Tesla’s short sellers lost $ 38 billion in automaker’s colossal 2020 rally

• Tesla’s short sellers suffered $ 38 billion in mark-to-market losses throughout 2020, Bloomberg reported Thursday, citing data from S3 Partners.
• Short-term interest in the company’s shares has fallen to less than 6% of Tesla’s float, from nearly 20% at the start of last year.
• The losses exceed the total of $ 2.9 billion seen in 2019 and stem from Tesla’s 740% rise in the past 12 months.
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Investors betting against Tesla lost billions last year, as the automaker’s shares beat nearly all estimates.

Short sellers suffered $ 38 billion mark-to-market losses throughout 2020, Bloomberg reported Thursday, citing data from S3 Partners. Selling interest in stocks fell to less than 6% of Tesla’s free float, from nearly 20% as the company’s rally led investors to close their positions bearish.

Tesla Bears lost more than any other group of short sellers in 2020. Those betting against Apple recorded the second-largest deficit of nearly $ 7 billion, according to Bloomberg.

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The heavy losses are up sharply from the total for the previous year. Bearish investors lost $ 2.9 billion in 2019, as Tesla jumped almost 70% from its low from June to the end of December.

Short-selling a stock is selling borrowed stocks and buying them at a lower price. Investors who sell a stock benefit from a drop in price.

Tesla shares rose 743% in 2020, driven by stable profitability, new bullish analysts’ outlook and outsized demand from retail investors. The rally pushed CEO Elon Musk’s net worth to $ 158 billion in December and established him as the second richest person in the world – after Amazon CEO Jeff Bezos.

The automaker split its shares on a five-to-one basis in August after Tesla’s stock price climbed above $ 2,000. While the action had no effect on the company’s fundamentals, some analysts felt the move was helpful in sparking new interest from retail investors.

The most recently billed stock higher upon inclusion in the S&P 500 Index. Tesla’s news on the S&P lifted stocks in mid-November. Shortly after, Goldman Sachs analysts noted that institutional investors who track the index could fuel Tesla’s next step as they seek to match the weight of the benchmark.

Musk has repeatedly clashed with short sellers on social media. The group CEO’s latest mockery came in July when he sold red shorts emblazoned with the company logo. The “shorts” – marketed as a sardonic rebuke to the company’s short sellers – proved so popular on the day they were launched that Tesla’s product website crashed.

Tesla closed at $ 705.67 per share on Thursday. The company has 20 “buy” ratings, 44 “hold” ratings and 19 “sell” ratings from analysts.

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