CNN Business conducted a data analysis from a financial analytics company S3 Partners. According to their research, short positions on Tesla shares have lost $8.4 billion.
This is more than short losses from any other company. The second largest loss for short sellers came from Apple, where they lost just under $6 billion over the same period.
But Apple is a much larger company, and short positions on it are much smaller than on Tesla. Short sellers account for about 21% of Tesla's current shares. This is the highest percentage of short sellers among all companies in the US market. At the same time, short sellers have only 1% of Apple shares.
Short sellers are betting that the stock price may go down. If the price rises before they can cash out they position, they will be forced to buy shares at a higher price in order to cover his bid. Accordingly, in this case, they incurs financial losses.
Recently, Tesla shares have been growing all the time, crushing the position of short sellers. After reaching a 52-week low of $176.99 in June, Tesla shares rose about 150%. This was facilitated by high sales and profit margins that surprised even skeptics from Wall Street. Over the past few months, several former Tesla bears have changed their minds about Tesla, and many financial analysts are raising the target price for Tesla’s shares.
Tesla shares rose 3% on Friday to close at $442.98 after a record Q4 sales record that matched its previous forecasts. For Q4, Tesla delivered a total of 112,000 units and produced 104,891. Besides its outstanding Model 3 deliveries, Tesla also produced 17,933 unit of the Models S and X and delivered 19,450 of its top tier vehicles.
According to S3 Partners, in just the first two trading days of 2020, shorts lost more than $700 million.
In the past few months, some short sellers have stepped back from their positions at Tesla. About 36% of its shares were sold shortly in May, but many Tesla shorts continue to hold, convinced that the market will turn against the electric automaker.
"Some of short-term shorts have been taken out. But many of the longer-term shorts, they're sticking with it no matter what the price moves are," said Ihor Dusaniwsky, head of predictive analytics at S3.
Shorts intentionally try to harm the company by lowering stocks and cutting off the company access to capital markets. Tesla is daily faced with negative propaganda from shorts that don't neglect the dirtiest strategies in order to lower the company's share price.
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