Tesla shorts have lost more this year than the US aviation industry
An incredible and amazing year for Tesla shares was a bloodbath for sellers of its shares.
According to an analysis by S3 Partners, short investors in Tesla – those who bet in the market that the newly minted auto giant’s stock will lose value – have lost a total of already about 35 billion dollars this year.
Tesla Short Sellers Lost More Money than the ENTIRE Airline Industry
«I can’t remember anything like it that could compare with this», – said Igor Dushanivsky (Ihor Dusaniwsky), S3 Managing Director and Short Expert.
To imagine the size of the disaster, you can compare this amount with losses to the US aviation industry, which reported a cumulative net loss of $ 24.2 billion dollars excluding special items in the first nine months of 2020, the worst ever reported by the industry.
Tesla short sank $ 8.5 billion in November alone as Tesla shares per month grew by 46%. That’s more than Tesla itself lost ($ 6.7 billion) in the 11 years since the first results report released. in 2008.
This can serve as a good excuse Tesla CEO Elon Musk, who made no secret of his hatred of those who were shorting his company’s shares.
Tesla (TSLA) is a stock that investors seem to be, love and hate.
For all those who believe the company is a clean energy leader with unlimited potential, paradigm-shifting potential, there are other investors who believe that this company will become an over-hyped niche player that will soon give way to larger and more established automakers..
This is why there has been such high interest in Tesla stock for a long time, and these short-term visionaries now owns about 6% of the company’s total shares. This is much higher than the typical 1% or 2% downgrade positions in most other large cap companies..
Tesla has become one of the largest companies in the country this year. After several years of losses, as the production of electric vehicles increased, the company began to profit at the end of 2019. And stocks soared, gaining more than 600% since the beginning of the year. Now, without exaggeration, the auto giant costs about the same as the six largest and most expensive global automakers combined – Toyota (TM), Volkswagen (VLKAF), Daimler (DDAIF), General Motors (GM), BMW and Honda (HMC).
When investors short a stock, they promise to sell the stock in the future at a set price. If the stock price falls, they make money by being able to buy the stock at a lower price than they promised to sell it. But if the share price rises, they lose money. Potentially very big money.
The dizzying rise in Tesla shares this year caused unprecedented volumes of losses, unlike anything that happened in the market before, as a huge number of investors opened short positions, and the company’s shares were becoming more and more expensive..
Dushanivsky said many of the short sellers have closed their positions – the number of Tesla shares held by short sellers is down 63% this year. But, according to him, many still do not want to change their point of view, despite the losses..
There are other big-cap stocks that have suffered big losses this year as the market recovered from a March sell-off. But they represent a small fraction of the volume of losses incurred versus stocks Tesla, because far fewer investors are short. The second biggest loser in positions down are Apple (AAPL), which lost $ 5.8 billion for the year. Amazon (AMZN) ranks third on incurred shorts to losses amounting to $ 5.6 billion.
Musk himself even doubted whether this share was worth its current market value..
«I even said that the stock was too high. I mean what should I do?» – he said, rolling his eyes, during an interview with Matthias Dopfner, CEO of technology and media company Axel Springer, in the past. Tuesday.
Musk also warned his employees in an email last week that if they didn’t work to control costs and investors would start to question the projections of big profits in the future., «our shares immediately flatten like a soufflé under a sledgehammer!»
One of the main short investors in the market, Jim Chanos (Jim Chanos), admitted that he cut the short position he held at Tesla for a long time, even though he still doubts the company’s long-term prospects..
And another big shortsman, Michael Berry (Michael Burry) who became famous as a hero books "Selling for a fall. The secret springs of financial disaster" (The Big Short: Inside the Doomsday Machine, Michael Lewis, thanks to his bet against the housing and mortgage-backed securities bubble shortly before the Great Recession, wrote in a tweet recently deleted that he also went short on Tesla.
But despite continued doubts about some short positions, Tesla is outperforming other skeptics..
Goldman Sachs upgrades its recommendation on shares to "buy" from "neutral" last Wednesday and set a 12-month target price of $ 780.
Goldman predicted that despite its small overall market share, Tesla could become one of the world’s largest automakers, selling about 15 million vehicles a year by 2040. By comparison, world leader Volkwagen sold 11 million vehicles last year..