Shares of electric car maker Tesla soared 33 percent this past week, its best one-week performance since May 2013 and the second-best one-week performance since the company’s inception.
Tesla shares rose 11 percent Friday local time, up more than 10 percent intraday for the second day in a row and up nearly 75 percent from the January low, or about 1.6 trillion yuan, and up more than 33 percent for the week.
Before that, Tesla shares fell sharply, dropping more than 40 percent in six months. Tesla shares are down a cumulative 65 percent in 2022, the worst year in Tesla’s 12 years on the market.
Tesla felt the negative effects of higher car prices, delays in some of the company’s products and CEO Elon Musk’s Twitter acquisition due to unfavorable conditions prevailing in the technology and auto industries. However, investors’ patience has been rewarded with a benign rebound in Tesla stock in 2023.
Tesla’s stock rebounded this week thanks to the release of fourth-quarter results that beat market expectations. In a conference call with shareholders and analysts, Tesla CEO Elon Musk said the company aims to produce 2 million cars by 2023 and that strong demand will support sales of those cars.
Tesla’s official guidance shows that the company is on track to produce 1.8 million vehicles this year and has not revised its long-term goal of achieving 50 percent compound annual growth over the next many years.
In the fourth quarter, Tesla did well in terms of both revenue and profit, with total revenue of $24.32 billion, including $324 million in deferred revenue related to Tesla’s driver-assisted driving system. Tesla cut prices sharply last December and in January of this year, raising concerns about demand and inventory build-up.
Analysts have had mixed reactions to Tesla’s financial results. Bernstein analyst Toni Sacconaghi, who has an “underperform” rating on the stock, wrote in a Thursday research note: “For the long side, the growth story remains alive and well. For shorts, the numbers don’t lie.” Earlier this year, in January, Tesla reported lower-than-expected vehicle deliveries and production in the fourth quarter.
The rise in Tesla’s stock price coincided with a broad market rally. The Standard & Poor’s 500 index rose 2.2 percent for the week, and the Nasdaq rose 4.3 percent. Shares of other U.S. electric car makers also rose, with Rivian shares up 22 percent in 1 week, while shares of traditional automakers Ford and General Motors each rose more than 7 percent. Shares of electric car maker Lucid jumped 43 percent Friday on rumors that Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, is planning to take the company private.
Tesla’s poor performance last year was partly due to Musk’s shift in focus to Twitter, the social media company he bought for $44 billion last October. Under Musk’s leadership, Twitter has experienced massive layoffs, a mass exodus of advertisers and low internal morale.
Tesla remains the second-biggest short-selling stock in the U.S. market, behind only Apple. More than 94 million shares of Tesla stock have been sold short, according to S3 Partners, a financial technology analysis firm.
Ihor Dusaniwsky, managing director of S3 Partners, said that despite the rebound in Tesla’s stock price, active short selling continues. He explained that short sellers believe Tesla’s rise has created “an overheated and overbought stock that will reverse, at least in the short term.
S3 Partners statistics show that the total number of Tesla shares shorted increased by 3.9 percent over the past week, while investors who shorted the stock lost $4.3 billion over the same period.
In addition to the stock’s rise, options trading for Tesla has also been surging recently. Data from the Chicago Board Options Exchange Global Market show that an average of nearly 3 million Tesla options contracts are now changing hands every day, up from 1.5 million a year ago and more than any other stock. Tesla now accounts for about 7% of all options trading on average, and January 6 was the busiest day on record, with more than 5.2 million contracts traded, or nearly 10% of all options.
Last December, for the first time in nearly two years, Tesla options traded in excess of the Kingmaker QQQ exchange-traded fund (ETF), which tracks the components of the Nasdaq 100. in July, the company’s options trading continued to outpace Apple’s, a notable achievement. In the S&P 500, Tesla ranks sixth in market capitalization, while Apple ranks first.
Steve Sosnick, chief strategist at Interactive Brokers Group, said traders buying the contracts “are almost bursting at the seams with confidence in Tesla and its technology and CEO Musk. Tesla is unique in that it has attracted so many speculators and has an equally fervent following.”
