NEW YORK ( TheStreet) -- Tesla Motors' (TSLA - Get Report) share price is being driven up by company financial performance, a strong product and shorting by traders. Recognizing the influence of these three factors allows investors to refine their trading strategy for this stock.
The first reason: The stock beat earnings. First-quarter net income totaled $11.2 million from a loss of $89.9 million a year earlier, Palo Alto, Calif.-based Tesla (TSLA) said. The profit was 12 cents a share, compared with a year-ago loss of 76 cents a share.
This kind of fundamental performance can drive a share price extremely high. In order to sustain this kind of growth there needs to be a continuation into the next quarter with a huge successive jump in earnings.If this happens, the stock could double, triple and even quadruple. As long as the company is beating earnings, increasing sales and returning a profit to the shareholder, the stock will soar.
The second reason: The company is selling a ton of its cars because of the great design of the vehicles. If Tesla creates a car that people look at, if they fall in love with the design, and just HAVE TO HAVE it, then they will buy it. Remember the Apple iPod taking off because of great design. If you read Dan Pink's book, 'A Whole New Mind,' you'll find he talks about the shift in our society for the necessity for great design instead of just another product. In this case it's a sexy, electric, fast sedan that everyone has to have.