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One of the most controversial stocks that we own for clients in New York is electric vehicle company Tesla. Investors either seem to love them or hate them? The SA-born CEO Elon Musk is hardly ever out of the news headlines, and often for strong reasons, like sending some random a nasty message on Twitter.
The company is burning through cash, making losses and spending lots of money on capital expansion as it ramps up production of its new mid-range Model 3 sedan.
Quarterly results on Wednesday evening saw the stock soar 16.2% in trading on Thursday, to just below $350 per share. For the record, the all-time (intra-day) high is $389.61.
I'm a Tesla optimist and committed shareholder. The future of motor cars is electric. Tesla is an established leader, especially in the luxury end of the market. Customers adore the vehicles.
They plan to build a new battery and car plant in China, in a quest to make 1 million vehicles in 2020. The car plant in Fremont, California, and Nevada Gigafactory will churn out 700,000, and the rest will come from the new Shanghai facility, which is supposed to begin production that year. Who cares about Trump's dumb tariffs on imported motor cars? Just make them and sell them where the customers are.
Yesterday's surge in the Tesla share price will have burned the Tesla haters and short sellers. David Einhorn, who runs the hedge fund Greenlight Capital, criticized Tesla and its CEO in a letter to investors on Tuesday and wrote that he "is happy that his Model S lease ended" and was "happy to switch to an electric Jaguar."
Elon hit back on Twitter: "Tragic. Will send Einhorn a box of short shorts to comfort him through this difficult time."