Last year, short-sellers made a killing by betting against TSLA stock. But less than two months into the new year, Tesla short-sellers have found themselves in the opposite situation. As per data from S3 Partners, Tesla completely crushed its short-sellers in the past month, dealing them with a painful $7.6 billion blow.
Following the company’s decision to implement a series of aggressive price cuts for its entire vehicle lineup and the company’s strong Q4 and FY 2022 earnings results, Tesla shares have soared as much as 110% from its low on January 6, 2023. With this turnaround, S3 Partners noted that Tesla had become the least profitable short position for hedge funds.
Tesla has always been a big target for short-sellers, many of whom have argued that the electric vehicle maker is only worth a tiny fraction of its current valuation. But while Tesla has given several big blows against short-sellers over the years, 2022 was a golden year for TSLA bears.
Tesla hit several headwinds in China, such as the shutdown of Gigafactory Shanghai due to Covid restrictions, as well as the company’s challenges in the domestic auto market due to competition from local carmakers like BYD. Elon Musk also sold TSLA shares to help fund his controversial and turbulent acquisition of social media platform Twitter.
Amidst this environment, Tesla short-sellers made a $15 billion profit in 2022. This effectively made TSLA the most profitable short of the year.
Unfortunately for Tesla shorts, the coming months might very well see more tailwinds for the electric vehicle maker. In the Q4 and FY 2022 earnings call, CEO Elon Musk and other Tesla executives highlighted that the company’s products are seeing a lot of demand. The company is also expected to hit several breakthroughs this year, such as the initial production of the Cybertruck.
Events such as the upcoming Investor Day this March 1, 2023 are also expected to provide the company with more momentum, especially as Elon Musk noted that the event would include discussions on Master Plan Part 3. Some details on the company’s next-generation vehicle, which is expected to be more affordable than the Model 3 and Model Y, are also expected to be revealed.
Disclosure: I am long TSLA.
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