Tesla is over $250 per share – again. And again for no clear fundamental reason. The Model S shares have not exceeded projections and the Model X has fallen short. But there is a wild card - the Model 3. Or more accurately the Model 3 prototype. What does it take to justify a value of $250 per share? First, the Model 3 must be delivered in volume in approximately the promised time frame. Second, it must be delivered not too far north of the promised price of $35,000. Third, manufacturing must be sufficiently efficient that the company can make money selling Model 3s at something like the promised price. If all of those stars align then a price of $250 can be defended as reasonable. But what does reasonable mean? It means that going forward investors can expect to earn a fair risk adjusted return, but little more. However, if the stars do not align the price could drop dramatically. It seems to this author, therefore, that Tesla investors have returned to never-never land. Buyers of the stock at $250 have limited potential upside and significant downside. It is hard to imagine what buyers at this price are hoping will happen to give them meaningful return. The implication is stay away. Actually shorting the stock, either directly or via the option market, is also something to consider. But the short side is extraordinarily risky because who knows where sentiment might take the shares. For now, the sidelines is the place to be.