Tesla Stock Is a Short-Seller’s Favorite Again

Key Takeaways

• Tesla is set to reveal its long-awaited robotaxi Thursday, with some analysts skeptical.

• Meanwhile, Elon Musk’s EV company has returned to being the most shorted stock in the United States.

• Weakening fundamentals and discounting measures top the list of analyst concerns.

Tesla (TSLA) bulls have robotaxi fever. Shorts are betting they’ll be disappointed.

As the EV giant prepares to unveil its robotaxi at its much-anticipated event Thursday, the company has found another way to grab the headlines: Elon Musk’s company has returned to its old position as the most shorted stock in the U.S. Meanwhile, the stock has been included in Wells Fargo’s latest trading ideas with an underweight call—and skepticism that the robotaxi will deliver on bulls’ presumptions.

According to data and tech firm Hazeltree, Elon Musk’s EV company was the most crowded shorted large-cap security in the Americas in September, returning to a position it held until July.

Investors would be less interested in the company—whose stock price has largely recovered from the losses it experienced in the first half of the year—as demand for EVs cooled, though the excitement around the robotaxi could give the stock a boost.

Tesla Stock Has Jumped 40% Since Musk Unveiled His Robotaxi Plan

Tesla stock is up more than 40% since April 5, when Musk announced plans for the robotaxi event, and it has stayed elevated even after the event was delayed.

Wells Fargo analyst Colin Langan, however, has given Tesla a $120 price target—half its current price—in the bank’s tactical trading ideas list for the fourth quarter. Langan wrote that he is skeptical Wednesday’s event will “match the high expectations from Tesla bulls, leaving investors to focus on weakening fundamentals.”

Those fundamentals include projections for moderating delivery growth as EV demand drops and the limited potential of discounting to boost sales. He also noted that Musk has promised robotaxis “by year-end…for years” but “experts say the technology is years away & that TSLA’s autonomous technology comes with considerable safety concerns.”

Last week’s delivery data sent Tesla stock lower despite beating expectations, as analysts said investors may have wanted Tesla to deliver a stronger quarter. Tesla said Wednesday that its third-quarter results will be released after the market closes on Oct. 23.

Read the original article on Investopedia.