(Note: The author of this fundamental analysis is a financial writer and portfolio manager. He and his clients own shares of TSLA.)
Tesla Inc. (TSLA) shares are off to a great 2018, with the stock rising by nearly 14 percent, despite the company lowering expectations on the Model 3 ramp-up and missing delivery estimates.
The bears could not have asked for a better start, getting all the negative news they were looking for in the first three days of the year. But Tesla shares have risen, denying the bears of profits. And the chart suggests the stock could continue to rise back to its old highs around $385 or more.
Tesla started the year off by announcing that it had only delivered 1,550 Model 3 cars in the fourth quarter. The electric car maker also pushed back the ramp-up of 5,000 Model 3 vehicles per week to the end of the second quarter. (See also: Tesla Model 3 Production Estimate Slashed 75% at Cowen.)
Stock Continues Rising
The chart tells the story of a stock that continues to grind higher after clearing a multi-month downtrend in the middle of January. Tesla stock is proceeding to take out resistance levels slowly, and at this point, there aren't any significant resistance hurdles left until $387.
Additionally, the stock is far from overbought with a relative strength index (RSI) around 61 and rising. The RSI has been trending higher since the stock price bottomed in early November, a bullish indication.
Perhaps reports that Tesla would be building a second battery plant in Australia helped to shift sentiment. Or maybe it was news that Tesla's first battery plant in Australia was showing it could create big profits for the company.
With battery-storage initiatives beginning to show signs of life and new orders coming in for the Tesla semi-truck, the bears may have started to get nervous. Short of Tesla discontinuing the Model 3, which is unlikely, the bar has been set so low for the company that any new news is likely to be positive.
Bears In Retreat
In fact, signs are emerging that the bears may be getting cold feet despite the negative commentary. Short interest hardly moved for the period between December 31 and January 12, only rising by 250,000 shares to 30.68 million shares short. That's less than 1 percent.
One Last Stand
The Tesla bears seem to have one last stand, and that is when the company reports its fourth-quarter financial results on February 7. All they can do is hope for a tremendous cash-burn rate, forcing the company to issue more debt or stock.
With the bar for everything set so low, the only thing left for Tesla to do is issue a surprise to the upside.
Michael Kramer is the Founder of Mott Capital Management LLC, a registered investment adviser, and the manager of the company's actively managed, long-only Thematic Growth Portfolio. Kramer typically buys and holds stocks for a duration of three to five years. Click here for Kramer's bio and his portfolio's holdings. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future performance.