NEW YORK (TheStreet) -- During the ultimate valuation party of shareholder nirvana that took place while moons of Jupiter and the migratory patterns of birds were in perfect harmony, $250 shares in electric automaker Tesla Motors (TSLA - Get Report) danced on the bloodied faces of short-sellers.
For a brief moment during the party's climax, the shares actually exceeded $260. Not just once, but for two days the stock traded above $260 during each day's high. It was a memorable party, and for those holding invitations it was the party of a lifetime.
Unfortunately for shareholders, Tesla will probably never close above $260 again. Not in today's dollars anyway. Righ now shares are trading around $186, up nearly 24% for the year to date and nearly 120% for the past 52 weeks.
As much fun as the first party was, and short-sellers aside, the road trip to new 52-week highs isn't on the map or GPS. Don't blame it on Tesla or Elon Musk -- they're doing their part to turn out fantastic vehicles. It's the market's fault.
Maybe "fault" is the wrong word to describe an efficient market. Some assume the market is perfectly efficient and a stock's market cap valuation is always correct. I can't say I blame people for believing in the efficient market hypothesis. After all, it's still taught in many universities.
In a nutshell, efficient market hypothesis disciples cling to the false notion that all available information is priced into any given stock and that at any given time will reflect the rational and logical discounted price based on all other investment opportunities. The key words are "rational" and "logical."
A stock moves or trades on any given day based on emotion. Rationality and logic take a back seat for most stocks during the short term, and they're nowhere to be found with high-flying momentum stocks that are heavily shorted.
In other words, the most logical explanation of Tesla's rise above $100 is the absence of logic.
The Model S is a marvelous automobile and may be the safest electric or gas sled your money can buy. But as epic as Tesla is and reasonably can be expected to become, it's not enough to justify the stratospheric current market cap, let alone a catalyst for $260 again.
In contrast to General Motors (GM) and Ford (F), Tesla Motors is redefining the automobile industry. Tesla's Model S is the greatest combination since Reese's created its irresistibly addictive mix of peanut butter and chocolate.
Elon Musk, Tesla's A-list star CEO, combined the Corvette's sinus-draining torque through an electric-powered drivetrain with the sophistication and elegance of a Mercedes S-Class. Tesla's Model S range worries are debatable, albeit if the car can reach it, you'll arrive quickly and looking sharp.