Tesla Motors Inc (TSLA): Succeeding Where Others Failed

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Tesla Motors Inc (NASDAQ:TSLA) just can’t seem to shake off the short sellers. Last year, Tesla stock was the fourth-most-shorted stock in the U.S. However, the company has passed many milestones since then. In fact, investors pushed Tesla stock higher by as much as 59% since the start of the year. Yet, the impressive run in the stock has some investors betting against it. Here’s why I think the shorts are in for a bumpy ride.
Tesla Motors Inc (NASDAQ:TSLA)

Succeeding where others failed
It’s easy to see why critics of electric-vehicle technology are betting against the company. For starters, widespread EV adoption is still years out, not to mention EV manufacturers are dropping like flies. Two major electric carmakers, Fisker Automotive and CODA, have struggled to stay afloat. CODA filed for Chapter 11 bankruptcy protection this month. Meanwhile, Fisker recently laid off about 75% of its workforce. Additionally, some may remember A123 Systems or Fisker’s battery supplier, which also went bankrupt.

These examples aren’t particularly encouraging for Tesla. However, lumping Tesla Motors Inc (NASDAQ:TSLA) together with these dying companies is a mistake. Similar to Fisker, Tesla borrowed money from the U.S. department of energy in 2010 in order to get its operations off the ground. Yet, unlike Fisker, Tesla is not only paying back the DOE loan, but also doing so five years early.

This is a monumental achievement for Tesla Motors Inc (NASDAQ:TSLA). Particularly at a time when many politicians are using the Fiskers and A123 Systems of the industry to garner support against the DOE’s alternative energy loans. Paying back its loan early is only one of many ways that Tesla is setting itself apart from industry peers.

A stock to own for the long run
One key mistake made by short sellers is to value Tesla Motors Inc (NASDAQ:TSLA) stock by the same metrics reserved for traditional auto manufacturers. Tesla isn’t Ford Motors. As a disruptive upstart, Tesla is a long-term play. Only investors with a stomach for volatility and a time horizon of at least a five to 10 years should own Tesla stock.

Separately, the launch of Tesla Motors Inc (NASDAQ:TSLA)’s Model S in Europe later this year is another catalyst for the stock. The company plans to begin European deliveries of its Model S as soon as July. On the home front, Tesla recently announced new financing options for its cars that should help more potential buyers pull the trigger.

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