- Tesla closed at a record high on Thursday and hit an intraday record of $413 per share on Friday.
- Since Tesla’s multiyear closing low of $178.97 per share in June to now, short-sellers have lost $7.6 billion on a mark-to-market basis, according to data from the financial-analytics firm S3 Partners.
- “What was a seven month long ‘hug’ is turning into a full-blown ‘squeeze,'” Ihor Dusaniwsky, the managing director of predictive analytics at S3 Partners, wrote in a Friday note.
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As Tesla hovers near a record high, short-sellers are being left out in the cold.
Tesla short-sellers have absorbed a $7.6 billion loss on a mark-to-market basis since the stock’s multiyear closing low of $178.97 per share on June 3, according to a recent note from the financial-analytics firm S3 Partners. The stock hit an intraday record of $413 on Friday.
Traders betting against Tesla are now “in the winter of despair,” wrote Ihor Dusaniwsky, the managing partner of predictive analytics at S3. Year-to-date, Tesla short-sellers are down $2.43 billion in mark-to-market losses, including $1.16 billion losses this week alone, he said.
“What was a seven month long ‘hug’ is turning into a full-blown ‘squeeze,'” Dusaniwsky said.
While mounting losses might have squeezed out some traders with “less conviction or tighter risk thresholds,” a significant number of shorts have held their ground, Dusaniwsky said.
Though short positions against Tesla have decreased by 3.2 million shares in December and by 18.2 million shares this year, actual short interest — or dollars at risk — has increased by $2.47 billion since Tesla’s low on June 3, according to the note.
Instead of bowing out of the trade, traders still betting against Tesla have “taken their 2019 rollercoaster P/L ride in stride,” he said.
If Tesla’s rally continues, Dusaniwsky expects to see more short covering, he said. The total number of shorted shares is roughly 25.5 million, just 1.2 million from the three-year low hit on January 30, according to the note. If Tesla continues to gain and hits $450 per share, the total number of shares shorted could dip below 20 million, Dusaniwsky wrote.
Tesla had gained roughly 21% year-to-date through Thursday’s close.
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