Tesla short sellers fall back after a rapid rise


Tired short sellers have lifted most of their bets on Tesla, because retail investors are not affected by Twitter polls and the stock market bubble and continue to inject cash into the world’s most valuable auto company.

According to data from professional data provider S3 Partners, Tesla’s short position as a percentage of the company’s total shares available for trading has dropped from 19.6% at the beginning of last year to 3.3%. During the same period, the number of Tesla shares that were shorted decreased by nearly 80% to 27 million shares.

Carson Bullock, the founder of Muddy Waters Capital and a short seller, said that he understands the reasons why people choose to short Tesla and believes that “they are not wrong in principle.”

“But the other side is [Tesla chief executive] Elon Musk, he is better at playing public company games than anyone I have ever met. “

Musk’s unorthodox leadership — until this year, Tesla has been lacking profits — made the company he founded in 2003 a favorite of short sellers, who profited when the value of stock picks fell. However, after Tesla’s rapid rise, many of these investors have now exited their positions.

Michael Burry bet on the US real estate market before the financial crisis and was dramatized in the Hollywood blockbuster “The Big Short.” He has been betting on Tesla for a long time. The deleted tweet argued that the company benefited from “large-scale government and electricity subsidies.”

However, last month, Burry’s company Scion Asset Management exited its short position and recently held more than 800,000 put options in May-derivatives that allow investors to sell assets at agreed prices before a certain date-Tesla stock .

The line chart of short interest as a percentage of Tesla's total liquidity shows that investors have given up betting on Tesla

Data provider Breakout Point estimates that in all 33 weeks since the second quarter of 2021, Tesla has been among the 30 most popular retail stocks and has been among the most popular in 16 of the 33 weeks Of the top 10.

Nevertheless, Tesla’s sharp rise means that it is still one of the biggest shorts in the U.S. stock market. Despite the reduction in short positions, Tesla’s stock price has risen by more than 1,200% since the beginning of last year, which means that short interest—that is, the number of short positions multiplied by the stock price—has been reduced by 11 billion to 28 billion U.S. dollars in the same period.

Not all short sellers have given up. Crispin Odey, a British hedge fund manager, continued to bet on the automaker. He wrote in a recent letter to investors that “many stocks are now ridiculously valued” and Tesla “Joined the ranks of immortality.”

“Even if you do all the numbers and are very generous, give them 10% of the entire market in eight years and stick to it, your final return will be 35 times the return in 2030,” Odd said. “The share price halving will be a good result [for Tesla]. “

However, he added that unless there is a sell-off in the fixed income market, Tesla’s stock price is unlikely to fall in the short term. “Until our bond breaks through properly, the stock market won’t really go downhill.”

Neil Campling, head of technical research at Mirabaud, continued to bet on Tesla, which he described as a “very negative” view of Cathie Wood’s Ark Innovation exchange-traded fund. Despite holding shares in the American electric car manufacturer, the ETF has fallen by about 8% this year. “If they hadn’t bet on Tesla, their performance would have been worse,” he said.

According to his standards, Musk also spent a busy month. If most of his 64.4 million Twitter followers were willing, just a week after fulfilling its promise to sell 10% of Tesla’s stock, JPMorgan Chase sued the company for $162 million for allegedly No payments in 2018.

Despite this, Tesla’s stock price has risen by approximately 30% in the past 30 days. However, there are signs that Musk’s online cheating has begun to arouse resentment from some investors.

A comment on Reddit’s r/wallstreetbets bulletin board (where day traders gather) summarized this sentiment as follows: “TSLA risk factors… Competition: 5%, supply chain/production: 5%, Elon Musk is stupid Of tweets: 90%”.

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