Alibaba Cost Short Sellers $2 Billion This Week

With the S&P 500 down 0.4 percent in the past five days, it's been a pretty good week for most short sellers. However, despite the downward market drift, the single most popular stock to short in the entire U.S. market single-handedly cost short sellers at least $2 billion this week.

Alibaba Group Holding Ltd BABA surged 11.5 percent this week to new all-time highs, capped off by a huge fiscal Q1 earnings beat on Thursday morning. While an 11 percent move isn’t necessarily a blowout for short sellers, Alibaba has more than twice the short interest of any other stock in the market, according to financial analytics firm S3 Partners.

In a new report on Friday, S3 analyst Ihor Dusaniwsky said Alibaba has by far the largest total short position of any company in the world, with more than double the short interest of the most popular U.S. short—Tesla Inc TSLA.

“With an additional $2.75 stock price increase today adding $371 million of losses, Alibaba short sellers are now down $2.0 billion in mark to market losses for the week, bringing their year-to-date mark to market losses to $9.8 billion, down 66.4% for the year,” Dusaniwsky said.

Related Link: Tesla Earnings Beat Costs Shorts $300 Million

With Tesla shares up 64.7 percent year-to-date, short sellers have been hammered with mark-to-market losses of roughly $4.5 billion. However, Alibaba stock is now up more than 92 percent in 2017, inflicting more than twice as much damage on short sellers as even Tesla has.

Remarkably, Dusaniwsky reported that short interest in the Hong Kong/China region is up 23 percent so far this year, indicating that bears are digging in their heels on their positions rather than dialing back exposure.

Disclosure: the author is long BABA.

Image Credit: Rico Shen [CC BY-SA 4.0-3.0-2.5-2.0-1.0], via Wikimedia Commons