Tesla Shorts Have Made A $1B Profit This Month

It’s been a brutal month for Tesla, Inc. TSLA investors, with the stock down 15.3 percent on concerns about demand for Tesla vehicles and the company’s ongoing cash burn. Tesla carries one of the largest short positions in the market, however, and Tesla short sellers are having a very profitable month of May.

Rebound Year For Tesla Shorts

With Tesla shares now trading below $200, Tesla short sellers have made a net profit of more than $1.07 billion in May, according to S3 Partners analyst Ihor Dusaniwsky. He said May has been one of the most profitable single months for Tesla short sellers since 2016.

“TSLA shorts are having a rebound year, up $3.88 billion in mark-to-market profits in less than five months in 2019 versus mark-to-market losses of -$1.40 billion in 2018, -$3.56 billion in 2017 and -$400 million in 2016,” he wrote in a Monday report.

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

Tesla’s short position is up 50.2 percent this year to 12.8 million shares. Even after the first two weeks of May, Dusaniwsky said short covering has been limited. In the past week, S3 reported 834,000 Tesla short shares have been covered. Tesla remains the second largest U.S. equity short position, trailing Apple Inc. AAPL.

Short Squeeze Off The Table

While Tesla shorts rack up the gains, Dusaniwsky said the chances of a short squeeze in the near term are slim.

“With Tesla short sellers making back more of than half of the mark-to-market losses they had incurred since 2016 and stock loan availability plentiful (shares shorted are nowhere near the almost 42 million shares shorted in early 2018) there is very little chance of the mother of all short squeezes occurring in the near future,” Dusaniwsky said.

Tesla shares are now down 43 percent overall in the past six months. Shares traded around $199.02 at time of publication.

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