Tesla (TSLA) dropped another 10% today to close around $120 which is causing me to upgrade the stock. Tesla (TSLA) stock has now dropped from $195 to $120 in about 6 weeks. TSLA has dropped from $180 to $120 in the past 10 days.
Investors with a longer time horizon than a few days should view this TSLA drop as a good buying opportunity. We could even see this stock return to $160-$170 before earnings in February 2014 as shorts cover ahead of the results. The long term thesis is still intact and investors who missed the last rally from $105-$195 are receiving a second chance.
- Tesla has heavy insider ownership with the CEO holding almost 29 million shares or 1/4 of the company. This is rare in a high growth company.
- Elon Musk continues to buy stock and said he was the first in and will be the last out
- At $120, the company becomes a take over target. Google (GOOG) or Microsoft (MSFT) could easily write a check for $20 billion.
- Short interest is likely above 35% of the float of 79 million shares.
- Today we saw a 10% down day on heavy volume, a sign of capitulation.
- Tesla (TSLA) is oversold on several key indicators.
- Shorts will take profits ahead of earnings in February 2014.
- Elon Musk can easily burn shorts badly by raising guidance or announcing better battery production pre earnings.
