After Tesla (NASDAQ:TSLA) more than doubled from its 2019 lows, short-sellers are still convinced of a bankruptcy. Yet Tesla still has a strong brand, a cult of followers, and plenty of cash, should it need it. This suggests the Tesla short squeeze will hurt for a while longer.
Tesla posted fourth-quarter vehicle production and deliveries that topped consensus estimates. It delivered 112,000 units (19,450 Model S/X and 92,550 Model 3) in the period. With its U.S. market stabilized to growing, the company has another positive catalyst: China.
Tesla opened a facility in Shanghai, where it produces over 3000 units. It may easily top Nio (NYSE:NIO) unit sales in the coming months. The region benefits from Tesla’s economic contribution, whereas Nio is struggling financially. Although NIO stock surged to over $4.50 at the start of 2020, the stock is dangerous.
Nio stock has a short float of 30%, compared to 20% for TSLA stock.
For 2020, Tesla will continue to frustrate bears. The potential growth of EV sales in China is high. Initial sales will likely exceed expectations, limiting any downside risks to the business in the near-term. Bears may continue to look only at valuations to justify the short position but that is a dangerous move. If Tesla ever needs money to finance capital expenses, it has the market’s support.
