Tesla short-sellers rake in $17 billion in Elon Musk company’s worst year

Tesla’s unprecedented stock market woes over CEO Elon Musk’s Twitter takeover have been a major boon for the automaker from many short sellers, market data showed Thursday.

Investors betting against Tesla shares are expected to earn $17 billion in mark-to-market earnings this year, Bloomberg reported, citing data from analyst firm S3 Partners Research. Tesla ranked as the most lucrative short bet over the past 12 months.

The rise in short sellers came as Tesla trailed its worst year of market performance on record. As of Thursday morning, Tesla shares were down 71% on the year.

Ihor Dusaniwsky of S3 Partners told the outlet that the windfall came after several years of steep losses for short sellers during Tesla’s pandemic-era stock market boom.

“As Tesla’s stock begins to rise, there should be a flurry of short-hedging that will help drive its stock price higher and faster, as short-term short-sellers look to make their outsized profits before they don’t evaporate,” Dusaniwsky told me.

Surges in COVID-19 cases have slowed Tesla’s production in China.

The drop included an 11% plunge on Tuesday alone after the Wall Street Journal reported that a rise in COVID cases forced Tesla to temporarily halt production in Shanghai.

Musk sought to allay the concerns of Tesla employees this week. In a note to employees on Wednesday, the billionaire thanked workers for their “outstanding performance” throughout the year while downplaying the company’s poor stock market performance.

“Don’t be too bothered by the stock market madness,” Musk said in the memo obtained by CNBC. “As we demonstrate continued excellent performance, the market will recognize it.”

Elon Musk
Elon Musk has sought to downplay concerns about Tesla’s stock performance.

“Long term, I firmly believe that Tesla will be the most valuable company on Earth!” Musk added.

Tesla investors are growing increasingly frustrated with Musk as he has spent more of his time revamping Twitter since its $44 billion takeover of the social media site in October.

Critics say Musk’s controversial actions on Twitter – which have included mass layoffs, clashes with advertisers and an overhaul of the platform’s vetting process – have become an overhang on Tesla shares. Musk has also confused investors by selling massive chunks of Tesla stock — including at least $36 billion to fund his acquisition of Twitter.

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Tesla was the most profitable short trade this year.

The ongoing drama on Twitter added to existing challenges at Tesla, which has struggled with ongoing global supply chain issues, reduced demand in China and growing fears of a global recession.

Earlier this month, Electrek announced that Tesla would make an indefinite number of layoffs and implement a hiring freeze in the first quarter of 2023. Musk previously signaled in June that he wanted to cut 10% of staff from the company. company because of a “super bad feeling”. on the state of the economy.

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