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Tesla Short Sellers Stack Pressure After Most Profitable 2022 Trade

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Tesla Short Sellers Stack Pressure After Most Profitable 2022 Trade

(CTN NEWS) – NEW YORK – Following their most successful year, short sellers targeting Tesla Inc.’s shares are putting additional pressure on the Elon Musk-led electric vehicle manufacturer.

According to data from analytics company S3 Partners, traders who want to make money by selling borrowed shares to buy them back later at a lower price have boosted their short positions on Tesla to roughly 79 million.

The data showed that over the previous 30 days, there were 325 million dollars worth of new short sales or an increase of roughly 4%.

Tesla’s short interest decreased from US$14 billion one month ago to US$8.76 billion, or nearly 3% of the float, which reflects the stock’s sharp downturn.

Tesla Short Sellers Stack Pressu

 Tesla Inc CEO Elon Musk dances onstage during a delivery event for Tesla China-made Model 3 cars in Shanghai, China January 7, 2020. REUTERS/Aly Song/File Photo

About 65% of Tesla’s shares plummeted last year. Following Musk’s decision to purchase the social media site Twitter, which some investors perceived as a diversion for the billionaire CEO, the drop quickened.

Stock fell as much as 7.9% on Friday, reaching its lowest level since August 12, 2020, before climbing up to add 1.2% at US$111.69. About 9% of the stock has fallen so far this year.

Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners, commented: “It appears that shorts believe the stock has some additional downside risk.”

“Short sellers will begin trading positions as soon as the stock price reaches a floor or their predicted value to realize their profits. That has not yet been observed in Tesla, “added he.

 

According to S3 statistics, Tesla was the most lucrative short play in the US market in 2022, netting investors US$15.85 billion in paper profits.

Although it was the strongest year ever for Tesla short sellers, they have only recovered roughly 25% of the expected losses of US$60 billion from 2010 through 2021.

According to Evan Niu, an analyst at Ortex, which tracks real-time short interest data, some shorts are undoubtedly cashing out their gains while new shorts may be cycling in with the expectation that the decline will continue.

Tesla Short Sellers Stack Pressu 1

/ Tesla

With pricing reflecting a 53% probability that the stock will decline more than 12.5% over the next three months, traders are leaning toward making bearish bets on Tesla options.

According to Refinitiv data, options positioning only predicts a 31% chance that the shares would increase by more than 12.5% during the same period.

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