As someone who was once nearly run over by a Model S, Tesla Motors Inc (NASDAQ:TSLA)’s flagship sedan, it didn’t come as a huge surprise that short positions are silently being run out of town by a recent stock surge; while the person driving that Model S was at fault more than I, I just didn’t hear it coming. That, I’m guessing, is how a number of investors felt when Tesla announced its first profitable quarter in the company’s history. “Where the hell did that come from?” must be the refrain from those that have been caught on the wrong side of a 35 percent stock price rise in the last five days for Tesla.
A recent Forbes article from Steve Schaefer pointed out that “Karl Loomes at Astec Analytics notes that some holders that lent out shares saw that stock returned in recent sessions, bringing the level of Tesla Motors Inc (NASDAQ:TSLA) shares borrowed down some 10 percent from just before the earnings announcement.”
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Clearly not all short positions have been closed, but given Tesla Motors Inc (NASDAQ:TSLA)’s sweetheart status in recent reviews of the Model S, and Elon Musk’s near unanimous appeal to investors (I’m guessing Sarah Palin holds no Tesla stock), its hard to think of Tesla as just a hiccup and one that will return the stock and the short investor to where they want to be in the near term.
With the meteoric rise in share prices recently, Tesla Motors Inc (NASDAQ:TSLA) for the time being is enjoying a run that is putting short sellers in their place, not unlike Netflix, Inc. (NASDAQ:NFLX) has done this year.
That place for some Netflix short-sellers is one where they are in too deep to not hold their positions, expecting the stock to weaken.
Netflix, Inc. (NASDAQ:NFLX) and Carl Icahn enjoyed a near doubling of the stock in just a few short January days this year. That rise has persisted and Netflix once again exceeded earnings expectations and is now trading nearly up nearly 150 percent for 2013. Tesla Motors Inc (NASDAQ:TSLA) cannot be compared to that, but short-sellers best beware when it comes to a surge driven by a product consumers want.
Tesla Motors Inc (NASDAQ:TSLA) will only deliver 21,000 Model S sedans this year, while Netflix, Inc. (NASDAQ:NFLX) will see that number in new subscribers who buy a subscription just for the fourth season of Arrested Development, which they will release on May 26th.