Tesla Short Interest Rises Nearly a Million Shares

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The number of shares sold short in Tesla Motors Inc. (NASDAQ: TSLA) rose 881,000 to 35 million for the period that ended January 13. While the increase was small, the short interest rose to an extraordinary 26.8% of the float.

The size of the bet against Tesla shows a willingness of some investors to expect a hit of bad news soon. In the case of Tesla, they may not have to wait long. Tesla has announced a string of technical advances. However, its last report on car sales was dismal.

Tesla shares have rallied roughly 40% since the start of December due to a list of good news. Some of this, according to Bloomberg, is due to a strong relationship with Donald Trump, although it is impossible to guess the end game of that. Bloomberg reports, in specific:

Shares of the billionaire’s Tesla Motors Inc. have surged 40 percent since Dec. 1, putting the stock within reach of a 52-week high. The acquisition of SolarCity is complete. Musk’s sprawling Gigafactory is now producing battery cells. And the clean-energy evangelist has the ear of a surprising fellow in Washington: President Donald Trump.

It’s a big turn of fortune from 2016, when skepticism was mounting that Musk could juggle his ambitious goals. Tesla’s shares crossed above analysts’ 12-month price target as of this week and are trading at about $254, the highest since April. One reason for the surge — progress toward production of the mass-market Model 3 electric car by year-end — has also burnished Musk’s appeal as an adviser to the new president.

On the other side of the debate, Tesla disappointed investors recently as sales fell below expectations:

Tesla produced 24,882 vehicles in Q4, resulting in total 2016 production of 83,922 vehicles. This was an increase of 64% from 2015.

Tesla delivered approximately 22,200 vehicles in Q4, of which 12,700 were Model S and 9,500 were Model X. When added to the rest of the year, total 2016 deliveries were approximately 76,230.Our Q4 delivery count should be viewed as slightly conservative, as we only count a car as delivered if it is transferred to the customer and all paperwork is correct.

Because of short-term production challenges starting at the end of October and lasting through early December from the transition to new Autopilot hardware, Q4 vehicle production was weighted more heavily towards the end of the quarter than we had originally planned. We were ultimately able to recover and hit our production goal, but the delay in production resulted in challenges that impacted quarterly deliveries, including, among other things, cars missing shipping cutoffs for Europe and Asia. Although we tried to recover these deliveries and expedite others by the end of the quarter, time ran out before we could deliver all customer cars. In total, about 2,750 vehicles missed being counted as deliveries in Q4 either due to last-minute delays in transport or because the customer was unable to physically take delivery. Even where these customers had already fully paid for their vehicle, we still did not count these as deliveries in Q4.

What some investors forget in all the excitement about Tesla’s future is that, ultimately, it will be judged on whether it can sell cars.