KeyBanc took a hatchet to Q4 Model 3 delivery estimates
The shares of Tesla Inc (NASDAQ:TSLA) retreated yesterday, even after CEO Elon Musk teased plans for an electric pickup truck, which he promised to make "right after the Model Y." However, analysts at KeyBanc are more concerned about Tesla's Model 3, and today lowered their fourth-quarter delivery estimates for the vehicle to 5,000 from 15,000. Below, we'll take a closer look at TSLA stock and today's analyst attention, and examine the red-hot demand for Tesla call options lately.
"[W]e think the M3 margin ramp will disappoint and investors will have to acknowledge no S/X growth at some point, which is not reflected in the shares," the brokerage firm wrote, reiterating a "sector weight" rating on TSLA shares. Most analysts are, in fact, lukewarm-to-cold toward Tesla stock, which sports just six "buy" or better endorsements, compared to 12 "hold" or worse ratings.
That's not entirely surprising, considering the stock has underperformed the broader S&P 500 Index (SPX) over the past three months. TSLA has ended lower in five of the past six sessions, after backing down from the formerly supportive $340-$350 area. The equity is now trading back below the $318 level, too -- where it stood before gapping lower in early November, due to lackluster earnings and concerns about Model 3 production. After closing yesterday at $317.29, TSLA stock is down 0.2% at $316.53 this morning.
Against this backdrop, short sellers have been upping the bearish ante, with Tesla short interest jumping 10.9% during the past two reporting periods. These pessimistic positions now account for more than a quarter of TSLA stock's total available float, representing roughly a week's worth of pent-up buying demand, at the security's average pace of trading.
However, some of those shorts could be behind the recent demand for long Tesla calls, possibly hedging their bearish bets with out-of-the-money options. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), TSLA's 10-day call/put volume ratio sits at an annual high of 1.62. In other words, options buyers haven't picked up Tesla calls over puts at a faster clip during the past 12 months.
Whatever the motive, the automaker's shares have handily exceeded options traders' volatility expectations during the past year; the stock's Schaeffer's Volatility Scorecard (SVS) sits at a lofty 96.