Tesla short sellers have lost almost $8 billion during the stock's rally to a record high

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Tesla short sellers have lost almost $8 billion during the stock's rally to a record high

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  • Tesla closed at a record high Thursday and hit an intraday all-time peak of $413 per share during trading on Friday.
  • Over the period from Tesla's multiyear closing low of $178.97 per share in June to present, short sellers have lost $7.6 billion on a mark-to-market basis, according to data from financial-analytics firm S3 Partners.
  • "What was a seven month long 'hug' is turning into a full-blown 'squeeze'," wrote Ihor Dusaniwsky, the managing director of predictive analytics at S3 Partners in a Friday note.
  • Watch Tesla trade live on Markets Insider.

As Tesla hovers at a record high, short sellers are being left out in the cold.

Tesla short sellers have absorbed a $7.6 billion loss on a mark-to-market basis since the stock's multiyear closing low of $178.97 per share on June 3, according to a recent note from financial-analytics firm S3 Partners. The stock hit an intraday record of $413 on Friday.

Traders betting against Tesla are now "in the winter of despair," wrote Ihor Dusaniwsky, the managing partner of predictive analytics at S3. Year-to-date, Tesla short sellers are down $2.43 billion in mark-to-market losses, including $1.16 billion losses this week alone.

"What was a seven month long 'hug' is turning into a full-blown 'squeeze'," Dusaniwsky said.

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While mounting losses might have squeezed out some traders with "less conviction or tighter risk thresholds," a significant amount of shorts have held their ground, Dusaniwsky said.

Even though short positions against Tesla have decreased by 3.2 million shares in December and 18.2 million shares this year, actual short interest - or dollars at risk - has increased by $2.47 billion since Tesla's recent low on June 3, according to the note.

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Instead of bowing out of the trade, traders still betting against Tesla have "taken their 2019 rollercoaster P/L ride in stride," he said.

If Tesla's rally continues, Dusaniwsky said he expects to see more short covering. The total number of shorted shares is roughly 25.5 million, just 1.2 million from the three-year low hit on January 30, according to the note. If Tesla continues to gain and hits $450 per share, the total number of shares shorted could dip below 20 million shares, Dusaniwsky wrote.

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Tesla has gained roughly 21% year to date through Thursday's close.

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