S3 Partners: Tesla Shorts Haven't Gone Anywhere

Tesla, Inc. TSLA has been on the move this week, surging as high as $387.46 following a tweet by CEO Elon Musk that he had “funding secured” to take the company private at a price of $420 per share.

In the days following Musk’s tweet, however, Wall Street demonstrated some major skepticism about Musk’s claims, and Tesla’s massive hoard of short sellers appear to be dismissing them all together.

Short Sellers Sticking Around

Financial technology and analytics firm S3 Partners found no evidence that Tesla shorts are exiting their positions in a meaningful way this week. According to S3 analyst Ihor Dusaniwsky, it has been business as usual for Tesla shorts.

“I have not seen significant short covering in Tesla since Elon Musk’s tweets,” Dusaniwsky told Benzinga. “It looks like the large short sellers are holding onto their positions," and increasing the positions at the stock's higher level, he said. 

So far, adding to short positions above $380 has been the right call. In the days following Musk’s tweet, Tesla stock tumbled back down to around $353 per share.

Dusaniwsky said that, as of Thursday morning, Tesla remained the single most heavily shorted U.S. equity with roughly $12.36 billion in total short interest. Year-to-date, Tesla short interest is now up 14 percent overall.

Betting against Tesla hasn't been a good call so far in 2018. The stock is up 13.3 percent in 2018, and Dusaniwsky said short sellers are down $2.21 billion on the year.

Market Doubting Musk

Musk could soon be under investigation by the SEC if he can’t prove there actually is a reasonable $420 offer on the table. A Musk investigation might be a best-case scenario for Tesla shorts, but CNBC's Jim Cramer said an investigation is a longshot.

“Musk has every right to say that he has a potential $420-per-share takeover bid lined up, provided that he doesn't sell stock into the hype,” Cramer said this week. “As long as there's no dump with the pump, it's arguably a legitimate thing to say.”

But just because Musk may not be in legal trouble doesn’t mean the market is buying his claims. Tesla shares are now up just 3.6 percent from where they traded prior to Muck’s tweet and are 16.1 percent below the reported $420 takeover price.

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