• 315 days Will The ECB Continue To Hike Rates?
  • 315 days Forbes: Aramco Remains Largest Company In The Middle East
  • 317 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 717 days Could Crypto Overtake Traditional Investment?
  • 722 days Americans Still Quitting Jobs At Record Pace
  • 724 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 727 days Is The Dollar Too Strong?
  • 727 days Big Tech Disappoints Investors on Earnings Calls
  • 728 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 730 days China Is Quietly Trying To Distance Itself From Russia
  • 730 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 734 days Crypto Investors Won Big In 2021
  • 734 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 735 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 737 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 738 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 741 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 742 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 742 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 744 days Are NFTs About To Take Over Gaming?
  1. Home
  2. Investing
  3. Stocks

Tesla Short Sellers Just Took A $1.7 Billion Hit

Sad

Tesla is the most shorted stock among U.S. companies, and CEO Elon Musk is notoriously caustic in his Twitter comments about “Shortville.” This week, after the release of Tesla’s second-quarter results, the residents of Shortville were in for an unpleasant surprise as their paper losses hit US$1.7 billion on an unexpected surge in the company’s stock price.

Despite posting yet another loss for the quarter, Tesla also reported an improvement in revenues and cash flow, as well as the fact that the Model 3 has started to make money during the quarter. Apparently, this was enough for investors to flock back into the company to the chagrin of short sellers.

Tesla expects to turn cash-positive this quarter as it maintains a production rate of 5,000 Model 3s weekly. What’s more, Musk told investors that the company will actually report profits for both the third and the fourth quarter of 2018 and reiterated that there was no need to raise more funds, again contrary to analyst forecasts that Tesla needs an urgent equity injection. 

Earlier this year, despite growing investor unease about Tesla’s failure to ramp up its flagship Model 3’s production rate, the supply of stock available for shorting began dwindling. Now, says financial analytics provider S3, Tesla short sellers have swung into the red. Related: Mexico’s Fintech Industry Is Booming

Before the release of the company’s better than expected Q2 figures, the year-to-date aggregate performance of Tesla short sellers was a positive US$276 million amid the Model 3 uncertainty and several accidents involving Tesla cars. After the release of the results, short sellers swung into a US$1.4-billion loss for the 12-month period.

Tesla has become the fourth worst-performing shorted stock, according to S3 data, as cited by Reuters. Since the start of 2016, Tesla short sellers have lost US$4.7 billion on their bets.

By Irina Slav for Safehaven.com

More Top Reads From Safehaven.com

Back to homepage

Leave a comment

Leave a comment