Tesla Earnings Beat Costs Shorts $300 Million

The most crowded U.S. short is costing short sellers more than $300 million on Thursday.

Tesla Inc TSLA stock is up nearly 7 percent after the company reported a smaller-than-expected Q2 earnings loss and reiterated its aggressive Model 3 production targets.

But while Tesla bulls cheered the strong quarter, Tesla’s many short sellers were hit hard, losing more than $300 million on Thursday morning, according to financial analytics firm S3 Partners.

Prior to Thursday, Tesla’s $9.03 billion in short interest made it the most heavily-shorted U.S. company out there. Tursday’s losses are nothing new for Tesla short sellers. The stock is now up 1,230 percent in the past five years. Short sellers have now collectively lost $3.64 billion on Tesla since the beginning of 2016, but analyst Ihor Dusaniwsky says Tesla shorts are undeterred.

“Tesla short sellers have been building their short exposure regardless of the losses they have incurred,” Dusaniwsky wrote. S3 reports Tesla short interest is up 49 percent since the start of 2016.

Related Link: Goldman Sachs Raises Tesla's Price Target A Month After Cutting It, Still Remains Bearish

Ironically, all the bearish bets against a stock can help support it at times. When the stock dips, short covering provides demand for shares. When a stock spikes higher, short squeezes can compound those bullish moves.

According to S3, there is only one stock in the U.S. market that is more heavily-shorted tan Tesla, and it’s not an American company. China’s Alibaba Group Holding Ltd BABA currently has a short interest of $22.1 billion, more than double Tesla’s short interest.

Among U.S. companies, AT&T Inc. T, Alphabet Inc (NASDAQ; GOOG) GOOGL, Apple Inc. AAPL and Amazon.com, Inc. AMZN round out the list of top five most heavily-shorted stocks by total short interest.

Disclosure: the author is long BABA.

Image: Heisenberg Media, Flickr