Tesla’s Zero To Sixty

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What's going on?

At Tesla’s annual meeting with shareholders on Wednesday, the company said it’s “extremely likely” to hit its weekly production targets soon, putting its stock in the fast lane – it rose by 10%.

What does this mean?

Tesla’s been plagued with issues recently – partly because of automation problems (the robots aren’t taking over… yet), which slowed the production of its new Model 3 car. It led some analysts to worry that the company might run out of cash. Before Wednesday’s announcement, Tesla’s stock had fallen by 20% this year.

Some investors thought it’d be smart to split the roles of chairman and CEO into two jobs – since sometimes-irreverent Elon Musk is both for Tesla – hoping to improve transparency and governance at the company.

Why should I care?

For markets: Investors side with Elon Musk and Tesla.

When put to a vote, most shareholders elected to back Musk to continue in his dual role. He assured investors that the company’s likely to deliver on its promise of producing 5,000 cars a week by the end of the month. The news that disruptions are possibly in Tesla’s rear-view mirror helped send the stock up – benefiting Tesla’s shareholders, but running over the toes of investors who bet on the stock falling further.

The bigger picture: Betting against Tesla cost $1 billion on Wednesday. (tweet this)

Investors expecting Tesla’s share price to decline may have “shorted” the stock. By borrowing Tesla shares (for a fee) to sell in the market (hoping to make profit by buying them back at a lower price), these investors would have seen their money disappear as the stock rose on Wednesday – they lost $1 billion overall (they’ll have to buy those shares back at the new higher price to return them to their original owner at some point). Some investors may have rushed to buy back Tesla stock to cover their losses as quickly as possible, causing a spike in the share price – a.k.a. a “short squeeze”.

Originally posted as part of the Finimize daily email.

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