Is Tesla (TSLA) going ballistic because of a short squeeze?

Elon Musk’s electric carmaker Tesla (TSLA) has reached unprecedented heights after it rose nearly 20 percent more to a new record high on February 3, 2020, gaining more than $100 per share and closing the day at a huge $780.

Three main factors appear to contribute to this 338 percent jump since June 2019 – just 9 months ago – from $178 to $786:

First, a growing number of analysts who focus on the automotive sector agree with the latest CES Las Vegas assessment which says that electronic vehicles would account for the majority of new vehicle sales by 2030, therefore potentially putting TSLA in a lead position to dominate the sector in the long run.

Second, two investment-related firms – Argus Research and ARK Investment Management – gave highly positive assessment of TSLA’s future prospects, raising their price target to $808 in the short term for the former and to $7,000 by 2024 for the latter.

Third, as between 18 percent to 20 percent of TSLA stock are being sold short, the skyrocketing price of TSLA has led short sellers to close their position by buying back the stock, consequently fueling TSLA’s climb to new summits thanks to a “short squeeze”.

Summing up, the reasons why TSLA keeps heading to the moon are multiple and could rely in part on “connected vessels” factors rather than on fundamental ones and the same logic could prove true for the descent if one happens someday.

Data on 4 February 2020
TESLA (TSLA) daily chart from TradingView.com

Disclosure : Cyceon and/or its management don’t own TSLA.

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