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Tesla Short Sellers Take $1.7B Hit

Tesla is the most shorted stock among U.S. companies, and CEO Elon Musk is notoriously caustic in his Twitter comments about “Shortville.” This week, after the release of Tesla’s second-quarter results, the residents of Shortville were in for an unpleasant surprise as their paper losses hit US$1.7 billion on an unexpected surge in the company’s stock price.

Despite posting yet another loss for the quarter, Tesla also reported an improvement in revenues and cash flow, as well as the fact that the Model 3 has started to make money during the quarter. Apparently, this was enough for investors to flock back into the company to the chagrin of short sellers.

Tesla expects to turn cash-positive this quarter as it maintains a production rate of 5,000 Model 3s weekly. What’s more, Musk told investors that the company will actually report profits for both the third and the fourth quarter of 2018 and reiterated that there was no need to raise more funds, again contrary to analyst forecasts that Tesla needs an urgent equity injection.

Earlier this year, despite growing investor unease about Tesla’s failure to ramp up its flagship Model 3’s production rate, the supply of stock available for shorting began dwindling. Now, says financial analytics provider S3, Tesla short sellers have swung into the red.

Related: A New Booming Market For U.S. Crude Exports

Before the release of the company’s better than expected Q2 figures, the year-to-date aggregate performance of Tesla short sellers was a positive US$276 million amid the Model 3 uncertainty and several accidents involving Tesla cars. After the release of the results, short sellers swung into a US$1.4-billion loss for the 12-month period.

Tesla has become the fourth worst-performing shorted stock, according to S3 data, as cited by Reuters. Since the start of 2016, Tesla short sellers have lost US$4.7 billion on their bets.

By Irina Slav for Oilprice.com

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  • m on August 03 2018 said:
    I love holding the most shorted stock!
  • Thomas on August 03 2018 said:
    We all need Tesla to succeed, because they are our best hope for a cleaner less polluted environment.

    We have an Oil Industry and an API that don’t know what cleaner fuels look like, and have no interest in going there.

    The 49 Waivers written by the EPA to Refiners over the last two years, to short circuit the Renewable Fuel Standard, says all anyone needs to know about the Oil Industry’s Lack of Commitment to Cleaner Fuels.

    EPA has written Waivers amounting to about 2.25 BILLION GALLONS of ethanol, so Refiners can replace the Clean Octane the Ethanol would have provided with Dirty, Known Carcinogens like Benzene. How nice of the EPA and the Refining Industry to flog us with their Known Carcinogens!

    So Refiners could make more money.

    Go Tesla Go!

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