Are Tesla Motors Inc (TSLA) Call Buyers Feeling the Heat?

Is electric car maker Tesla Motors Inc (TSLA) slumping on competition concerns?

by Kirra Fedyszyn

Published on Dec 8, 2015 at 12:05 PM
Updated on Jun 24, 2020 at 10:16 AM

Elon Musk's California-based electric car company Tesla Motors Inc (NASDAQ:TSLA) is trading 2% lower today, last seen at $226.41. While the company itself hasn't reported much news since a Model S recall and upbeat 2016 forecast from Musk last month, it could be other carmakers that are driving TSLA down. Specifically, reports of potential competitors to Tesla's popular vehicles have been heavy over the past few days.

Just yesterday, Porsche said it is rolling out production on a fully electric, high-performance sedan boasting impressive charging times, which USA Today deemed a "Tesla killer." This morning, Bernstein's Max Warburton conferred that German car companies, including Audi, BMW, and Mercedes, "are setting out to match Tesla -- and ideally try to kill it," as they each release new electric vehicles over the next three years.

Technically, TSLA has been struggling recently. Since hitting an annual high in July, the stock has embarked on a series of lower highs and lows, and are now sitting just 1.8% north of their year-to-date breakeven level. What's more, TSLA has underperformed the S&P 500 Index (SPX) by more than 14 percentage points over the last three months.

Meanwhile, analysts are scattered, but generally pessimistic. Of the 15 brokerages providing coverage on Tesla, five give it a "buy" or better, compared to five "holds" and five "sell" or worse ratings. Short interest remains heavy on TSLA, with nearly 27% of available shares wrapped up in these bearish bets -- worth more than five days' of trading, at the stock's typical daily pace. 

Options traders have been busy looking for a bright side, though. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day call/put volume ratio of 1.2 ranks higher than 78% of similar readings over the past year. However, some of those call buyers could be Tesla Motors Inc (NASDAQ:TSLA) shorts seeking out an options hedge


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