Shares of Tesla Inc TSLA soared on Tuesday after the company beat consensus estimates for second-quarter deliveries.
The news could be good for investors and bad for short sellers.
What Happened: Tesla continues to be a popular stock to short for investors, with some betting against a lofty valuation compared to other automotive companies, while others are betting against CEO Elon Musk.
Short interest in Tesla currently stands at $21.11 billion with 100.30 million shares shorted, according to data from S3 Partners shared with Benzinga.
Tesla ranks as the fourth most shorted stock in the U.S. markets behind NVIDIA Corporation NVDA, Apple Inc AAPL and Microsoft Corporation MSFT according to S3 Partners.
"There has been increased short selling in TSLA since the beginning of June," S3 Partners Managing Director of Predictive Analytics Ihor Dusaniwsky told Benzinga.
Dusaniwsky said there has been 13.94 million shares worth $2.92 billion of Tesla sold short in 2024.
"Over the last thirty days, we've seen short selling with 722k shares, worth $152 million, sold short."
Benzinga asked if there had been a significant change in shorting Tesla shares since the pay package for Tesla CEO Elon Musk was approved on June 13.
"Since June 13th, we've seen 1.56 million shares of short covering, worth $327 million, a -1.5% decline in total shares shorted as its stock price rallied +18%."
Tuesday's gains represented $1.65 billion in mark-to-market losses, according to Dusaniwsky.
Short sellers are up "only" $1.37 billion in mark-to-market profits, or +7.6%, year-to-date, Dusaniwsky said.
"Shorting TSLA has been a profitable trade in 2024 until lately."
In June, shorts have given back earlier profits and are down $1.95 billion in month-to-date mark-to-market losses, which represents a 10.7% decline.
Why It's Important: Musk has been critical of Tesla short sellers in the past and joined in with others poking fun at those betting against the company Tuesday.
"Once Tesla fully solves autonomy and has Optimus in volume production, anyone still holding a short position will be obliterated. Even Gates," Musk said.
The tweet was in reference to one of the most famous Tesla short sellers ever, Microsoft co-founder Bill Gates.
Musk referenced Gates' short position in Tesla stock during an appearance on the "Joe Rogan Experience" podcast.
"I also heard that at one point he had a large short position. I don't know if that's true or not, but it seems weird. People I know who know the situation pretty well, I asked them ‘are you sure?' and they said ‘yes, he has a huge short position on Tesla.’ That didn't work out too well," Musk told Joe Rogan.
Shortly after the comments from Musk, Gates was interviewed by CNBC's Andrew Ross Sorkin.
"What Elon's done with Tesla is fantastic," Gates said. "We need more Elon Musks."
Gates was asked directly if he was short Tesla stock.
"I don't talk about my investments," Gates replied, failing to deny the accusation.
In April 2022, leaked texts between Gates and Musk revealed that Gates was still short the stock. Ahead of a proposed meeting between the two billionaires, Musk asked Gates via text if he still held a short position on Tesla.
"Sorry to say I haven't closed it out," Gates said. "I would like to discuss philanthropy possibilities."
TSLA Price Action: Tesla shares closed over 10% higher at $231.26 on Tuesday, versus a 52-week trading range of $138.80 to $299.29.
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© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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