Despite $38.2B In Losses, Tesla Short Sellers Ramp Up Bearish Bets
This week, Tesla Inc (NASDAQ: TSLA) celebrated a huge 2020 for investors after Tesla was added to the S&P 500 index with a record market cap of over $ 625 billion. Tesla stock hit a new all-time high on Friday as forced institutional purchases began in the closing minutes and Tesla's ailing short sellers were in even more pain.
Tesla short sellers took a little break on Monday after earnings workers pushed the stock down 5.9%. That retreat brought Tesla short sellers in more than $ 1.8 billion in profit on Monday, according to S3 Partners analyst Ihor Dusaniwsky.
On Monday, Dusaniwsky said Tesla was still the world's most heavily shortened stock, with more than $ 34.5 billion short interest. This short rate is three times the short rate of the second most frequently trimmed stock, Apple, Inc. (NASDAQ: AAPL). Apple has only $ 11.4 billion in short-term interest.
Related link: Cannabis short sellers are down 3 million after the Tilray and Aphria merger in 2020
Terrible year for short positions: Even after the profit on Monday, Tesla short sellers suffered another $ 4.3 billion in market value losses in December.
After Monday's pullback, Tesla shares are still up more than 730% year-to-date, and short sellers have taken a hit all year round. According to S3, Tesla short sellers have suffered market value losses of $ 38.2 billion by 2020 on Monday afternoon.
Despite the huge losses, Tesla short sellers added to their positions prior to joining the S&P 500. S3 reported that Tesla's short interest increased $ 1.5 billion in the past 30 days.
“Shorts were active prior to Tesla's S&P inclusion, and we may see more short selling in the new year as short sellers seek short-term pre-inclusion momentum and speculative long buyers to sell their long positions and gain market value in this fiscal year, ”said Dusanivsky.
Gasoline Gas Hiring: Tesla's market cap has increased to almost the size of the entire old auto market, even though Tesla accounts for only a small fraction of global auto sales. It is understandable, therefore, why short sellers are frustrated.
However, short selling stocks that are trapped in a bubble can be extremely dangerous as irrational exuberance can last for years, and it won't reach its ultimate peak until investor enthusiasm has subsided.
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