Tesla Motors Inc (NASDAQ:TSLA) continues to be the center of much debate on Wall Street, and it continues to garner short interest as investors speculate that the stock just can’t go any higher. After all, it’s already up almost 400 percent this year to date, so what gives?
Why investors shouldn’t short Tesla
But Jeffrey Gundlach of DoubleLine Capital warns that shorting Tesla probably isn’t a good idea. The rapid rise in shares of Tesla Motors Inc (NASDAQ:TSLA) this year has already triggered one short squeeze as well as speculation about another.
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“I’m scared to death to short Tesla,” Gundlach said speaking on CNBC. “It’s a cultish stock and who knows where it goes?”
Of course Gundlach isn’t the only one to call Tesla a cult stock recently. Jim Cramer of CNBC’s Mad Money did as well.
Tesla disrupts the auto market
There are a few reasons Tesla Motors Inc (NASDAQ:TSLA) has transformed into a cult stock. The automaker posted its first quarterly profit earlier this year, greatly surprising Wall Street. Then it did it again in the second quarter. But the hype around this company isn’t all about earnings surprises. It is also disrupting the auto market, even garnering attention from General Motors Company (NYSE:GM), which has formed a team specifically to study Tesla and its success within the auto industry.
Meanwhile the automaker continues to steal share from Detroit’s Big Three automakers, particularly in California where Tesla outsells several other major auto brands. And so far attempts from other companies to make a competitor for the company’s Model S sedan just haven’t worked out very well. BMW’s i3, which was initially considered the company’s answer to the Model S, just doesn’t have the style that the Model S has. Cramer said recently that Tesla Motors Inc (NASDAQ:TSLA) doesn’t have anything to fear from the i3, and it appears so far as if he’s correct about that.