Jim Cramer on what's driving Tesla
By Jim Cramer
Excerpt:
Let's put aside how great Tesla may be. Let's forget that the history of new car companies is at best, checkered. Instead, let's talk about what's really driving this stock besides an electric engine. It is short sellers who are frantically trying to find stock to maintain their positions. Remember, when you are short a stock you have to borrow it first to sell it. You also have to maintain that borrow, meaning that brokers reserve the right to be able to say, "We can't find stock to sell to real buyers, so you have to cover your short or we will just buy you in." The dreaded buy-in — that's what's happening.
When a broker does a buy-in on a short he doesn't care what price is paid — even if it rips the lungs out of the short, the broker must meet the demands of the buyer, which trump the rights of the short seller. Without new supply, the shorts are just being crushed and that, not the engine, the sleek design, or the numbers, is what's driving the stock. Until more supply can be found, get used to this craziness. It's just the way it works in a crowded short, and always will.
Full article: Cramer: What's Really Driving Tesla? – TheStreet.
