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Tesla (TSLA) stock soared to $ 2,000 a share before the shares split and shorts flew away.
Earlier this month, Tesla announced a 5-to-1 stock split that caused the share price to soar.
Surprisingly, it has steadily increased since then.
TSLA is now up 40% since the share split was announced with no other major catalyst occurring in the meantime.
By comparison, Apple, which also announced a stock split two weeks before Tesla, has risen 20% since the announcement.
Tesla’s action appears to be unstoppable over the past 3 months, again despite no major announcements:
One of the possible reasons is slow short-term squeeze as more short sellers ditch Tesla.
For a long time, Tesla has been one of the best-selling stocks in the world, which means investors bet on the price going down by borrowing stocks and hoping to buy them back at a lower price.
Ihor Dusaniwsky, a brokerage expert, reported yesterday that the shorts had dropped over 2 million shares in the past 30 days:
As you can see, there is a clear correlation between the number of stocks sold short and Tesla’s stock price.
At the time of writing, Tesla’s stock was up 6% today to a new high of $ 1993 per share – again with little to no news.
Tesla’s stock split is scheduled to take place on Friday, August 28 – meaning TSLA shareholders will have 5 shares for every share they hold next Monday, but the stock will trade at 1/5 of its value .
Taking Electrek
It sounds like a short squeeze to me.
Especially in August based on Ihor’s data and it looks like they might not want an in-game skin during the stock split.
More importantly, I think they should stay away during Tesla Battery Day, but it could also end up being a classic ‘buy the rumor, sell the news’ type event.
What do you think? Let us know in the comment section below.
Disclosure: I have been TSLA for a long time.
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