Tesla Continues To Be A "Bloodbath" For Short-Sellers

Tesla's TSLA success has been huge for the company, but not all investors have benefited from its growth. The company has garnered a fair amount of praise from analysts, some of which have raised their Price Targets following Tesla's earnings beat. "The stock has responded very well," Brian Shannon, President of AlphaTrends.net, told Benzinga. "I think the earnings were maybe a little bit controversial, creative accounting, but clearly the response from the Street is that it's a bullish event." With the stock up more than 16 percent today, Shannon said that Tesla "continues to be a bloodbath for short-sellers." "[It's] just a strong momentum name that, at this point, really is a dangerous stock for the average retail [investor]," said Shannon. "I think there's gonna be a lot more volatility coming into it." Related: When Will Tesla's Mass-Market Vehicle Arrive? In explaining this assessment, Shannon noted that the stock has risen more than 300 percent over the last four months. "We've seen a little bit of a shakeout before the earnings, and now a big gap higher, and I think it's starting to frustrate not only some of the short-sellers who are involved in it, but some of the longs who are getting shaken out of these pullbacks," said Shannon. "I think the level of participation should probably be limited to really, much more sophisticated short-term traders who can handle this type of volatility until it gets a bigger correction at some point, where people start putting valuations on it and maybe pulling back to a 50-day moving average, which is all the way down at $115 at this point." Shannon added that while the stock is "getting ahead of itself," its growth "doesn't mean it's a short sale by any means." "It's been kind of a perpetual short squeeze machine here the last several months," said Shannon. "New groups of shorts come in thinking…that it must be up too much, and they get squeezed, and then somebody else [comes in]. I'm sure today there's a lot of shorts trying to establish positions. It may be the same for them as well." Louis Bedigian is the Senior Tech Analyst and Features Writer of Benzinga. You can reach him at 248-636-1322 or louis(at)benzingapro(dot)com. Follow him @LouisBedigianBZ