Coming up short: the Wall Street war for TSLA

No, you didn’t misread the title, and we didn’t misspell it. US automaker Tesla is known by most as a trendsetting electric automaker, but for Wall Street investors their publicly traded stock — listed under the TSLA ticker — is the battlefield of a long-fought war between pro- and anti-Tesla investors. We dig through the rubble to see who’s winning in the wake of an explosive Q2 earnings call from TSLA.

TESLA factory

Not-so-humble beginnings

Tesla Motors has been pioneering electric vehicle technology and drawing headlines since 2004, when hotshot billionaire Elon Musk joined the fledgling company in its Series A round of investment and was retroactively recognised as a founder.

He, with his cadre of high-profile tech buddies, immediately started Tesla along a path of innovation that would make it a world leader in EV development. By 2008 they had released their first production model, the Roadster, and were generating significant buzz.

At that time, EVs were a long way from any kind of recognition. Battery tech was vastly inferior to what it is today and large-scale production was a long way away. The Roadster was the first EV to capture the world’s attention thanks to its class-leading 320 km range, trendy design, and 3.7 second 0-60 mph. By 2010 Tesla was riding the high of the Roadster’s success and was ready to go public.

Tesla, meet TSLA

Tesla’s initial public offering took place in June 2010, raising over $200 million at $17-a-share and cementing TSLA as the hot stock of the day. Perhaps most interestingly, Tesla’s was the first IPO of a US automaker since Ford went public in 1956. They were entering a market with deeply entrenched players and an almost unrivalled barrier to entry. There were many that wanted them to fail.

But the press attention kept coming and records kept being broken. By 2012 Tesla had released the Model S to widespread acclaim and even more celebrity attention than the Roadster. As the year rounded off into 2013, the TSLA stock exploded in value, reaching over $190 USD in September of that year.

Sparring partners

By 2014 the $TSLAQ community started appearing on Twitter. $TSLAQ takes its ‘Q’ from the stock market abbreviation for a company going bankrupt, using Twitter’s dollar sign ‘cashtag’ system (a stock-tracking equivalent to hashtags) to spread their message anonymously over the internet. By taking out a short position on TSLA, the community hopes to instigate and capitalise on what they see as Tesla’s inevitable downfall.

Meanwhile, a vast network of blogs, news outlets, and commentators continued to sing Tesla’s praises. While $TSLAQ remained leaderless and largely incoherent, the pro-Tesla alliance rallied around Elon Musk and kept the TSLA price high despite growing quarterly losses

There was never any doubt who was winning this war. Between 2012 and today Tesla has maintained consistent growth and retained its reputation for innovation and headline-grabbing antics. They launched the Model X electric SUV in 2015, updated the Model S with a “ludicrous” 2.27s 0-60 mph in 2016, and launched a Roadster into space in 2018.

Today

Yet despite Tesla continuing to defy their naysaying, the short sellers have maintained their presence online and some have even engaged the company in the open. In April this year Tesla were granted a temporary restraining order against $TSLAQ activist Randeep Hothi, known on Twitter as @skabooshka, after he allegedly chased employees down the Californian highway. The restraining order was dropped last week.

Meanwhile, the Q2 earnings call announced yesterday shows Tesla is in a precarious position. While Model 3 sales remain strong, overall revenue is down, and many short sellers have been publicly salivating over the news online.

At the same time, pro-Tesla blogs have opted for a decidedly positive spin on the news. Teslarati focused on high Model 3 sales and strong cash flow in their article, “Record cash as Model 3 and China Gigafactory take off”, published only hours after the results were released. As both sides take shots at swaying the market, post-results data suggests an approximate ~11% loss in TSLA value overnight — A temporary win for the shorters, it seems.

Tomorrow

But Tesla is still here, and it’s hard to envision a world without them after 15 years of record breaking and innovation. The Model 3 is scheduled to launch in Aus later this year, the 2020 Roadster is projected to smash records for EVs and combustion sportscars alike, and Tesla continues to lead the way in fast-charging rollouts and self-driving tech.

Ultimately, the $TSLAQ crowd have a lot to lose if Tesla delivers on their promises. We’re interested to see what’s next for the pioneer automaker and the fierce conversation that perpetually follows them. Whatever the outcome, we’ll be investing in bags of popcorn.