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Throughout the last week, Tesla stock has experienced one of the greatest upward runs in the company’s history.
That’s after a depressing past few months for Tesla bulls, who held the EV maker’s stock while in a major downward trend. Since the start of the year, Tesla's stock price has fallen following a string of negative news, including reports that Tesla had canceled the company’s next-generation $25,000 vehicle.
The downward trend accelerated when Tesla posted unexpectedly weak Q1 production and delivery numbers. Quarter over quarter, Tesla recorded a rare 20% decrease in deliveries.
Fears the Cybertruck’s Stainless Steel Gets “Dangerously Hot in the Sun” Tested Against The Exterior Temperatures of Other Teslas – The Cybertruck Comes out as the “Coolest Tesla” @elonmusk @Tesla #Cybertruck
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Some institutional Tesla investors blamed Elon Musk’s online antics for damaging Tesla’s brand and leading to the fall in deliveries. Musk harshly responded to Tesla investors who spread this theory.
Following the delivery miss, Tesla cut 10% of its global workforce, or about 15,000 employees, in a single day. Tesla CEO Elon Musk set off a massive restructuring and reorganization throughout Tesla, stating, “There’s nothing more I hate, but it must be done.”
However, the stellar Q1 earnings call Elon Musk and other Tesla executives delivered is what finally turned things around for Tesla stock.
During the earnings call and in the accompanying earnings report, Tesla said the company will introduce new low-cost vehicles ahead of schedule. Elon Musk elaborated on Tesla’s plans, saying the new cars will begin production ahead of earlier guidance, either in late 2024 or early 2025.
Tesla also announced that with the added models, the EV maker expects to increase production to 3 million vehicles per year or another 50% growth on Tesla’s 2023 performance. Tesla said the EV maker will achieve this growth by leveraging already installed vehicle production capacity in existing factories.
In addition to the exciting vehicle news, Tesla was able to ride the AI wave. The EV maker announced that it doubled the number of AI-training computers in the first quarter of the year.
During the call, Elon Musk added that Tesla’s AI training computing capacity will once again double before the end of the year.
Heading into Wednesday's earnings call, Tesla's stock price closed at $144 per share. This is 65% lower than Tesla’s peak stock price of $407 per share in November 2021. In other words, heading into Q1 earnings, Tesla had lost $700 billion in value, with more grim news to come.
However, the EV maker's stock went ballistic after Musk and Tesla painted a rosy future for the company. Since the earnings call up to Monday morning, Tesla's value went up an incredible 37.5%, or $170 billion, in just five days.
This is one of the largest 5-day gains for any large company. When Tesla held an optimistic earnings call, what likely happened was that it set off a short squeeze that immediately shot up the stock price.
If you are unfamiliar with the concept, a short squeeze occurs when a lot of people have shorted a stock by borrowing it and selling it in the hopes of purchasing it back at a lower price and profiting from the difference.
However, if a stock price shoots up sharply, the short sellers are forced to buy back the borrowed stock and return it to the lender.
When a stock price rises quickly, short sellers are forced to cover by buying the stock, which increases the stock price. This forces more short sellers to buy back the stock, which forces more short sellers to buy, creating upward momentum for the stock.
S3 Partners, an analytical firm that tracks short positions, said that in the five days since Tesla’s earnings call, Tesla short sellers have lost a combined $5.5 billion.
Elon Musk Retaliates Against Tesla Community Leaders & Ardant Supporters Sawyer Merritt & Whole Mars Catalog for Spreading Leaked Confidential Tesla Information – Musk Shares Details About His Actions @Tesla @elonmusk #Teslahttps://t.co/f5Z6THi4fE
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The rise in Tesla’s stock price was certainly exciting for the EV maker's fans. However, the upward trend appears to have been stopped in its tracks thanks to “Reverse Cramer.”
Jim Cramer is a famous financial journalist, host of Mad Money on CNBC, former hedge fund manager, and one of the biggest personalities in financial programming.
However, despite his fame and electric personality, which can keep audiences engaged, Jim Cramer is famous for making some of the biggest blunders in the financial market.
Famously, Jim Cramer promoted Bear Sterns's stock days before the bank went bankrupt, setting off the 2008 financial crisis and the Great Depression.
Jim also advised against Tesla stock in 2010, when the company was valued at less than 100th of its current value.
Along the way, Cramer has made similar significant blunders, including calling Sam Bankman-Fried, disgraced FTX CEO and later would be convicted felon for financial crimes, “a visionary.”
Given Cramer’s less-than-stellar track record in predicting stock performance, investors came up with the idea of “Inverse Cramer.” the idea is, if most of Cramer’s predictions are major blunders, then doing the reverse should be profitable.
In simple terms, when Cramer advises you to sell a stock, you buy, and when the CNBC host advises you to buy, you sell. An index fund created to track “Inverse Cramer” has outperformed the markets in the past few years.
Going back to Tesla, on Monday, when Tesla stock peaked at $198 per share, Cramer appeared on his Mad Money show and hailed the Tesla CEO as one of a kind.
Cramer especially admired Elon Musk for going to China over the weekend and striking a deal with the Chinese government and Chinese Premier Li Qiang that allowed Tesla to start testing the company’s full self-driving software package in the country.
Speaking about Musk, Cramer said there isn’t any other CEO in the US who can make a surprise visit to China and strike a deal that will make his/her company billions.
Cramer ended his coverage of Tesla and Elon Musk by stating that Tesla stock’s incredible upward run will not stop until Tesla short sellers are crushed.
This was an exciting prediction for any Tesla shareholder; however, in classic “Reverse Cramer” fashion, Tesla’s stock price started to fall only hours after the Mad Money broadcast.
Tesla’s stock retreat continued on Tuesday, and on Wednesday, the EV maker’s shares opened at $180 a piece. In the two days since Cramer gave Musk the stamp of approval, Tesla stock has lost $57 billion in value.
Currently, Tesla stock appears to be settling down at around $180; however, we’ll be sure to keep you posted as things change. Until then, visit our site, torquenews.com/Tesla, regularly for the latest updates.
So, what do you think? Are you surprised to see Tesla stock experience this level of volatility in the past few days? Which direction do you think Tesla’s stock price will go in the next few days? Let us know your thoughts in the comments below by clicking the red “Add new comment” button.
Image: Screenshot from CNBC Television on YouTube
For more information, check out: Fears the Cybertruck’s Stainless Steel Gets “Dangerously Hot in the Sun” Tested Against The Exterior Temperatures of Other Teslas – The Cybertruck Comes out as the “Coolest Tesla”
Tinsae Aregay has been following Tesla and the evolution of the EV space daily for several years. He covers everything about Tesla, from the cars to Elon Musk, the energy business, and autonomy. Follow Tinsae on Twitter at @TinsaeAregay for daily Tesla news.
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