Tesla Motors Inc (TSLA) Takes Off on Cash Infusion, Panasonic Pledge

Tesla Motors Inc (TSLA) has just raised $1.5 billion to help the electric automaker ramp up Model 3 output

by Alex Eppstein

Published on May 20, 2016 at 10:11 AM
Updated on Jun 24, 2020 at 10:16 AM

Tesla Motors Inc (NASDAQ:TSLA) has raised nearly $1.5 billion in capital via its secondary offering of 6.8 million new shares of common stock, which will go toward financing the automaker's aggressive production plan. That said, industry experts and supplier executives are already casting doubt on the output goals for the company's yet-to-be-released Model 3, according to a Reuters report -- understandable, given that the electric car's design isn't even finalized.

At the same time, TSLA has received a vote of confidence of sorts from Panasonic. The Japanese electronics firm said it's prepared to accelerate its $1.6 billion investment to help build the electric automaker's "Gigafactory" in Nevada. The sooner that happens, the sooner Tesla can begin manufacturing batteries for the Model 3 -- with production scheduled to begin later this year.

Wall Street's reaction to the collective news has been positive, with TSLA stock up 1.7% at $218.73. Year-to-date, however, the shares are down roughly 9%, and in recent weeks have struggled to pick a direction around their 80-day moving average. Today's early gains have TSLA putting that trendline in the rear-view mirror -- at least, for the time being.

Based on what we've been seeing in the options pits, traders may not be too keen on the upside move. Specifically, during the last 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), option players have bought to open 1.26 TSLA puts for each call. The corresponding put/call volume ratio ranks just 2 percentage points from an annual high.

Likewise, short sellers are counting on Tesla Motors Inc (NASDAQ:TSLA) to reverse lower. Despite dropping in recent reporting periods, short interest still accounts for almost 28% of the stock's float. At TSLA's average daily trading volume, it would take seven days for these bearish bettors to cover their positions. In fact, if the shares can sustain their positive momentum, a short-squeeze situation could ensue -- as could another round of analyst upgrades.

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