Updated from 10:31 a.m. EST to provide analyst comments regarding valuation in the sixth and seventh paragraphs.
This is in due in part to a huge short position in the Palo Alto, Calif.-based electric car company. According to Nasdaq.com, as of April 30 (the last date the data is available), the short interest was 27,501,901 shares, good for nearly eight days worth of average volume.That number has come down from 22.9 days at the end of March, when Tesla pre-announced first quarter earnings, and said it would be profitable on both a non-GAAP and GAAP basis. CEO Elon Musk even tweeted that shorts were having a rough go of it in recent weeks.
Seems to be some stormy weather over in Shortville these days— Elon Musk (@elonmusk) April 25, 2013Even some Wall Street analysts, who are usually a bullish group, have had a hard time justifying the recent run. Merrill Lynch analyst John Lovallo II, who rates shares "underperform" with a $37 price target, noted that Tesla is priced beyond perfection, and has become a momentum name. "We recognize that Tesla is a momentum driven stock, but believe the tides could quickly turn at the first sign of execution hiccups or softening demand," Lovallo wrote in a note after Tesla report earnings. Deutsche Bank analyst Rod Lache is not taking a valuation view on the company, as the stock is not being driven by fundamentals. He notes that "a large part of the current investor base that Tesla has the potential to be significantly disruptive to the automotive industry and massively profitable as a result." Consumer Reports gave the Model S a near perfect score of 99, citing the car's power, handling and interior, and called it one of the best cars it's ever reviewed. This epic run will not last forever, but it's clear that shorts are covering, as the electric car company continues to impress consumers and Wall Street alike. -- Written by Chris Ciaccia in New York >Contact by Email. Follow @Chris_Ciaccia