Breakout

Why Tesla is running over the bears

Jeff Macke
Breakout

Shares of controversial automaker Tesla Motors (TSLA) ran over bears yesterday as a three prong attack of decent news sent shares up more than eight percent. At $224 Tesla shares are the highest they've been since the beginning of April. This is a high vol, high risk name so before you should even think of getting long, let alone short, you need to know how to tell the real catalysts from the bogus headlines.

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Let's take the news one by one: first came reports that Tesla was talking to BMW and Nissan about standardizing charging station technology. That obviously takes electric cars another step towards the main stream. Bullish but not earth shattering (Nissan and BMW are competitors, after all).

Then during the day we heard bullish news on the government front. First bills in New York and New Jersey that would allow Tesla to set up shop in non-traditional storefronts moved forward. That's big news, especially in New Jersey where the state assembly voted 77-0 to allow zero emission cars to be sold outside of dealerships. Even in states that are legendary for alledged corruption, it's going to be hard to defend gas guzzling companies' retail monopoly on cars.

Finally we heard rumblings that California is joining Texas, Arizona and New Mexico in the fight to be the home of Tesla's Gigafactory. There's been some talk that states wouldn't want the threat of environmental hazzards from this plant. Don't kid yourself. Any governor turning down the chance to create high-tech jobs is committing 'Cantor-cide' when it comes to the mid-term elections.

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Tesla Model X

Tesla Model X

Oh yeah, Tesla also told customers its Model X SUV would enter production in 2015. Along with the sub-$40k car set for delivery in 2017, Tesla suddenly looks like it will have a full line-up of cars available for sale in any number of locations coming on line just when the infrastructure is ready for prime time.

As for shares of Tesla they've been late to the comeback party over the last few weeks. Despite being up 50% YTD the stock is still down a few percent over the last 3 months, even after yesterday's gains. I'm keeping my shares because I don't think this is a stock that trades off valuation, but emotion and progress. Yesterday was a reminder that Tesla, for all its shortcomings, is no Fisker. It's not going to disappear and it's not General Motors (GM), facing legacy problems up to the gils. Tesla is its own animal as far as the stock is concerned. Don't fall into the trap of thinking you're smarter than the markets.

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