Bloomberg: Tesla Shorts in “Winter of Despair”

Esha Dey brings us this great headline from Bloomberg:

Investors betting against Tesla Inc. are facing the “worst of times” with the electric-vehicle maker’s stock price on a tear over the past seven months.

Tesla shares gained 0.4% to close at a record on Friday, rising more than 120% from a low of $178.97 on June 3.

Bloomberg

Ouch. TSLAQ is going to need some cream for that short burn. Literally, it appears:

The surge in the share price has sent short sellers into a “winter of despair,” S3 Partners Managing Director of predictive analytics Ihor Dusaniwsky wrote in a note, adding that bearish Tesla investors were down $2.43 billion in mark-to-market losses so far this year.

Bloomberg

If you still had any doubt that fate loves irony, Tesla short-sellers –– who lambasted Tesla all year for supposedly burning too much cash –– have eviscerated more than twice as much capital as Tesla betting against the company’s stock. Unlike Tesla, they built no business and have no products to show for their effort: They just lit their clients’ money on fire.

While the mounting mark-to-market losses have squeezed out many shorts with less conviction or tighter risk thresholds, a “significant amount of shorts have held their ground and taken their 2019 roller-coaster P/L ride in stride,” Dusaniwsky said. If Tesla’s rally continues, he expects to see continued short covering as more investors reach their risk limits.

Bloomberg

Glad to see shawty is holding their ground. I wouldn’t want their losses to stop just yet –– the short burn hasn’t even begun.

The total number of Tesla shares shorted stands at 25.46 million, just above the three-year low of 24.23 million on Jan. 30, Dusaniwsky wrote. If the current pace of short covering and the stock price rally both continue, the number of shares shorted could fall below 20 million as Tesla’s stock price hits $450.

“What was a seven month long ‘hug’ is turning into a full-blown ‘squeeze,’” Dusaniwsky said.

Bloomberg

Burn shawty burn

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