Tesla deals $7.6 billion blow against short-sellers up to now month

Last yr, short-sellers made a killing by betting against TSLA stock. But lower than two months into the brand new yr, Tesla short-sellers have found themselves in the other situation. As per data from S3 Partners, Tesla completely crushed its short-sellers up to now month, dealing them with a painful $7.6 billion blow. 

Following the corporate’s decision to implement a series of aggressive price cuts for its entire vehicle lineup and the corporate’s strong Q4 and FY 2022 earnings results, Tesla shares have soared as much as 110% from its low on January 6, 2023. With this turnaround, S3 Partners noted that Tesla had turn out to be the least profitable short position for hedge funds. 

Tesla has at all times been a giant goal for short-sellers, a lot of whom have argued that the electrical vehicle maker is barely value a tiny fraction of its current valuation. But while Tesla has given several big blows against short-sellers over time, 2022 was a golden yr for TSLA bears. 

Tesla hit several headwinds in China, comparable to the shutdown of Gigafactory Shanghai because of Covid restrictions, in addition to the corporate’s challenges within the domestic auto market because of competition from local carmakers like BYD. Elon Musk also sold TSLA shares to assist fund his controversial and turbulent acquisition of social media platform Twitter.

Amidst this environment, Tesla short-sellers made a $15 billion profit in 2022. This effectively made TSLA probably the most profitable wanting the yr. 

Unfortunately for Tesla shorts, the approaching months might thoroughly see more tailwinds for the electrical vehicle maker. Within the Q4 and FY 2022 earnings call, CEO Elon Musk and other Tesla executives highlighted that the corporate’s products are seeing a number of demand. The corporate can also be expected to hit several breakthroughs this yr, comparable to the initial production of the Cybertruck. 

Events comparable to the upcoming Investor Day this March 1, 2023 are also expected to supply the corporate with more momentum, especially as Elon Musk noted that the event would come with discussions on Master Plan Part 3. Some details on the corporate’s next-generation vehicle,w which is predicted to be cheaper than the Model 3 and Model Y, are also expected to be revealed. 

Disclosure: I’m long TSLA.

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