Tesla Motors Inc (TSLA) Short Interest Up. Is The Magic Fading?


Tesla Motors Inc (NASDAQ:TSLA) magic may be fading away as many market participants expect the shares to fall. Tesla shares saw an increasing short interest of 861,000 to 23.4 million shares in the period that ended December 15th. Total short interest amounted to 25% of the total float. For the same period, short interest for General Motors is 2.3% of the float.

Why is short interest rising?

In their latest report, Morgan Stanley analysts have dropped the forecast on Tesla Motors Inc (NASDAQ:TSLA) for the year 2023 by 40% to 300,000. Some investors are alarmed over the report that the EV manufacturer will postpone the release of its Roadster.

Number of units sold are not the only factor behind the rising short interest, believe experts. There are concerns that big auto companies are going to directly compete with Tesla Motors Inc (NASDAQ:TSLA). Recently, BMW launched its i3, which is priced just above $41,000, a price point on which Tesla is gearing up to compete sometime in the next several years. There are possibilities that by then EV manufacturer will realize that cheaper electric cars is already crowded. BMW would also unveil high-end electric car such as i8, which will cost around $135,000, but with the acceleration and amenities of the Tesla Model X. Volkswagen’s Audi division is also gearing up to launch all-electric vehicles by year 2018.

Is Tesla magic fading?

Hype surrounding Tesla Motors Inc (NASDAQ:TSLA) may have started to fade now as investors believe that the rally in the shares will not be straight up but sharp decline. Tesla shares decline 8% in the previous month after the rally when shares spiked 90% from the beginning of the year 2014 through Labor Day. At the highest price point, market cap of Tesla was above $35 billion compared to General Motors’ $54 billion, which will sell more than 8 million cars worldwide this year.

Nasdaq released the short interest data for the two-week period ended December 15, 2014 on the Christmas Eve. Apart from Tesla Motors Inc (NASDAQ:TSLA), other big names that witnessed a spike in short interest are Facebook, BlackBerry, Google, Zynga, First Solar, Keurig Green Mountain, Go Pro, SolarCity, etc.