Tesla's stock under scrutiny as analyst claims market manipulation

In a recent X post on August 29, Wall Street analyst Gordon Johnson raised concerns about Tesla's (TSLA) stock, alleging that it is not trading on its business fundamentals but is being actively manipulated through the options market. Johnson contends this pattern amounts to 'engineered support' for Tesla's stock rather than price action justified by earnings or operational performance.

Johnson's allegation is based on activity in the options market. The Tesla open interest ratio has hovered below 1.0 throughout the year, indicating a persistent tilt toward call buying over puts. This suggests traders are betting heavily on upside moves, effectively stabilizing Tesla's stock price.

The latest put-to-call ratio data shows a sharp swing in sentiment driven by options traders. TSLA's put-to-call ratio collapsed from 0.85x on August 28 to 0.67x on August 29, indicating a shift towards bullish sentiment.

However, Tesla's financial performance has been less than stellar. The company's deliveries dropped 13.5% year-over-year to 384,122 vehicles in the second quarter. Sales in Europe declined 40% year-over-year in July for Tesla. Year-to-date, the stock has fallen more than 11%, and Tesla's profits plunged 71% in the second quarter.

Tesla has also lost seven consecutive months of market share to rivals in Europe, including China's BYD. These figures raise questions about the sustainability of Tesla's stock price, especially given Johnson's claims of market manipulation.

Not all analysts share Johnson's bearish outlook, though. Elon Musk is suspected to be involved in buying options in the Tesla stock market to try to stabilize Tesla's share price. On the other hand, Morgan Stanley's analyst, Andrew Slimmon, expects stocks to rise as corporate earnings continue to surprise. Whether that optimism extends to Tesla remains uncertain.

Analysts remain divided on the equity's outlook. While GLJ Research reaffirmed its 'Sell' rating and a bearish target of $19.05, Morgan Stanley reiterated a 'Buy' rating with a bullish target of $410 per share.

As the debate continues, it is essential to consider the facts and make informed decisions about investing in Tesla's stock.