Tesla Inc (TSLA) closed the day down -2.69%, and down -14% month-to-date. TSLA shorts are up $1.07 billion in mark-to-market profits in May, making it one of their most profitable months since 2016. TSLA shorts are having a rebound year, up $3.88 billion in mark-to-market profits in less than five months in 2019 versus mark-to-market losses of -$1.40 billion in 2018, -$3.56 billion in 2017 and -$400 million in 2016.
Tesla shares shorted has increased by 12.8 million shares in 2019, an increase of 50.2%, as its stock price fell by 38.3%. While Tesla short interest is down to $38.4 billion, a 10.2% decrease in 2019, the drop is entirely due to its stock price decline and not a change of sentiment by short sellers. There has been a steady flow of short selling for most of the year, but we have seen some short covering over the last week with 834k shares covered, a decrease of 2.1%.
Tesla continues to one of the most shorted equities in the U.S., with Apple Inc (AAPL) holding the top spot since April 2019.
FAANG stocks continue to dominate the list of most shorted U.S. equities, taking five of the top ten spots, but Tesla continues to hold the #1 or #2 spot since 2016. Tesla shares shorted had been gradually declining from April 2018 to January 2019, but short sellers have been reinvigorated in 2019.
With Tesla short sellers making back more of than half of the mark-to-market losses they had incurred since 2016 and stock loan availability plentiful (shares shorted are nowhere near the almost 42 million shares shorted in early 2018) there is very little chance of the mother of all short squeezes occurring in the near future. Tesla and Elon Musk will have to make good on delivery projections and profitability\cash flows will have to improve for Teslaâ€™s stock price to rally once again. Teslaâ€™s stock price will have to get back over $300/share for shorts to be deeply in the red again and the threat of a short squeeze to be valid. Winter almost came for Tesla short sellers, but now it looks more like Spring is in full bloom.
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