Tesla Motors, Inc. (TSLA) Speeds to Icon Status with Mattel Deal

Tesla Motors Inc (NASDAQ:TSLA) could be headed higher, while Mattel, Inc. (NASDAQ:MAT) may continue to struggle

by Alex Eppstein

Published on Jun 19, 2015 at 11:00 AM

Tesla Motors Inc's (NASDAQ:TSLA) popular Model S sedan is headed to toy stores around the country, thanks to a deal with Mattel, Inc. (NASDAQ:MAT). Specifically, miniature versions of the electric car will be produced by MAT brands Hot Wheels and Matchbox, as confirmed yesterday on Twitter Inc (NYSE:TWTR).

The collaboration marks a milestone for TSLA, which has gone from automotive afterthought to iconic name in just a few short years. What's made the company even harder to ignore is its stock's tremendous run on the charts. Since bottoming at $181.40 in late March, the shares have surged 44% to trade at $261.18, and are approaching levels not seen since last October.

More upside could be in store, as well, given Tesla Motors Inc's (NASDAQ:TSLA) high levels of short interest. Over one-quarter of the stock's float is sold short, representing nearly eight days' worth of pent-up buying demand, at typical daily volumes. Should these bears start hitting the exits, it could supercharge TSLA's drive higher.

Shares of MAT haven't been nearly so successful. The toymaker's stock is down more than 13% year-to-date at $26.80, and it's currently struggling to muscle above its 160-day moving average.

Nevertheless, traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have been bullish toward Mattel, Inc. (NASDAQ:MAT). The equity's 10-day call/put volume ratio of 3.27 outranks 84% of comparable readings from the past year. A capitulation among these bullish bettors could result in headwinds.

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