This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Cramer: What's Really Driving Tesla?

The company is now worth $10 billion vs. the $3 billion it was worth a couple of weeks ago, so you might think this is all alchemy. But along comes Morgan Stanley today, a completely legitimate brokerage house, raising its price target on TSLA from $47 to $103. That's a total validation of everything positive about Tesla, and suddenly the shorts have no place to go. They have been run over by a beautiful sleek Tesla, which Morgan points out is the best brand in the industry as Consumer Reports just awarded it with that exact title.

Let's put aside how great Tesla may be. Let's forget that the history of new car companies is at best, checkered. Instead, let's talk about what's really driving this stock besides an electric engine. It is short sellers who are frantically trying to find stock to maintain their positions. Remember, when you are short a stock you have to borrow it first to sell it. You also have to maintain that borrow, meaning that brokers reserve the right to be able to say, "We can't find stock to sell to real buyers, so you have to cover your short or we will just buy you in." The dreaded buy-in -- that's what's happening.

When a broker does a buy-in on a short he doesn't care what price is paid -- even if it rips the lungs out of the short, the broker must meet the demands of the buyer, which trump the rights of the short seller. Without new supply, the shorts are just being crushed and that, not the engine, the sleek design, or the numbers, is what's driving the stock. Until more supply can be found, get used to this craziness. It's just the way it works in a crowded short, and always will.

Action Alerts PLUS,  which Cramer co-manages as a charitable trust, has no positions in the stocks mentioned.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free


Chart of I:DJI
DOW 17,830.76 -210.79 -1.17%
S&P 500 2,075.81 -19.34 -0.92%
NASDAQ 4,805.2910 -57.85 -1.19%

Our Tweets

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs