Tesla Short Sellers Bank $1.5B On Earnings Miss

It’s been a brutal year for Tesla, Inc. TSLA investors, with the stock down another 15% this week following a big earnings miss in the second quarter. Tesla carries one of the largest short positions in the market, however, and Tesla short sellers are having a very good week.

Rebound Year For Tesla Shorts

On Thursday, Tesla recorded its worst day of 2019, with shares closing down 13.6% following the big earnings miss. As a result, Tesla short sellers earned $1.55 billion in profits on Thursday, according to S3 Partners analyst Ihor Dusaniwsky. He said Tesla short sellers are now up 35% year to date, banking net profits of more than $3.06 billion.

This year has been a rebound year for Tesla short sellers after they booked mark-to-market losses of -$1.40 billion in 2018, -$3.56 billion in 2017 and -$400 million in 2016, according to Dusaniwsky.

Despite big profits, Tesla short sellers have been aggressively adding to their positions throughout 2019.

Tesla’s short position is up 56.3% this year to 39.9 million shares. Short interest now represents 30.4% of Tesla’s public float. Tesla has even surpassed Apple Inc. AAPL as the most shorted stock in the U.S. market.

Short Squeeze Off The Table

In the past week, S3 reported 2.5 million Tesla short shares have been covered. While Tesla shorts rack up the gains, Dusaniwsky said the chances of a short squeeze in the near term are slim.

“We should expect some short covering in the near term as recent short sellers may choose to close out their positions and realize their profits. But this price move has taken the idea of an impending Tesla short squeeze totally off the table, shorts now have a $3 billion buffer of year-to-date mark-to-market profits to comfort them and help keep them in their positions,” Dusaniwsky said.

Following this week’s sell-off, Tesla shares are now down 33.1% overall in 2019. The stock traded around $223.24 per share at time of publication.

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