Tesla Short Sellers Kick Off 2021 Down Another $1B on 1st Trading Day

Image: Tesla

Since short sellers did not learn the lesson that Tesla (NASDAQ: TSLA) taught them in 2020, 2021 started with big losses for them. In the first trading session of the new year, they suffered losses of more than $1 billion.

Despite all the difficulties associated with COVID-19, 2020 has been an incredibly positive year for Tesla. The effort that the company has put in over the years has begun to pay off. Tesla continued its rapid development, building new factories and increasing production capacity, leading to stronger and more widespread investor confidence. The company's share price continued to rise, making it not only the most valuable automaker in the world, but also the sixth-largest company in the United States by market capitalization.

Parallel to the company's success, 2020 has been a devastating year for Tesla's short sellers, who lost approximately $40 billion, according to S3 Partners. "There's nothing that compares to it that I can remember," said Ihor Dusaniwsky, managing director at S3.

In 2021, short sellers continue to make the same mistake and, according to the facts, started the year very badly. Tesla shares rose 3.4% to $729.77, a record high at the close. Intraday, their value even reached $744.49, which equated a market capitalization above $700 billion. At the time of this writing, TSLA shares cost $736.74. This is clearly something short sellers did not count on.

Dusaniwsky tweeted that Tesla's short interest is $31.20 billion as of January 4. This corresponds to 44.22 million shares shorted, or 5.83% of the total outstanding shares. He also stated that TSLA short sellers have already lost $1.07 billion in the first session of 2021 alone.

$TSLA short int is $31.20BN; 44.22M shs shorted; 5.83% of Float; 5.51% S3 SI% Flt. Shs shorted down -2.1M shs, -4.4%, over last 30 days & down -1.41M shs, -3.1%, last week. Shorts down -$40.12B in 2020 mark-to-market losses; down -$6.3B in Dec and down -$1.07B today's +3.4% move pic.twitter.com/8PyBaHNHyy

— Ihor Dusaniwsky (@ihors3) January 4, 2021

The Tesla stock rally continues for a number of reasons:

• this explosive growth is underpinned by Tesla's ability to meet its 2020 delivery targets. On January 2, the company reported that it delivered half a million vehicles, exceeding Wall Street's expectations by average consensus
• the company has already reported five profitable quarters in a row, and investors have every reason to believe that Q4 2020 will also be profitable
• in December, Tesla was included in the prestigious S&P 500 index, which testifies to the great confidence in the manufacturer
• the company has and is implementing a strong roadmap

Tesla short selling is a very bad idea, so the number of shares held by short sellers is gradually decreasing. However, at the moment, Tesla continues to be the largest domestic and worldwide short in position, which will likely cost short sellers even more.

© 2020, Eva Fox. All rights reserved.

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Eva Fox holds zero shares of Tesla, Inc., and currently (at the time of this article's publishing) holds zero options or securities in Tesla Inc. and/or its affiliates.