, shares are up more than 30% for the week. The Dow is down for the week. The S&P is up slightly. <\/p>\n
The gains are leaving investors wondering whats going on. In short, lots.<\/p>\n
Tesla stock was upgraded recently to Hold from Sell by Credit Suisse. Goldman Sachs launched coverage on Wednesday with a Buy rating, further boosting shares. <\/p>\n
(No new Street research on Tesla was published Thursday, based on data from various news-aggregation sites.)<\/p>\n
When any stock spikes, short covering is often cited. Tesla shares are more heavily shorted than shares of other companies. About 20 million shares of Tesla, or 14% of stock available for trading, has been sold short. Shorting refers to bearish investors borrowing stock they dont own and selling it, betting on near-term price declines. Any recent short bets have turned out badly, which can generate a flurry of buying as short positions are covered. <\/p>\n
Sometimes stocks rise just because that is what it has been doing. Traders love stocks with high volatility. Short-term trading gains feed on themselves. Trading gains, after all, are possible only when stocks move significantly. Conversely, it is impossible to make a lot of money trading a stock that barely moves. The change in daily value is too small. Big daily gains attract interest from many different kinds of stock-market denizens. <\/p>\n
In addition to all of that, earnings are coming on April 29. The period ahead of a quarterly report can also generate more trading activity as investors position themselves for the coming event. Based on options markets, Tesla shares are expected to move between 10% and 20% when numbers are reported. It s a big range, again reflecting the recent volatility. <\/p>\n
The stock has moved about 14% up or down, on average, the last three times quarterly results were reported. <\/p>\n
The coming earnings report and conference call will likely focus on car productionwhich stopped in March because of the coronavirusnear-term sales and new product introductions. The Tesla Model Y is out and is expected to become the bestselling model the car company has produced. Americans especially love larger, SUV-size vehicles. SUVs, trucks and crossover vehicles account for a majority of U.S. car sales. <\/p>\n
The rally has left Tesla shares trading for 400 times estimated 2020 earnings. It is a big multiple, but Tesla is growing fast. The stock trades for 64 times estimated 2021 earnings of almost $12 a share. <\/p>\n
Tesla has also left its peers in the dust. Other U.S. auto makers stocks are down about 45% year to date. Car parts providers are down about 40% year to date. The Russell 3000 Auto & Auto Parts Index is down just 11% year to date, but Tesla is more than half of the Index, measured by market capitalization. In fact, Tesla is worth more, at $136 billion, than the other 23 members in the index combined. <\/p>\n
Write to Al Root at allen.root@dowjones.com<\/a><\/p>\n <\/p>\n Read more: <\/p>\n Tesla Stock Rose for the 9th Straight Day. Heres Whats Behind Its Run. - Barron's<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" Text size Tesla shares are at it again, rising for the ninth straight day. Continue reading