Despite all the difficulties associated with COVID-19, 2020 has been an incredibly positive year for Tesla (NASDAQ: TSLA). The effort that the company has put in over the years has begun to pay off. Tesla continues its rapid development, building new factories and increasing production capacity, leading to stronger and more widespread investor confidence. The company's share price continues 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, this has been a devastating year for Tesla's short-sellers, who lost $35 billion, according to S3 Partners. "There's nothing that compares to it that I can remember," said Ihor Dusaniwsky, managing director at S3.
Tesla's short sellers lost $8.5 billion in November alone. That one month of short losses amount to more than the $6.7 billion Tesla lost in the entire 11 years from its first reported results in 2008, to the end of last year, according to CNN Business' Chris Isidore.
At the moment, Tesla's short-sellers own about 6% of the total stock, which is much higher than the typical 1% or 2% short position in most other large-cap companies. Meanwhile, Tesla reported five profitable quarters in a row, and is worth about the same as the top six most expensive automakers in the world combined.
Shorting Tesla has been a very bad idea, which is why the number of shares held by short-sellers is down 63% this year, Dusaniwsky said. For example, the founder of Kynikos Associates, Jim Chanos--one of the main short investors and renowned short-sellers--is not as confident as he used to be that shorting Tesla is a good idea. Chanos said he cut the size of his short position on Tesla.
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About the Author
Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.