Tesla Inc (NASDAQ: TSLA) shares gained another 13.2% on Friday as the stock’s parabolic rise continued. Tesla is now up 278% in just the past six months, and Tesla short sellers are getting scorched along the way.
Tesla's Short Numbers
As of the close on Monday, S3 Partners analyst Ihor Dusaniwsky said there are still 24.38 million shares of Tesla held short, a position worth about $15.8 billion. That short interest represents about 18.2% of Tesla’s float.
Short sellers have been covering their positions as the stock rockets higher, reducing their exposure by about 5.3% over the past 30 days, the analyst said in a note.
Yet the value of the outstanding short position is actually higher than it was a month ago due to the stock’s skyrocketing price.
Since the beginning of the year, Tesla has leapfrogged Apple, Inc. (NASDAQ: AAPL) to become the most heavily shorted stock in the U.S. market. Even with more than $1.22 billion in short covering year-to-date, Dusaniwsky said the value of Tesla’s short position is up $4.88 billion due to its ballooning price.
Losses Mounting For Tesla Shorts
Prior to Tuesday’s big gain, Tesla short sellers had endured a $2.89 billion mark-to-market loss in 2019 and a year-to-date mark-to-market loss of $8.31 billion so far in 2020.
“Everyone is anticipating a dramatic TSLA short squeeze, but it is more likely to be a continuous slow decline in shares shorted rather than a sudden abrupt plunge. This is due to the amount of short hedging that is being done to offset Tesla convertible bond and option exposure,” Dusaniwsky said.
Tesla shares were trading 12.73% higher at $879.30 at the time of publication Tuesday.
Even most Tesla bulls were not anticipating a move this strong in Tesla in this short of a period. Among the 27 analysts that cover Tesla, the average price target is just $506, roughly 35% below Monday’s closing price.
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