Tesla’s soaring shares spell disaster for short sellers

supercharger
Credit: Tesla

Tesla’s shareholders are happy to see their stock rise in value. However, Tesla short sellers are bleeding heavily on their gamble as of late.

Despite Tesla’s astounding success in recent years, some investors are willing to short the EV maker’s shares. In fact, Tesla’s shares are the most shorted globally. But with the strong earnings reported last quarter, the company’s stock rose 10 percent, much to the consternation of short sellers, who hold about 3 percent of the total shares.

S3 Partners have estimated damages sustained by Tesla short sellers at more than $1 billion in just a day of surging. Altogether, short sellers may have lost $2.67 billion this month.

Many experts expected Tesla to struggle financially this year because of persistent supply-chain issues and increasing costs of raw materials. Tesla’s stock is also expected to take a hit with the disruption in production caused by Covid-19 in China and the CEO’s protracted pursuit of Twitter ownership.

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However, the recent quarterly report and soaring shares are assurance to investors that Tesla will weather the storm. It reported a profit of $2.5 billion on a revenue of$16.93 billion last quarter.