Tesla Motors Inc (TSLA): This 400% Gainer Should Keep Crushing the Shorts

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Of course, at some point, the short sellers could be right about Tesla. But at some point, the sun will run out of fuel to burn and life on Earth as we know it will cease to exist. As for the current moment here on Earth, at least from a trading perspective, TSLA shares are firing on all cylinders.

Now the question for the bulls is, how much more upside is there in TSLA shares? To answer that big unknown, let’s take a look at where Tesla is right now.

In Q2, the company boosted vehicle production of its flagship Model S sedan by some 25% to 500 vehicles a week. That’s tiny by Big Three automaker standards, but amazing for a startup selling a vehicle with game-changing transportation technology. Tesla produced 5,150 vehicles in Q2, well above its original forecast for just 4,500 deliveries.

The increased unit production helped Tesla increase gross margins 22% on a non-GAAP basis over the same quarter last year. In his letter to shareholders, Musk wrote that Tesla can deliver approximately 21,000 cars this year. He also wrote that the company is on track to achieve 25% gross margins for the year (based on a non-GAAP calculation).

If Tesla Motors Inc (NASDAQ:TSLA) can execute on this margin prediction, and if the company can continue to “surprise” analysts who don’t yet understand that betting against Musk is a foolish game, then the smart money will continue to jump into Tesla — and so should you.

Recommended Trade Setup:

— Buy TSLA at the market price
— Set stop-loss at $140, approximately 10% below the current price
— Set initial price target at $200 for a potential 30% gain by year-end

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