This year's short squeeze on Tesla (TSLA) will go down in history.
Since the beginning of 2020, stocks have more than doubled in value.
Short squeeze is a situation when the price of a stock rises sharply, and short position holders are forced to urgently buy shares to cover them and limit losses. This leads to even greater price increases and increased losses on uncovered positions.
In January alone, short sellers lost $5.8 billion in their positions. As of February 4, their losses amounted to about 8.3 billion dollars. According to analysts at S3 Partners, $TSLA has more short sellers than any other US stock. Shorts currently control over 18% of the company's public shares.
On February 4, they closed at $887 per share, which turned into a market capitalization of $160 billion.
Now the bears have got a little respite overnight, since Tesla fell 2.6%, opening at $864. At the beginning of morning trading on February 5, stocks returned below $800, down more than 13%.
But if we go deeper, then we will understand that the situation looks different. Electric cars are the future, they are more efficient, cheaper to maintain and don't pollute the environment. Tesla has changed the world and now every major automaker claims to be working on electric vehicles.
The most important part of the car is the battery and Tesla is very active in improving it. The automaker has entered into deals with several major battery manufacturers. Last year, the company bought Maxwell Technologies to stay ahead of the technology. Tesla has already made a huge breakthrough in this area, which we will learn more about in April at "Battery Day".
Tesla is also the undisputed leader in technology. All of the company's cars are high-tech, and their performance can easily be improved thanks to the usual (for Tesla owners) update via Wi-Fi.
This leadership of Tesla in the production of batteries and technologies makes it not only an automobile manufacturer, but also a technical company, and the demand for it shares is justified.
There is also another very important thing. The company's solar energy systems may soon reveal their full beauty. In the fourth quarter, the company already used 54 megawatts of solar energy, which is the best indicator for the year. The potential of Tesla's Solar business is now greatly underestimated, but soon it will certainly change.
That is why the demand for the company's shares is justified. Yesterday we saw an epic demonstration of how Tesla gets a victory over opponents. Perhaps such a lesson will make some bears seriously think about changing sides.
Featured image: Tesla