The minds, and fevered imaginings of investors, have been captivated by Tesla (NASDAQ:TSLA) stock for the last few months now, as it's made its meteoric rise into $2,000 a share territory. The formerly little electric car company, at last report, now has a bigger market capitalization than Walmart, let alone any other competitor in the electric vehicle space. Let alone any competitor in the gas-powered vehicle space, for that matter. As Tesla approaches a five-for-one stock split, it's going to have to pull out all the stops to get its share price back up after that big event.
The Shorts are Abandoning Ship
Tesla spent a lot of time among the world's most shorted stocks, mainly because, for a while, Tesla's amazing upward rise looked like it was built less on fundamentals and more on hot air. Yet at every turn, short-sellers were stymied, and forced into squeezes that kept the stock going. One report noted that, over the last 30 days, shorts gave up fully two million shares.
The short-sellers seem to be one of the biggest forces behind Tesla's gains, as there hasn't exactly been any earth-shaking news out of the company to drive its price up in such fashion. Now, with a stock split looming and the price about to get seriously cut as new shares emerge, some are starting to wonder if $2,000 a share will ever be seen again, especially from atop their newly-minted pile of Tesla shares.
Keeping the Streak Alive
While Tesla hasn't had any major news, yet, some news of smaller impact has emerged. Sometimes, the combined force of several small items can act like one major item on perceptions and work about the same way.
One such small item is that one of the upcoming planned features coming to Tesla cars is that the car will play elevator music from its external speaker. The external speaker was mandated as a means to warn pedestrians that the car was coming since electric cars make little noise. CEO Elon Musk actually tweeted a video of the car speaking as it rolled, advising passersby to not just stand there staring.
A second update—and one much more applicable for drivers—was an update to the Tesla smart air suspension system. The Model S and Model X line of Tesla vehicles will have access to a “real-time visualization” system of their vehicle's suspension in action, as well as automated adjustments to same, ensuring the best response to road conditions and the best possible range for the battery.
However, another planned update to Tesla will address one of the biggest safety issues parents face: the notion of accidentally leaving a child behind in a hot car. Essentially, Tesla is looking to add a motion-detection mechanism that could be able to ascertain movement in what should have been an empty car, and alert the driver accordingly. Tesla is currently seeking approval to market the mechanism from the Federal Communications Commission (FCC), and should such approval arrive, the heartbreaking stories of kids dying from being accidentally left in hot cars should fade away.
The Elephants In the Room
All of these together are solid enough items and demonstrate Tesla's ongoing commitment to customer satisfaction. If Tesla can market that child-sensor system to other carmakers, it could represent an absolute coup as every other carmaker either start licensing it from Tesla or starts falling all over themselves to replicate it.
There remain, however, two major points that will really decide the fate of Tesla stock going forward. First, there's the matter of a long-established point for Tesla: its admittance into the S&P 500. Such a move would likely set the stock price into another explosive rise up, as S&P-focused mutual funds and the like start piling into the stock, since it's part of the S&P 500. Some estimates suggest that exchange-traded funds (ETF) might actually double the number of shares owned. Other estimates, however, suggest the actual impact would be minimal.
The second point is Tesla's upcoming Battery Day, September 22. The opportunity to show off Tesla's manufacturing and give shareholders a chance to vote on several issues will likely be a major proving ground for Tesla products, including the battery, which is easily one of Tesla's biggest advantages. Since electric vehicle batteries can be used for house power, the notion of a car that can power a house will likely be of particular interest, especially in California, where rolling blackouts have been a part of life again.
Tesla has a lot going for it going into its stock split, in both small tweaks and major updates. By keeping such responses rolling out, it stands a much better chance of recovering its pre-split value and making for a lot of happy investors.
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