Shares of electric-car company Tesla (NASDAQ:TSLA) jumped on Monday, rising 5.5% as of 2:50 p.m. EDT.
The stock’s gain comes as one analyst pegs traders’ covering of short positions on Tesla stock as a potential reason for the gain. In addition, a tweet from Tesla CEO Elon Musk stating that he deleted his Twitter account may have encouraged some investors.
Tesla stock’s sharp rise on Monday may be related to “the start of short covering over the next few weeks,” said Baird analyst Ben Kallo, according to Benzinga. When a large number of traders with short positions cover their trades by purchasing shares, it sometimes causes a stock to rise in the near term, creating a “short squeeze.”
Kallo has a $340 12-month price target on Tesla shares.
In addition, over the weekend Musk tweeted, “Just deleted my Twitter account.” Given the troubles Musk’s active and outspoken usage of Twitter has led to in the past, many shareholders would likely view the CEO’s absence on the social media platform as a net positive.
Notably, Musk’s Twitter account doesn’t appear to be deleted as of Monday afternoon. But the CEO hasn’t tweeted since.
While these two events may be reasons for Tesla stock’s rise on Monday, investors should remain focused on the electric-car maker’s fundamentals. The company needs to ramp up production while keeping costs in check in order to meet its full-year vehicle deliveries guidance and achieve profitability.
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