Tesla Stock Eyes $300 After Surprise Earnings Beat

Seven brokerages have upped their price targets this morning

by Patrick Martin

Published on Oct 24, 2019 at 10:16 AM
Updated on Oct 24, 2019 at 10:29 AM

One of the top earnings winners this morning is Tesla Inc (NASDAQ:TSLA). The electric car concern reported adjusted third-quarter earnings of $1.86 per share, blowing past the estimated loss of 42 cents per share. The surprise profit beat was enough to overshadow a revenue miss, while CEO Elon Musk detailed a cheaper SUV rollout and revealed Tesla was ahead of schedule on its Shanghai factory.

No fewer than seven brokerages have come forward with price-target hikes, the highest coming from Instinet to $300 from $270. However, Credit Suisse wants to see a sustainability of results, while JPMorgan Securities is more concerned with operating expenses. 

All of this buzz has Tesla stock up 17.7% to trade at $299.85, on track for its best single-session gain since May 2013. TSLA was riding a nine-day winning streak earlier this month, and the subsequent pullback found support at the $250 level. Should today's results hold, this would be the shares' highest close since early March. 

A short squeeze is in play that could power additional upside on the charts. Short interest took a dive by 9.3% in the two most recent reporting periods. However, the 36.06 million shares sold short still accounts for a healthy 27% of TSLA's total available float, and a week's worth of buying power, at the stock's average pace of trading.

There's additional pessimism to be unwound in the options pits. Tesla's Schaeffer's put/call open interest ratio (SOIR) comes in at 3.13, and ranks in the 96th annual percentile. So not only does this show put open interest heavily outweighs call open interest among contracts expiring within three months, but such a put-skew is rare.

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