Elon Musk Delivers $10 Billion Blow To Short Sellers In 2021

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Short sellers betting against electric vehicle manufacturer Tesla Inc have suffered massive blows over the course of this year, especially following the rapid price appreciation of the company's stock price during the second half of this year. Data from research firm S3 Analytics reveals that Tesla's short interest dropped by roughly one third last month, and the shares' 44% appreciation since January has now dealt a staggering $10 billion in short seller losses.

Tesla Short Sellers Lose Close To $1 Billion During Day's Trading Yesterday

Today's data shows that as of the end of Trading on Tuesday, December 7th, Tesla short interest stood at a little over 23 million shares sold short. This marked for a little over 2% of the company's outstanding shares and it also made for a sharp drop from November start, when more than thirty million of the electric vehicle company's short interest shares.

Tesla's battle with the short sellers, who borrow shares and then sell them with hopes of the share price dropping in order to make a profit, has been widely covered in the press. Its difficulties with production led to research firms the like of Citron estimate that the share price could drop below $100 in 2016, at a time when they were selling for $187 on the market before the later stock splits.

Since then, Elon Musk's car manufacturer has seen its share price cross $1,000, to sit with the likes of Cupertino, California consumer electronics firm Apple, Inc, Google's parent company, Alphabet, retail giant Amazon alongside Microsoft Corporation.

The striking feature of the battle between Tesla and the short sellers is that close to one fifth of their 2021 trading loss came yesterday, according to S3 Research. With a little over two hours left before trading close, the short sellers took in $914 million in losses, after Tesla's share price appreciated to $1,051 during the day.

Tesla, Inc's short interest stood at $22.7 billion after midday on Tuesday, December 7th, 2021, as it dropped by more than $10 billion during November. Image: Ihor Dusaniwisky/S3 Partners, LLC

S3's Ihor Dusaniwisky also revealed that the year to date losses for Tesla's short sellers have now crossed $10 billion, courtesy of yesterday's loss. For comparison, the full year's losses for the investors ettin against the company stood at roughly $3.4 billion in 2017.

As Dusaniwsky outlined on Twitter:

$TSLA short interest is $22.78B
22.58M shares shorted
2.77 % SI% of Float
2.70 % S3 SI% Float
0.30 % fee
Shares shorted down -245K shs, worth $247M, -1.07 %, over the last week.
Shorts down -$10.46B in 2021 mark-to-market losses;
including -$914M on today's +3.86 % move.

Tellingly, however, while the short seller losses are still staggeringly high, they have also significantly dropped during November. Data from the same source for November laid out that by October end, the short sellers had bled $14 billion after Tesla's share price grew by 50% during the month. At the time, close to thirty million shares had been sold short, and a 3% price appreciation dealt $1 billion in losses to the short sellers.

While the bearish investors have recovered a sizeable chunk of their losses last month, this merely brings them back to the state they were at by October end, when the year to date losses stood at $9.3 billion.

Tesla's stock splits over the years have also resulted in the short interest shares coming to represent a small portion of its outstanding shares. In order to acknowledge short sellers, the company's chief has also marketed shorts to its detractors.

The big share price movement for 2021 started in late October when the shares appreciated from a closing price of $843 on 15th October 2021 to close at $1,229 on the 4th of November, gaining nearly 46% in the process. Since then they have lost more than $150, particularly after Musk started to liquidate some of his holdings. which saw him sell $2 billion of shares in just two days.

The author has no position in any of the stocks mentioned. WCCF TECH INC has a disclosure and ethics policy.
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