Tesla short sales generate $ 1 billion profit in May

For Tesla's CEO, Elon Musk, short sellers have always been the number one public enemy and this month will not be different.

These investors, who are betting that stocks will plummet, had a lucrative month in May, as the electric car maker faced declining demand for its flagship vehicles and worries about rampant spending.

According to data compiled by S3 Analytics, investors holding short positions earned mark-to-market profits in excess of $ 1 billion in May. This total is among the most profitable months for short sellers since 2016.

MORE ABOUT THIS

Short sellers made paper profits of about $ 3.88 billion in 2019, after the builder reported losses in each of the past three years. Tesla is the second shortest stock of American stocks, ahead of Apple.

"Tesla's share price will have to recover over $ 300 per share so that the shorts are in the red again and the threat of a short tightening is valid," wrote Ihor Dusaniwsky, director of Predictive analysis of S3 Partners. "The winter is almost here for Tesla's short sellers, but now it seems more than spring is in full bloom."

Tesla shares fell about 15% in May and about 40% since the beginning of 2019. The electric car maker announced in April that it delivered 63,000 vehicles in the first quarter, which is well below the expectations of 76,000 deliveries. The company recorded a loss of $ 702 million for the quarter.

Teleprinter	security	Latest	Change	% Chg
TSLA	TESLA INC.	205.08	-0.28	-0.14%

Elon Musk is also struggling with security issues related to its "Autopilot" technology. The National Transportation Safety Bureau said last week that the system was activated in a fatal accident involving one of Tesla's flagship model 3 sedans in March.

CLICK HERE TO GET THE FOX BUSINESS APP

Wall Street companies have hammered Tesla in recent days. Morgan Stanley said Tuesday that its shares could fall to $ 10 in the worst case, citing concern that "Tesla has become too big in relation to short-term demand."