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Tesla short-sellers have lost more than $39 billion betting against the stock in 2020

Dec 23, 2020, 01:06 IST
Business Insider
Reuters
  • Short-sellers betting against Tesla's stock have lost more than $39 billion in 2020, according to data compiled by S3 Partners.
  • Tesla, which remains the most shorted stock in the market, has staged a 677% year-to-date rally as of Monday's close and was added to the S&P 500 on Monday.
  • "There is still a school of thought that this is a bubble that Elon Musk created, and we're going to short that bubble," said S3 Partners founder Bob Sloan. "Eventually things mean revert, the company has to make money other than credits and you still see people willing to take that bet."
  • Watch Tesla trade live here.

Investors betting against the success of Tesla by selling shares short have lost more than $39 billion in 2020, according to data from S3 Partners.

That's more than the combined amount short sellers lost in Apple ($6.1 billion), Amazon ($5.6 billion), Square ($5.2 billion), and Sea Ltd ($4.3 billion) so far this year.

In an interview with Bloomberg on Monday, S3 Partners founder Bob Sloan explained that even with the soaring value of Tesla and its recent inclusion in the S&P 500, short-sellers are still betting against the company.

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Shares of Tesla have soared 677% year-to-date as of Monday's close as the electric vehicle maker benefited from a combination of strong vehicle deliveries, five consecutive quarters of profits driven in part by the sale of regulatory credits, and an overall increase in investor enthusiasm for electric car manufacturers.

Read more: BANK OF AMERICA: Buy these 26 cheap and fundamentally rock-solid stocks before the economic rebound sends them soaring in 2021

The soaring value of Tesla in 2020 has spurred 62% of the shorts outstanding to be covered so far in 2020, but the company still remains the most shorted stock in the stock market based on the notional value of outstanding shares sold short, according to Sloan.

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"There is still a school of thought that this is a bubble that Elon Musk created, and we're going to short that bubble. Eventually things mean revert, the company has to make money other than credits and you still see people willing to take that bet," Sloan said of Tesla short-sellers.

About $35 billion worth of Tesla shares remain shorted by bearish investors, according to Sloan. That far outpaces the roughly $10 billion in shares currently sold short for Apple, Amazon, and Alibaba.

Read more: A chief market strategist at a $5 billion firm shares her recommendation on when to buy Tesla as it joins the S&P 500 - and explains why the index funds snatching it up may not get a big boost from the electric-car maker's inclusion

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