Tesla Shorts headed for a record-loss-breaking 2018


Tesla shorts have lost $866.4 million in 2016 , $3.566 billion in 2017, and 2018 has already turned into a continuing nightmare for many of them.

Tesla trades in a wide range: 52 Week High : 387.46, 52 Week Low: 244.59

Tesla, the most shorted stock in the United States is also the top performer in Nasdaq, up more than 30% in the last three months and 17% since the start of the year.

Though the shorts have reduced their exposure from ~35 million shares short in July to the current 28 million, at $10.4 billion Tesla short position is still a sizable amount. 

Data from analytics firm S3 partners show that Tesla shorts have lost $2.45 billion since the start of the year. Barring a spectacular stock price collapse in the next two weeks, the chances of recovering their investment looks very slim and multi-billion dollar loss in 2018 looks highly likely. 

Shorting Tesla isn’t that easy either. It costs a ton of money. 

In June, Ihor Dusaniwsky, Head of Predictive Analytics at S3 Partners told CNBC, “Shorting Tesla is costing investors over $1 million in financing a day to keep up, as the fee investors pay to bet against the stock is at about 3.5 percent.”

Is there an Escape Hatch?

Tesla has no major financial event in the next few weeks. The company reported its third-quarter financials on October 24th and we will be updated on production and delivery statistics only in the first week of January 2019. 

Unless Musk finds a way to self-inflict, the odds of a stock price moving news hitting the market in the next two weeks remains very low. 

Tesla has been one of the top two U.S. shorts for several years and things are not going to change in a hurry. Shorts have lost nearly seven billion dollars since 2016 and they still have more than ten billion dollars riding against the company. 

Tesla has been a losing bet for them, but they still keep chasing the elusive, because there aren’t many stocks that move as sharply as Tesla does.

Never before in the history of mankind, we had a company that can add or lose billions to its valuation at the stroke of a tweet. 

As long as Tesla remains a highly volatile, news sensitive stock, the shorts will stay pitched in their tents. Happy 2019!