Tesla’s stock (TSLA) has surging to$2,000 a share ahead of the stock split and the shorts are running away.
Earlier this month, Tesla announced a 5 for 1 stock split that sent the stock price surging.
Surprisingly, it hasn’t stopped rising since then.
TSLA is now up 40% since announcing the stock split without any other major catalyst happening in the meantime.
In comparison, Apple, who also announced a stock split two weeks before Tesla, has been up 20% since the announcement.
Tesla’s stock appears to be unstoppable over the last 3 months, again despite no major announcement:
One of the possible reasons is a slow burn short squeeze as more short sellers are giving up on Tesla.
For a long time, Tesla has been one of the most shorted stocks in the world, which means that investors are betting on the price going down by borrowing shares and hoping to buy them back at a lower price.
Ihor Dusaniwsky, a short interest expert, reported yesterday that shorts gave up over 2 million shares over the last 30 days:
As you can see, there’s a clear correlation between the number of shares shorted and the price of Tesla’s stock.
At the time of writing, Tesla’s stock was up 6% today to a new high of $1,993 per share – again on little to no news.
Tesla’s stock split is set to happen on Friday, August 28 – meaning that TSLA shareholders are going to have 5 shares for every share they held on the next Monday but the stock is going to trade at 1/5 of its value.
It looks like a short squeeze to me.
Especially in August based on Ihor’s data and it looks like they might not want any skin in the game during the stock split.
More importantly, I think they should stay away during Tesla’s battery day, but it might also end up being a classic “buy the rumor, sell the news” type of event.
What do you think? Let us know in the comment section below.
Disclosure: I am long TSLA.
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