Tesla Shorts Extend Losses, Scurry Positions As Shorted Shares Go Down

Ramish Zafar
Image: Medium

This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.

If there's one phrase that, in our opinion, is apt for electric vehicle and energy products manufacturer Tesla Inc's performance on the stock market for the past 90 odd days, it's 'What A Run.' At the end of trading on October 23, 2019, Tesla (NASDAQ:TSLA) closed at a price of $254.68/share on the open market. Then, a day later, the company's stock price closed at $299.68, a jump that's bound to have sent shivers down institutional investors who had bet on the company's share price to fall as time progressed.

The best for the stock was yet to come. The day after Tesla closed on $299.68, the company's stock price once again made a big positive leap and closed on $328.13. Now, with the stock trading at $642.13, fresh data from S3 Partners, LLC provides insight into the short-selling environment around Tesla.

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Tesla Inc (NASDAQ:TSLA) Short Interest Grows To $15.5 Billion As Number Of Shares Shorted Continues To Decrease Following Recent Gains

After losing close to $5.4 billion in January's mark-to-market losses yesterday, Tesla's short extended their losses by $300 million today, for a final tally of $5.45 billion. The stock's price gains have resulted in dollar price volumes of shorts sold going up and standing at $15.55 billion as per S3's data and at $14.83 billion as per data from Marketbeat.

However, as anticipated, while Tesla's price jump might have sent shivers down shorters' spines last year, it's bound to have caused serious vibrations now especially following the company's earnings report for the fourth quarter of 2019 that it posted earlier this week. These vibrations are reflected in today's data which shows that shorters are gradually closing their positions in Tesla. Over the course of today's trading, Tesla's shorted shares have gone down by approximately 260,000 shares, after having decreased by 400,000 shares yesterday.

However, a slight dip in Tesla's price which dropped by 1.05% today did result in small gains for the short sellers, which results in approximately $163 million.

Tesla's 50-day moving average has skyrocketed due to recent gain on the market; Koyfin

Tesla Is The Most Shorted Automaker Worldwide Reveals Data

S3's head Mr. Ihor Dusaniwsky also reports that right now, Tesla's shorted shares represent more than half (51%) of the total shorted shares of automakers worldwide. Over the previous week, Tesla's shorts are down by 861,000 shares or by 3.4%. This is only natural given the stock's recent gains on the market and those who are yet to close out their positions are undoubtedly wondering what is the most profitable way to do so.

Following Tesla, Toyota Motors is the second most shorted auto stock, but its short interest is nine times lesser than the electric vehicle manufacturer. In third place is the Ford Motor company, with a short interest fourteen times lesser than Tesla's. Tesla's Chief Executive Officer Mr. Elon Musk has often taken short sellers to task publicly for injecting pessimism in his company on the market but ever since Tesla's share price growth, it appears as if the executive has been heeding board advice of maintaining a cool head on public forums such as Twitter.

The day after Tesla (NASDAQ:TSLA) reported its fourth quarter and fiscal year 2019 earnings, the company's stock rose by 11% on the open market. While the surge represented renewed investor optimism in the company, it failed to keep an eye on a handful of metrics that do not paint a rosy picture. For instance, Tesla's net income decreased in its fourth quarter, simply due to the company choosing to account C.E.O. Mr. Musk's bonus as a part of operating expenses. Tesla's operating expenses for the quarter were $102 million and Mr. Musk took a $72 million bonus.

Tesla's average selling price for its vehicles also fell for the quarter, resulting in only a small revenue growth year-over-year in 4Q19. But for a company that has often struggled to achieve profitability in the past, such problems surely must be small wrinkles that should be ironed out soon. Will they? We'll find out for sure.

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