Elon Musk’s creation, after having beaten analysts’  estimates just 11 days ago following the release of its first quarter earnings – which proved to be way beyond expectations – is now on a tough up-going rally. Surely this trade should have been implemented earlier but we believe there is still room for profit. Tesla intends to proceed on selling 2.7 million shares valued at $229 million at Thursday’s 84.84 closing price plus an additional $450 million in convertible senior notes; Ceo Musk will buy a further $100 million. This cash will help pay off the DOE loan and surely will take some burden off the company’s shoulders and also bolster additional confidence in skeptical investors. So building on a large surge in deliveries and sales ($561.8 million Q1) that unexpectedly bolstered first quarter revenues, Tesla Motors Inc. currently boasts a higher capitalization than Fiats’. We suggest to take position as soon as possible, 91.5 looks like a good entry point, take profit at a 10 % return level and sell if the losses fall below 5% of the current price. We acknowledge that this is right now a cult stock, and that soon investors will remember about fundamentals rather being dragged by market frenzy. That will be the right moment to short the stock, but not just yet: there still may be one more bullish week ahead. However we are aware that this is a really risky trade and so we suggest a low capital allocation.

 


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