Doug Kass of Seabreeze Partners Management increased his short position on Tesla Motors Inc (NASDAQ:TSLA) last Wednesday when the stock was trading between $218 and $224, increasing the cost basis to $212, just in time to see a glowing Morgan Stanley (NYSE:MS) report more than double its 12-month price and drive Tesla stocks toward $250.
Tesla’s stock rises seven-fold over the last year
“[Wednesday’s] earnings beat — albeit, the better profits excluded noncash compensation costs and other expenses — provided me with an opportunity to expand my Tesla short,” Kass wrote in an email, reports Steven Russolillo for The Wall Street Journal.
Tesla Motors Inc (NASDAQ:TSLA)’s stock price passed the $200 mark for the first time earlier this month, prompting skeptics to reiterate that the sky-high PE multiple was hard to justify, even for a company that looks set to expand aggressively in the next few years. Some investors have become timid about shorting Tesla after getting burned a year ago, but that was before the stock price went up seven-fold. Kass has said that the more he thinks about his Tesla short, the more he likes it. If Tesla stocks cross $250, it shouldn’t surprise anyone if he extends his position yet again.
Morgan Stanley doubles Tesla price target
Morgan Stanley (NYSE:MS) analyst Adam Jonas increased his Tesla price target from $153 to $320, rating the stock Overweight, reports Niamh Ring for Bloomberg, largely based on the potential for its battery technology to bring in additional revenues from outside the auto industry.
“If it can be a leader in commercializing battery packs, investors may never look at Tesla the same way again,” said Jonas. ‘‘If Tesla can become the world’s low-cost producer in energy storage, we see significant optionality for Tesla to disrupt adjacent industries.’’
Battery pack innovation is important for Tesla Motors Inc (NASDAQ:TSLA) because increasing the distance its cars can go on a single charge and decreasing recharge time will help electric cars appeal to a broader audience. Mass production is also key because Tesla sales are being held back on the supply side, and increasing its rate to 1000 new cars per week is a big part of the company’s plan to grow earnings this year.
Battery technology has implications outside the auto industry, but it’s hard to imagine Tesla Motors Inc (NASDAQ:TSLA) moving into adjacent industries in the next few years when it should be completely focused on expanding into new markets and developing its lower cost Model E.