Tesla Inc (TSLA) reported second quarter results after the market closed on Wednesday and although they delivered a quarter of record deliveries (95,356 vehicles), record production (87,048 vehicles), and strong revenues ($6.35 billion) they also reported a wider than expected loss of -$1.12 per share. Tesla is projecting positive net income for the third quarter and the opening of its Chinese production facility year end. Another negative announcement was the resignation of its founding engineer and CTO, J.B. Straubel, after 16 years of service at the company.
Tesla short interest is $10.59 billion; 39.97 million shares short; 30.35% of its float; and a 0.89% stock borrow fee. Tesla continues to be the most shorted U.S. equity, in terms of notional short interest, as well as the most shorted stock in the worldwide Automotive Sector.
With Teslaâ€™s stock price down over 14% in mid-day trading, short sellers are up $1.55 billion in mark-to-market profits today. Todayâ€™s price move brings year-to-date mark-to-market profits up to $3.06 billion, up +35% for the year.
Although Tesla shares shorted have increased by 14.4 million shares, +56.31%, in 2019 there has been some short covering recently. Shares shorted decreased by -1.4 million shares, -3.46%, in July and by -2.5 million shares, -5.91%, over the last week. Short sellers were trimming their exposure ahead of the earnings report.
We should expect some short covering in the near term as recent short sellers may choose to close out their positions and realize their profits. But this price move has taken the idea of an impending Tesla short squeeze totally off the table, shorts now have a $3 billion buffer of year-to-date mark-to-market profits to comfort them and help keep them in their positions.
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Managing Director Predictive Analytics, S3 Partners, LLC
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