Tesla short sellers suffered losses in the billions of dollars following the stock's winning streak.
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Tesla Inc. (TSLA) has been on a tear recently, to the detriment of short sellers. As of June 14, 2023, Tesla’s Aroon Indicator signaled a bullish trajectory, leading many to predict that the electric vehicle giant’s stock price is likely to continue its upward trend. If the projections hold, Tesla short sellers, who have bet against the company's stock, stand to lose billions.
The Aroon Indicator Gives a Bullish Signal
Named after the Sanskrit word for 'dawn's early light,' the Aroon Indicator, developed by Tushar Chande in 1995, is used by traders to predict if a particular security is trending, and how strong that trend is. The bullish signal from the Aroon Indicator for Tesla indicates the likelihood of the stock's upward move.
On June 14, 2023, the Tickeron's A.I.dvisor detected that Tesla's AroonUp (green line) was above 70, and the AroonDown (red line) was below 30. This specific pattern often signifies a bullish setup, suggesting that traders might want to consider buying the stock or purchasing call options.
In past instances where the Aroon Indicator showed a similar pattern for Tesla, the stock generally moved higher in the following days. According to the A.I.dvisor, the stock moved upwards in 268 out of 295 similar occurrences, giving the bullish signal an impressive success rate of 90%.
The Implications for Short Sellers
This anticipated upward trajectory is not good news for Tesla's short sellers. Short selling is an investment strategy where investors borrow shares of a stock to sell them with the hope of buying them back at a lower price later. If Tesla's stock price continues to rise, these short sellers could stand to lose significant amounts of money.
In recent years, Tesla's stock has been a popular target for short sellers, who have questioned the company's high valuation compared to traditional automakers, as well as potential profitability and production issues. But as Tesla continues to defy these skeptics with its stock price performance, these short sellers find themselves in an increasingly precarious position.
The latest bullish signal from the Aroon Indicator adds to a series of positive developments for Tesla, as the company continues to surge ahead in the electric vehicle market. This reinforces the idea that betting against innovative companies such as Tesla can be a high-risk proposition.
However, short sellers have been known to weather through turbulent times, and they might hold their positions with the hope that the tide will eventually turn in their favor. Yet, given the strong indicators for Tesla's stock price rise, they might find themselves under more pressure than ever to reevaluate their positions. As the electric vehicle market continues to expand, Tesla's short sellers could potentially find themselves in a deepening hole, if the stock's winning streak continues.
TSLA in -9.13% downward trend, falling for three consecutive days on January 02, 2025
Moving lower for three straight days is viewed as a bearish sign. Keep an eye on this stock for future declines. Considering data from situations where TSLA declined for three days, in of 273 cases, the price declined further within the following month. The odds of a continued downward trend are .
Technical Analysis (Indicators)
Bearish Trend Analysis
The 10-day RSI Indicator for TSLA moved out of overbought territory on December 18, 2024. This could be a bearish sign for the stock. Traders may want to consider selling the stock or buying put options. Tickeron's A.I.dvisor looked at 38 similar instances where the indicator moved out of overbought territory. In of the 38 cases, the stock moved lower in the following days. This puts the odds of a move lower at .
The Momentum Indicator moved below the 0 level on December 30, 2024. You may want to consider selling the stock, shorting the stock, or exploring put options on TSLA as a result. In of 79 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are .
The Moving Average Convergence Divergence Histogram (MACD) for TSLA turned negative on December 23, 2024. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 43 similar instances when the indicator turned negative. In of the 43 cases the stock turned lower in the days that followed. This puts the odds of success at .
Bullish Trend Analysis
The Stochastic Oscillator is in the oversold zone. Keep an eye out for a move up in the foreseeable future.
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where TSLA advanced for three days, in of 345 cases, the price rose further within the following month. The odds of a continued upward trend are .
TSLA may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.
The Aroon Indicator entered an Uptrend today. In of 283 cases where TSLA Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to outstanding earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating low risk on high returns. The average Profit vs. Risk Rating rating for the industry is 89, placing this stock better than average.
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. TSLA’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Seasonality Score of (best 1 - 100 worst) indicates that the company is slightly overvalued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is significantly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (8.905) is normal, around the industry mean (6.142). P/E Ratio (40.726) is within average values for comparable stocks, (18.218). Projected Growth (PEG Ratio) (2.067) is also within normal values, averaging (5.723). TSLA has a moderately low Dividend Yield (0.000) as compared to the industry average of (0.042). P/S Ratio (6.305) is also within normal values, averaging (78.580).
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a manufacturer of electric sports cars
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