It's been a tough week to bet against Elon Musk and Tesla (TSLA).
Tesla short sellers are down more than $5 billion in the past five days, according to data from S3 Partners, as shares have risen nearly 40% since the company reported quarterly results after the bell on April 23.
On Monday alone, Tesla shares rose about 15% reports the electric vehicle manufacturer has received approval to deploy autonomous software for full self-driving in China. This extended gains from the previous week, when Musk promised a new, low-cost vehicle and reassured investors that Tesla can lead the way in autonomous ride-sharing.
The stock was down more than 40% from the year of its first-quarter earnings report, as weak fourth-quarter results and lower-than-expected vehicle deliveries in the first quarter had weighed on the fundamental story for Tesla.
This fueled bearish sentiment on Tesla on Wall Street, as investors built the third-largest short position of any US company. Dan Ives, managing director of Wedbush Securities, a longtime bull of the electric vehicle maker, called Tesla's position an “inflection point” in early April.
“We view this as a seminal moment in the Tesla story for Musk to turn this around and reverse the first quarter black eye,” Ives wrote on April 2. Tesla story.”
The reversal has happened so far, with short positions on the stock punished with losses of nearly $3 billion on Monday's trading day alone. Still, Ihor Dusaniwsky, director of S3 Partners, noted that the recent surge in Tesla stock should not be categorized as a short squeeze.
According to Dusaniwsky, 2 million new shares were shorted in the rally this past week, and investors are still up $4.1 billion on their short positions against Tesla this year. This reflects the divided stance Wall Street is taking on what happens next for stocks.
Tesla stock is rated Buy, 24 Hold, and 14 Sell by 23 analysts.
For his part, Ives has turned bullish again, maintaining an Outperform rating and a $275 price target.
“Musk winning FSD approval in the important Chinese market is, in our view, a turning point for the Tesla story,” Ives wrote in a note on Monday.
But not everyone shares that sentiment.
“We expect that Tesla shares can be rescued from the impact of lower near-term earnings expectations, due to efforts to refocus on autonomous robo-taxis and yesterday's announcement that certain new product introductions previously planned for the second half of 25 would accelerate in the second half of 2025. an effort to reignite growth,” JPMorgan auto stock analyst Ryan Brinkman wrote after Tesla's April 24 earnings report.
“However, we do not think the shares can maintain their current, still high valuation over the long term, as investors increasingly consider the implications of short-term expectations for long-term growth.”
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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