Tesla Motors Inc (TSLA), Research In Motion Ltd (BBRY), Cliffs Natural Resources Inc (CLF): Will The Short Squeeze Continue?

Page 1 of 2

There are some stocks that are everyone’s favorites; I believe Apple Inc. (NASDAQ:AAPL) and The Coca-Cola Company (NYSE:KO) fall into this category. Then there are others that a lot of investors are skeptical about; such stocks carry a high short interest as investors bet that their price will go down. However, you often make the biggest gains in stocks that most investors are betting against if you are able to correctly determine that the bears are mistaken. Tesla Motors IncI believe that the bears have got it wrong with Tesla Motors Inc (NASDAQ:TSLA) and Research In Motion Ltd (NASDAQ:BBRY), but the same cannot be said of Cliffs Natural Resources Inc (NYSE:CLF).

This electric car maker is on a tear

Tesla Motors Inc (NASDAQ:TSLA)’ stock shows the most classic case of a short squeeze. The electric car maker has a lot of doubters who believe that Tesla’s electric vehicles will have a hard time competing with the internal combustion engine and hybrid vehicles. Skeptics argue that a high price, range anxiety and performance issues related to Tesla’s Model S will impact the company’s financial performance. However, the bear thesis on Tesla Motors Inc (NASDAQ:TSLA) has started to crack as short sellers start to understand the strong global demand for Tesla’s exquisite Model S.

Tesla recently reported its first quarter earnings which showed that the company made a profit for the first time; the company reported and EPS of $0.12 which exceeded consensus estimate of $0.04. Tesla’s revenue increased 83% quarter-on-quarter to $562 million, beating consensus estimate of $492 million. In another blow to short sellers and skeptics, Tesla increased its full year Model S sales guidance to 21,000 cars versus initial outlook of 20,000 vehicles for the year. In its shareholder letter, Tesla management also said that the demand for its Model S cars remains strong throughout the world. Although Tesla Motors Inc (NASDAQ:TSLA) stock is up more than 90% in the past three months, the stock still carried a short interest that represented more than 37% of its float as of April 30th, which would take a lot of time to unwind as investors understand the company’s long term potential.

The turnaround has just started

Research In Motion Ltd (NASDAQ:BBRY) Blackberry stock has also drawn a lot of interest from shorts; as of April 30, Blackberry had a short interest of more than 164 million shares which represents more than 33% of its float. As with Tesla, the bear thesis on Blackberry is also flawed. Blackberry has had a tough time in the past two-three years as it saw its market share eaten up by Apple Inc. (NASDAQ:AAPL) and Samsung while the Blackberry 10 OS faced delays. However, since its launch, the BB10 has received outstanding reviews, with many praising Blackberry’s security features and BB10’s intuitive gesture based interface.

In its Q4 2013 earnings release, Research In Motion Ltd (NASDAQ:BBRY) surprised analysts by posting an EPS of $0.22 vs. consensus estimates of a loss of $0.32 spurred by sales of 1 million Z10 devices and cost cutting measures. The relatively higher average selling price of the Z10 also helped Blackberry increase its gross margin to 40.1% in Q4 2013 versus 30% in Q3. Recent reports indicate that there is very strong interest in the Blackberry Q10, the first QWERTY based phone that runs on the BB10 platform, with reports suggesting that the device has been sold out at some stores in the UK and Canada where it has already been launched.

Although the short squeeze in Research In Motion Ltd (NASDAQ:BBRY) has not been quite as dramatic as Tesla Motors Inc (NASDAQ:TSLA), the stock is still up almost 30% this year, and I expect the shorts to continue to gradually get squeezed out as the sell-through of the Z10 and Q10 gets clearer and as Blackberry launches more BB10 based devices later this year to target the emerging markets.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!