Tesla hits a one-month high after reaching a 'critical inflection point

  • Tesla has climbed more than 13% this week after its second-quarter earnings report showed ir was able to slow its cash burn.

  • The stock on Friday hit $355, it's highest level since July 2, costing short-sellers more than $1 billion.

Shares of Tesla continued their post-earnings surge on Friday, rising another 1% to an intra-day high of $355, their highest level since July 2.

On Thursday, the stock climbed more than 12% after the electric-car maker reported a wider-than-expected loss, but showed it managed to slow down its cash burn. A calmer — and apologetic — Elon Musk once-again reassured investors that Tesla would be profitable this year.

That oft-repeated phrase appears to have calmed fears of a Tesla bond crisis, with the yield on its bonds expiring in 2025 hitting a low of 6.86% on Friday, their lowest since June 18. Last week, investors were paying a record amount to ensure against any potential Tesla bond crisis.

Tesla's second-quarter financials also led to a number of upgrades and price target increases across Wall Street. Analysts' average price target is now $318, up from $310, according to data from Bloomberg.

"While we have been cautious on Model 3 ramp, we believe gross margin performance on Model 3 will carry the stock over the next 12+ months," Oppenheimer analyst Colin Rusch, who upgraded the stock to outperform with a price target of $385, said in a recent note.

"Incremental gross profit for the Model 3 has the potential to generate sufficient cash for TSLA to reach positive operating cash flow. With higher volumes and slower spending, we believe TSLA has reached a critical inflection point in its development."

But Thursday's surge from less than $300 earlier this week has also cost short-sellers — or those investors betting against Tesla's stock price — more than $1 billion, according to data from financial analytics from S3 partners.

"We are not seeing a large amount of buy to covers yet, with such a large price move on the open most short sellers that are looking to cover are waiting for a retractment before placing buy-to-cover orders," S3 managing director Ihor Dusaniwsky said.

"They’ve already been bloodied on the open without the ability to get out of their positions at anywhere near yesterday’s market close so they are waiting to see if they can make back a few bucks before realizing their losses."

Shares of Tesla are now up 9% since this year and are quickly closing in on their all-time high of $389.61 set in September 2017.

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