Tesla Is Destroying the Competition, and It Means Massive Stock Gains
Elon Musk gets the upper hand on short-sellers.
Elon Musk is grinning ear to ear today.
Tesla shares jumped nearly 12.72 percent as a former short-seller of the stock cried uncle and admitted that Tesla was "destroying the competition." The stock registered the biggest gain by far on the Entrepreneur Index™. After a volatile day, the index closed down 0.26 percent.
Citron Research, party to a securities class action lawsuit against Tesla over Mr. Musk's tweets earlier this year about going private, published a note this morning saying that Tesla's Model three was causing "a legitimate disruption of the auto industry." Tesla announced yesterday that it would report earnings on Wednesday -- earlier than expected. If, as Musk has promised, the company shows a quarterly profit for the first time and hits revenue targets, the remaining shorts on the stock may really feel the squeeze.
Tesla's big day came in the face of a market that whipsawed from another big sell-off in the morning to an encouraging rally as the day progressed. The yield on the 10-year Treasury bond dropped 8 points in the morning as investors moved cash to safety, then rose five in the afternoon as they returned to the stock market.
The disappointing earnings from Dow Index components Caterpillar and 3M sent the major indexes down more than 2 percent early. Caterpillar lowered guidance for the year citing the impact of rising costs and tariffs. The results fueled fears about a slowing global economy and peak earnings for U.S. companies.
Casino operator Wynn Resorts had the biggest decline on the Entrepreneur Index™ today, falling 5.53 percent due to fears about a slowing Chinese economy. Truck manufacturer PACCAR Inc. was also slammed, down 5.12 percent. Other big drops on the index included business services company Cintas Corp. (-2.23 percent), and pipeline operator Kinder Morgan (-2.29 percent). The price of oil fell 4.4 percent today, dragging down the shares of oil and gas producer Hess Corp. by 2.4 percent.
Capital One Financial was down 1.69 percent on the day. The company was fined $100 million by banking regulators for weak anti-money laundering controls. It reported third quarter financial results after the market closed, beating both earnings and revenue estimates. The stock however was down in after-market trading.
Technology stocks were mixed. Netflix (1.1 percent), Adobe Systems Inc. (0.28 percent) and Alphabet Inc. (0.23 percent) were up. Twitter (-1.41 percent), Akamai Technologies (-1.47 percent), and Facebook (-0.25 percent) were down. Graphics chip-maker NVIDIA Corp. posted the biggest decline in the tech sector, falling 4.39 percent. Amazon.com, down more than 3 percent early in the day, closed off 1.15 percent.
Homebuilder D.R. Horton has apparently been beaten up enough for now. Down nearly 10 percent over the past two days, the stock was up 2.03 percent today. Other stocks that have been in the doldrums lately also posted gains. Bed Bath & Beyond, down 38 percent this year, was up 1.88 percent. Similarly, Ford was up 2.14 percent, though still down 31 percent on the year.
The Entrepreneur Index™ collects the top 60 publicly traded companies founded and run by entrepreneurs. The entrepreneurial spirit is a valuable asset for any business, and this index recognizes its importance, no matter how much a company has grown. These inspirational businesses can be tracked in real time on Entrepreneur.com.