Tesla Shorts Vs. Beyond Meat Shorts: Who's Getting Squeezed Harder?

Tesla Inc TSLA shares are up another 3% on Tuesday, and Tesla bulls are finally getting their long-awaited short squeeze. The stock is now up 119% in the past three months alone, but the short squeeze currently happening in Beyond Meat Inc BYND could be even more impressive.

After another 9% gain on Tuesday, Beyond Meat shares are now up 53.2% in just five days. Benzinga PreMarket Prep co-host Dennis Dick compared the two short squeezes on Tuesday morning.

“I did not think Beyond Meat had it in it to squeeze them this much. I thought they could squeeze them to $100. I did not think two days later they could squeeze them to $105,” Dick said on Tuesday's show.

Dick said the price action is clearly a short squeeze and not a reflection of any fundamental market shift toward plant-based meats.

“I am very, very, very impressed with the resilience here in both of these stocks,” Dick said. “I think when the dust settles here, this will get ugly. But right now, the power of the squeeze tells you you can’t short it.”

No Rationale Required

Co-host Joel Elconin said short squeezes don’t need a fundamental rationale; they just need a catalyst.

“Shorts are underwater, bots are buying, they’re sniffing out the big orders, they’re buying ahead of the big orders, and until the bots get tired of buying and start selling when there’s big sellers in the market, this is what’s going to happen,” Elconin said.

Dick warned Tesla and Beyond Meat traders these types of short squeezes can often last much longer than expected. Elconin said attempting to analyze Tesla technicals is essentially pointless until the squeeze is over.

“There’s an identifiable pattern here. It’s called the rocketship pattern,” Dick said. He even got burned attempting to short Tesla at $498 before cutting his losses quickly at $501.

Market Sentiment

One thing is for certain: the two short squeezes have certainly captured traders’ attention. StockTwits daily message volume for Tesla has jumped from 2,327 a month ago to 5,672 on Monday. At the same time, the percentage of those messages reflecting bullish sentiment has dropped from 81.3% to 79%.

For Beyond Meat, daily message volume in the past month has skyrocketed from 176 to 2,497. However, unlike Tesla, bullish sentiment has also risen significantly in that time from 72.5% to 91.3%.

The Winner Is…

Despite the crazy action in Tesla, Dick said the Beyond Meat squeeze is more impressive.

“I think if you’re in it, this is a great opportunity to get the hell out, in my opinion,” he said. Dick said he believes Beyond Meat shares will come crashing back down to earth at some point, but he’s not shorting the stock at these levels.

Tesla Shorts Getting Burned

Tesla short sellers are certainly learning their lesson the hard way about the dangers of short squeezes. Tesla shorts lost $2.9 billion in 2019 and are already down another $2.8 billion so far in 2020, according to S3 Partners analyst Ihor Dusaniwsky. In fact, Tesla shorts lost another $1.25 billion on Monday alone.

“With 2020 losses mounting, we should see a continuation and probably an acceleration of Tesla’s multi-month short squeeze,” Dusaniwsky said.

Benzinga’s Take

When fundamentals go out the window and market dynamics take their grip on stocks like Tesla and Beyond Meat, it’s extremely difficult to make an argument for either buying or shorting a stock in the near term. Longs, shorts and short-term traders should all be extremely cautious with both these stocks in the coming days.

Do you agree or disagree with these predictions? Email feedback@benzinga.com with your thoughts.

Related Links:

Here's How Much Investing $100 In Tesla Stock Back In 2010 Would Be Worth Today

CFRA Research Downgrades Tesla, Sees Risks Ahead After Huge Run