Bearish Morgan Stanley Note Stalls Tesla Stock

Tesla stock remains heavily shorted

Tesla Inc (NASDAQ:TSLA) stock is down 2.3% to trade at $285.20 this morning, after Morgan Stanley issued a price-target cut to $291 from $376 and slashed its profitability forecasts. The analyst in coverage expressed concerns about Model 3 production and the recent executive turnover, saying TSLA is trading near fair value. On the other hand, Electrekjust got its hands on an internal email from the company suggesting Model 3 production is set to pick up dramatically this week.

The new price target actually sits just above Tesla's closing price from yesterday. The equity fell to an annual low of $244.59 on April 2, and the subsequent rally has been capped by the $310 area on multiple occasions. Overall, the stock has shed 8.4% in 2018, and has underperformed the broader S&P 500 Index (SPX) by 13 percentage points in the past three months -- though earlier it bounced from familiar support near the $280 level.

It's no surprise then that short sellers continue to pile on the electric car name. Short interest increased by another 23% in the two most recent reporting periods to a record high 39.09 million shares. This represents a hefty 31% of TSLA's total available float, and more than seven days of pent-up buying power, at the average pace of trading.

Near-term options traders have seemingly been more bearish than normal, as well. This is according to Tesla's Schaeffer's put/call open interest ratio (SOIR) of 1.53, which ranks in the 89th percentile of its annual range, suggesting options traders are more put-biased than normal, judging by open interest levels in contracts expiring within three months.