Tesla Inc (TSLA) reported earnings that beat estimates and improved future guidance including the fast-track on production of its Model Y crossover vehicle. TSLA‚Äôs stock price rallied in pre-market trading and opened up over +7%. TSLA‚Äôs price strength continued in early trading and is up over +10% on heavy trading. Shorts, who were already down -$4.1 billion in mark-to-market losses in January, are down an additional -$1.5 billion in mark-to-market losses today. Tesla shorts are now down -$5.60 billion in mark-to-market losses in 2020.
Tesla short interest is $14.28 billion; 24.58 million shares shorted; 18.37% of its float; with a stock borrow fee of 0.30%. Short sellers have decreased their exposure by -1.78 million shares, -6.74%, over the last 30 days which equates to -$1.03 billion worth of short covering. There was active short covering ahead of Tesla‚Äôs earnings report yesterday, with 544 thousand shares covered, worth -$316 million, over the last week.
Tesla is the largest short in the domestic market and the largest short in the worldwide Auto Manufacturers Sector.
Tesla short sellers were up +$5.16 billion in year-to-date mark-to-market profits as Tesla lost -46% of its value and hit its year-to-date low of $178.97/share on June 3rd, 2019. But since June 3rd¬†Tesla shorts are down -$12.83 billion in mark-to-market losses and we‚Äôve seen 19.11 million short shares covered worth $11.10 billion ‚Äď a decrease of -44% in shares shorted.
Tesla‚Äôs short squeeze will probably shift into a higher gear as some short sellers re-evaluate their short thesis and begin to trim or close out their short exposure. Shorts were trampled by a Tesla Semi as its stock price rose +9% within the first 5 minutes of trading and had little chance to close out positions at anywhere near yesterday‚Äôs closing price. Over the next several days post-earnings long buying will be joined by short covering as shorts try and find more attractive exit points after this morning‚Äôs quick price surge.
We should expect sizable short covering, especially if Tesla‚Äôs rally continues. Tesla shares shorted have not dipped below 20 million shares since mid-2013, if short side mark-to-market losses continue to mount we may see Tesla shares shorted with a ‚Äú1 handle‚ÄĚ in the not too distant future.
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¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬† Managing Director Predictive Analytics, S3 Partners, LLC
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