Bloomberg News

Tesla Shorted as Obama Boosts Electric Cars: BGOV Barometer

October 24, 2011

Oct. 21 (Bloomberg) -- Investors are betting against electric-car maker Tesla Motors Inc. even as President Barack Obama promotes his goal of putting 1 million advanced-technology vehicles on U.S. roads by 2015.

The BGOV Barometer shows that Palo Alto, California-based Tesla’s short-interest ratio, a measure of how difficult it would be for a trader to cover a negative bet on a stock, increased to 21.02 on Sept. 30 from 3.04 on Dec. 31, according to Bloomberg data.

“They’re basically pontificating that they’ve reinvented the wheel, and I don’t believe that’s the case,” said Carter Driscoll, a Capstone Investments analyst who recommends shorting Tesla shares and rates them “sell.”

Another measure of short interest, shares outstanding out on loan, almost quintupled year-to-date through Oct. 19, to 19 percent from 3.8 percent at the end of last year, according to researcher Data Explorers. That’s the highest level since Tesla went public in June 2010. Short sellers profit from price declines by selling borrowed securities and replacing them with stock bought at lower levels.

Tesla has too many things going against it, in spite of Obama’s enthusiasm for electric vehicles and the company’s advanced-vehicle loan from the U.S. Energy Department, Driscoll, who is based in Miami Beach, Florida, said in an interview.

He cited lack of consumer demand for plug-in vehicles, the cost of Tesla cars and congressional scrutiny of Energy Department loan programs as reasons for the increase in short interest.

Sticker Price

Tesla’s Roadster, the only car it sells this year, costs more than $100,000 after a U.S. tax credit for electric vehicles. That compares with Nissan Motor Co.’s Leaf that sells for $35,200 before the credit and General Motors Co.’s Volt starting at $39,145.

Tesla received a $465 million loan from the Energy Department’s Advanced Technology Vehicle Manufacturing program in 2009. Tesla doesn’t plan to apply for another loan from that program, which congressional Republicans tried to cut, Chief Executive Officer Elon Musk said last month.

The loan program, which has committed about $3.5 billion since 2009, was a George W. Bush administration idea carried on by Obama, who has spoken this year at plants owned by Indianapolis-based Allison Transmission Holdings Inc., which makes hybrid drive trains for buses, and Johnson Controls Inc., based in Milwaukee, which produces lithium-ion batteries for hybrid and electric vehicles.

Tesla’s short interest as a percent of shares outstanding compares with an average of 3 percent for companies in the Standard & Poor’s 500 Index, the data show. Tesla would be the fourth-most-shorted stock in the gauge if it were in the benchmark measure of U.S. equities.

Tesla has risen 2.7 percent this year through yesterday. The carmaker has reported losses every quarter since its initial public offering.

--With assistance from Alan Ohnsman in Los Angeles and Nikolaj Gammeltoft in New York. Editors: Bernard Kohn, Joanna Ossinger

-0- Oct/24/2011 18:24 GMT

To contact the reporter on this story: Angela Greiling Keane in Washington at agreilingkea@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net


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