Tesla share price down 8.71% for the month, but what’s the outlook?

As inflation fears abate and enthusiasm returns to equity markets, we have seen investors push back into growth stocks, with Tesla (ticker: TSLA) for example, gaining 7.37% in the last five sessions.

Despite that, the stock remains down close to 9% in the last month, highlighting a substantial downward trend within the name. This comes as Michael Burry, of Big Short fame, revealed that his firm had taken a substantial short position in the electric automaker in mid-May.

That short attracted significant media attention, with outlets from Bloomberg, Investors chronicle and even Al Jazeera reporting on the money manager’s wager against Tesla.

Specifics on the short

As part of recent regulatory filings made with the SEC, Burry’s Scion Asset Management on May 17 revealed that it held put options against 800,100 shares of Tesla at the close of the last quarter – at the time, implying a nominal value of over $500 million.

Since revealing that short position the Tesla share price has actually risen 7.0%, finishing Thursday’s session at $630 per share.

Importantly, the SEC regulatory filings don’t tell us how much Burry’s firm paid for these puts nor their expiration date.

Tesla short interest

Since peaking at around $48 billion in mid-January – in terms of dollar volume shorts sold – total short interest in the electric automaker has fallen steadily, last at $23 billion, according to Market Beat.

Percentage of Tesla shares sold short, against total shares outstanding, currently stands at 4.14%, or ~39.8 million, also according to Market Beat.

Analysts

Following reports of Burry’s chunky short position, brokers made the following amendments to their recommendations:

• UBS Group analysts lowered their price target to $700 and retained their Neutral rating.
• Wells Fargo initiated coverage on the electric automaker with an Equal Weight rating and $590 price target
• Robert W Baird analysts this week reiterated their Buy rating and $736 price target

The Q1 at a glance

Tesla's most recent quarterly (Q1) release highlighted another strong quarter of growth for the company, with total revenues, gross profits and net income (GAAP) all rising strongly.

Commenting on the outlook, Tesla retained its typical focus on growth, saying:

'We plan to grow our manufacturing capacity as quickly as possible. Over a multi-year horizon, we expect to achieve 50% average annual growth in vehicle deliveries. In some years we may grow faster, which we expect to be the case in 2021.'

Total vehicle deliveries were up 109%, year-on-year, in the first quarter.

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