How much money did Tesla short sellers lose?
Tesla short sellers lost $3.5 billion in two days after Q2 deliveries.
(Reuters) - Investors who bet against Tesla stock have lost $5.5 billion in the four sessions since the electric car maker promised more affordable cars, according to data from S3 Partners.
NEW YORK, Jan 4 (Reuters) - Investors who bet against U.S. and Canadian stocks had paper losses of $194.9 billion last year following a sharp market rally, data provider S3 Partners Research said on Thursday.
Tesla is the third-largest U.S. short behind Nvidia (NVDA.
With the shares rallying 17% in the two trading days since the second-quarter report, short sellers have lost an estimated $3.5 billion on a mark-to-market basis, according to data from S3 Partners.
Tesla sales fell for the second straight quarter. It marks the the first time in the company's history that sales declined from the previous year for two quarters in a row.
TSLA Stock 12 Month Forecast
Based on 34 Wall Street analysts offering 12 month price targets for Tesla in the last 3 months. The average price target is $180.92 with a high forecast of $310.00 and a low forecast of $2.00. The average price target represents a -26.57% change from the last price of $246.39.
To boot, analysts believe Tesla's product roadmap is not certain, as its “balls to the wall” push into autonomous driving and reported abandonment of a much-anticipated, lower-cost electric vehicle mean it will likely be a while before Tesla can return to its path of strong earnings growth and ludicrous cash generation ...
Even so, the gains posted by Ambrx Biopharma (AMAM) in Friday's session are unusual and particularly eye-catching. The stock soared to the tune of a hardly believable 1007% after the company announced pleasing results from the mid-stage testing of its breast cancer drug ARX788.
The combination of new buyers and panicked short sellers creates a rapid rise in price that can be stunning and unprecedented. A short squeeze gets its name because short sellers are being squeezed out of their positions, usually at a loss.
How high can a short squeeze go?
In such a case, they have to compete with each other in a sense, because others are also clamoring to get rid of their stock—and there's no fundamental limit to how high the stock could climb as brokers initiate margin calls forcing shorts to buy to cover.
Tesla lost over $700 billion in value since November 2021 and Elon Musk wants $45 billion for his performance as CEO.
Put simply, a short sale involves the sale of a stock an investor does not own. When an investor engages in short selling, two things can happen. If the price of the stock drops, the short seller can buy the stock at the lower price and make a profit. If the price of the stock rises, the short seller will lose money.
A trader who has shorted stock can lose much more than 100% of their original investment. The risk comes because there is no ceiling for a stock's price. Also, while the stocks were held, the trader had to fund the margin account.
Legendary short-seller Jim Chanos is best known for making a fortune after spotting fraud at Enron and for his bearish bets against Tesla. Now, he's being accused of misappropriating company funds for his personal use and making his girlfriend richer.
“Tesla is easily the most shorted US equity in dollar terms currently, but it is not, in the most literal sense, the most shorted stock in the history of the stock market”, Pierson highlighted.
With shares down nearly 40% this year, Tesla's market capitalization has tumbled from $790 billion to below $490 billion, a far cry from its late 2021 peak of over $1 trillion and moving against broader gains.
Tesla's share of the electric vehicle market in Q1 2024 was 51.3%, down from 61.7% one year earlier. Though the overall year-over-year growth was minimal in Q1, nine manufacturers recorded more than 50% year-over-year growth in EV sales – BMW, Cadillac, Ford, Hyundai, Kia, Lexus, Mercedes, Rivian and Vinfast.
Tesla currently dominates the EV market. Sales across its four models — Y, 3, X, and S— represent nearly three-fourths of total 2021 EV sales.
Note: EV=electric vehicles, which include both battery electric and plug-in hybrid electric vehicles. The share of electric and hybrid vehicle sales in the United States decreased in the first quarter of 2024 as battery electric vehicle (BEV) sales declined.
What is considered a heavily shorted stock?
Short interest as a percentage of float above 10% is fairly high, indicating significant pessimistic sentiment. Short interest as a percentage of float above 20% is extremely high.
In this case, the short interest would be 200%. Though a rare occurrence, it is possible that in extreme instances, the number of shares shorted can exceed 100%. These rare situations usually occur with small-cap stocks with a small float and high short interest.
The risks of shorting
Specifically, when you short a stock, you have unlimited downside risk but limited profit potential. This is the exact opposite of when you buy a stock, which comes with limited risk of loss but unlimited profit potential.
It's unlikely Tesla's returns going forward will come anywhere near resembling the last five years. So, investors shouldn't expect a $1,000 price per share by the end of the decade.
When CNBC asked what Tesla would be worth in five years, Wood confidently said $2,000 per share. The $2,000 per share figure is not new, either. In April 2023, Ark Invest published its valuation model for Tesla with the same price target and the expectation of reaching it by 2027.
