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Summary
- Despite the desperate efforts, short sellers couldn’t pull down the price of Tesla shares in 2020.
- Increased support from the retail investors pushed its share price through the roof.
Despite Tesla, Inc (NASDAQ:TSLA) share prices going up year after year, short-sellers have been sticking to their point of view. Usually, when investors continuously lose money, they stop wasting their time and effort after a while. Regardless, Tesla short-sellers seems to be dedicated to their perspective. In 2019 and 2020, despite losing, they continued to short sell Tesla shares.
The market is quite aware of Tesla Co-Founder and CEO Elon Musk’s dislike for short-sellers. On many occasions on social media, he has mocked the investors trying to pull down his company’s stock price. However, market infatuation with Tesla is evident, as well.
According to the fresh media reports, short-sellers had already lost USD 38 billion in mark-to-market in 2020.
Before the year-end in the month of December 2020, Tesla investors had a field day soon after joining the S&P 500 index. The company showed record-high market capitalisation, which is above USD 625 billion. Its shares hit the rooftop, however, the short sellers suffered on trading day. According to the industry experts, soon after that, the short sellers pulled the stock down in a revenge attempt, earning USD 1.8 billion profit. Even though
there have been such wins for the short sellers, 2020 did not deliver them any expected profits.
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According to the media reports, investors doing short selling lost billions of dollars last year. Information released from S3 Partners stated that the those betting against Tesla lost USD 38 billion in mark-to-market in 2020.
With promising financial results and delivering outstanding performance, the company successfully led the investor out of their bearish positions.
Tesla is one of the heavily shorted stocks similar to Apple Inc (NASDAQ: AAPL). However, even on 4 January 2021, Tesla stock had a short position three times more than the short interest in Apple stock. Tesla has USD 34.5 billion in short interest, and Apple has nearly USD 11.4 billion in short interest.
Those who had bet against Apple also witnessed hefty losses. The second-largest shortfall of about USD 7 billion in 2020. For Tesla bears, these are a substantial increase in the losses than the previous year. In 2019 short sellers lost USD 2.9 billion in Tesla trading.
Short-selling happens when the investor sells borrowed shares and buys them at a lower price. Investors earn from the drop in the stock price. However, for Tesla, its shares gained 743 per cent last year, which means no profits for the short sellers. The company also showed profitability even during the coronavirus pandemic. In the month of December, the stock market rally helped its CEO Elon Musk increase in the net worth to USD 158 billion. He became the world's second-wealthiest person, the first being Jeff Bezos, CEO of Amazon.com, Inc.
Tesla Co-Founder and CEO Elon Musk have repeatedly talked against the short selling investors publically. Musk recently mocked the short sellers while announcing a product- “limited edition satin red colored shorts”. He stated "short shorts" on social media taking a sarcastic jibe at the bearish investors. The product was sold out soon after the launch, which also resulted in the merchandise website crash.
