NEW YORK: Pretty much everyone on Wall Street has an opinion about Tesla.
The electric vehicle maker’s stupendous rally in recent months has given shareholders something to cheer about, cost short sellers billions of dollars and vindicated legions of retail investors who have long adored Elon Musk’s company.
Tesla shares have climbed nearly 320 percent since early June, helped by the company's better-than-expected financial results and ramped-up production at its new car factory in Shanghai.
Another factor driving this week’s rally may be fund managers hurrying to raise their allocation of the stock, analysts said.
“A lot of advisors and institutions, they jump in the bandwagon because they don’t want to trail,” said Ross Gerber, president and CEO of Gerber Kawasaki in Santa Monica. “If Tesla goes to $1,000 and they don’t own it, what are they going to tell their clients?”
Gerber trimmed his fund’s position in the stock as the company’s valuation soared. He hopes to buy more if the stock falls and said a fair valuation would be about $550.
Retail investors have driven part of the surge, as staunch defenders of Tesla crowd Twitter, Reddit and other web sites.
Among Fidelity Investments customers, Tesla has been the most actively traded stock in recent sessions, with 16,000 buy orders for the electric carmaker's shares.
The stock is held widely by institutional shareholders. Tesla’s biggest institutional shareholders are Baillie Gifford, Capital World and Vanguard, according to Refinitiv data. It also has an international following. Retail investors in South Korea have been trading Tesla shares at a furious pace in recent weeks, buying and selling $200 million of stock in January, according to the Korea Securities Depository. Volume in November stood at $43 million.
Tesla options positioning is also bullish. According to data from options analytics provider Trade Alert, skew turned deeply negative this week, meaning that demand for calls, used to position for further share gains, has surpassed demand for puts, used to guard against a fall in shares.
That is a departure from the usual dynamic in most stocks, in which options used for downside protection generally command prices higher than those for upside participation.
Tesla’s biggest winner is Musk, who stands to up to $1 billion thanks to Tesla’s recent rally. The company’s market capitalization briefly exceeded $150 billion this week, the second target in his record-breaking compensation package.